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Distribution Requirement Planning (DRP) Add-On Overview

The DemandCaster Distribution Requirement Planning (DRP) add-on module provides the capability to plan and optimize your master production schedule (MPS) across a network of warehouses, manufacturing facilities, and distribution centers.

The objective of the module is to help users plan supply in order to minimize shortages and reduce the costs of ordering, transporting, and holding products. Though the Distribution Requirement Planning module supports alternate supply options as well as a constrained supply logic as it relates to execution, since it is a planning system, it is always working to plan supply to meet demand based on your pre-determined lowest cost of manufacturing and distribution.

Distribution Requirement Planning helps you:

  • Plan and order your products across multiple inter-connected source and destination manufacturing and distribution facilities for an end-to-end enterprise-wide plan
  • Address short term constrained supply situations by allocating goods to customer orders before safety stock or minimum order quantity requirements.
  • In a constraint supply situations, apply rules to allow excess inventory that is available in a secondary source location to be made available to the destination location.
  • Manage temporary alternate supply locations over a set time horizon.
  • Specify forecasting, safety stock, planning parameters and other settings for each inventory-carrying location and manufacturing facility
  • Set location and item-specific lead times, transfer times, costs, bills of materials, and manufacturing processes even for the same item number.

Source and Destination Structure and Organization

The DRP process is managed by a source and destination logic otherwise known as bill of distribution. The destination is the ship from (stock) location to either another location or to the customer. The source is where the supply for the destination is received from. This relationship is shown in the selection interface as follows:

  1. The location of the item is defined in the location column. This is where the inventory is maintained for a give item / location.
  2. The locations may be filtered by selecting one or more locations in the drop down selection filter.
  3. The supplier of a given item/location is defined in the supplier column
  4. A Supplier with an * after its name means the supplier is a location.
  5. When the source and destination is the same, the item is manufactured in the location. The replenishment orders are handled by production orders and the lead time is either the production time or order time.
  6. If the source and destination locations are different, the location receives its inventory via a transfer order from the source location. The time required to transfer the item is defined by the transfer time lead time.
  7. When the supplier does not have an * and there is a name in the column, its source is a supplier and managed via a purchase order. The lead time to purchase is the Lead Time or Order Lead Time if a Transfer (transit) Time is applied.
  8. An "unknown" supplier is undefined and either is manufactured in the location or should be corrected if the item location requires a transfer order or a purchase order.

Ship From (destination) Location Logic

The Distribution Requirement Plan is part of the Requirement Planning process. The process is managed as follows:

  1. It starts with a forecasts and/or customer orders in the ship from location which we also call the destination location.
  2. The forecast and customer orders are translated to a requirement plan where suggested orders are generated to maintain inventory based on the item/locations inventory attributes.
  3. These requirements are then translated from the Destination location to its source as defined in the Distribution Panel. The Distribution Panel is opened by hovering your cursor over the word "Distribution Panel."
  4. The translation of the requirements from the destination to the source is done so by the transfer lead time (read the article Lead Time Logic to learn more). The transfer lead time is the second lead time value in the image below.

Note: The graph in the image below is hidden via the graph button in tool bar.

Source Location Logic

  1. The requirements from the destination are passed to the source with a ship date at the source offset by the transfer time. These requirements are placed in the dependent demand column of the source location. Placing the cursor over any of the orders in the Dependent Demand column shows the orders and where they are coming from.
  2. The history in the source is the sum of the sources independent demand locations.
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