This post is part of a series about DDMRP. Previously there was an introduction to DDMRP, a brief explanation of why DDMRP is needed, and a post about the first of the DDMRP components, inventory positioning. This post is about the second component, strategic buffers. I will, as usual, not go into all the detail about DDMRP buffers, but rather try to explain just enough to then discuss what would be needed in an SAP solution.
Strategic Buffers
For each decoupled part, we'll use a certain buffering level. The total buffer will consist of 3 zones: green, yellow and red.
The way these zones ares used will be detailed later when we discuss demand driven planning. For now a brief summary of each zone should be enough:
The size of each zone, and therefore of the total buffer, will be different for each part. This is accomplished in part by creating material groupings (buffer profiles), and in part by individual material traits.
Buffer Profiles
Parts are grouped according to its characteristics. It is suggested that you group them according to:
This is only a suggestion, as the actual profiles created depend on the nature of the business. According to the buffer profile a part falls on, we should be able to configure some factors that will later be used for buffer sizing:
Individual Part Attributes
The following attributes, which are also used for buffer sizing, are different for each part:
Calculating Buffer Zones
To calculate the buffer zones we'll often use the average usage over the entire decoupled lead time (ie, ADU x DLT). Though there is no standard DDMRP name for this value, I will refer to it below as Lead Time Usage (LTU).
Each zone is then calculated as:
So now in SAP...
These are the official compliance criteria for this second component:
In SAP, material grouping could maybe be made via MRP controller or MRP group, or a Z field in the material master, and we would then need a Z table to configure the factors per grouping. Pretty straightforward for now.
For the individual part attributes, we already considered calculation of DLT in the last post, and MOQ (or minimum lot size) is a standard SAP field (MRP1).
Average daily usage (ADU) is somewhat trickier. We need first to configure how it should be calculated (for example, average of 4 weeks in the past and 2 weeks in the future). Past consumption could be calculated in a number of different ways, depending on how the system is configured: we could use the Logistics Information System, the consumption history (MVER) or even checking directly the material movements. For the future we'd have to look at existing requirements (both independent and dependent demand). ADU should be refreshed frequently, probably through a daily job, and it is import for analytics purposes to keep a history of each part's ADU per day.
In summary:
For now, then, implementation in SAP is quite easy, but it will get more difficult. There is still one post about manual buffer adjustments, before we really discuss how to use these buffers for demand driven planning.
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