Company Announcement - A 20% increase in sales combined with inventory reduced by as much as two thirds seems impossible to achieve. Add to those results shorter lead times and higher returns on capital employed and the idea starts to sounds far-fetched for any industry that is struggling to adapt to today’s highly competitive markets that demand shorter lead times, greater product variety and lower prices.

These impressive results are however a reality for early US and European adopters of Demand Driven Materials Requirement Planning that bridges the constraints of existing Materials Requirements Planning and Distribution Requirements Planning systems, which has been in use for 40 years.

The first company in Africa to adopt the Demand-Driven Material Requirement Planning methodology is South African auto-electronics manufacturer PFK Electronics. The company has signed a contract with Demand Driven Technologies of Washington state, USA, to implement its Replenishment+® software, which will be supported by South African consulting group, People Systems Quality.

“We’re looking forward to using DDMRP methodology to reduce waste and make changes to our supply chain that will see our customers be happier than ever,” says Derrick Palterman, Business Systems Manager of PFK Electronics.

The DDMRP methodology is a development of the MRP and DRP systems, which are at the heart of every supply chain. American supply chain specialists Carol Ptak and Chad Smith applied the concepts of Theory of Constraints, Lean and Six-Sigma in developing this new methodology. The DDMRP approach is different in that it makes each part of the supply chain more independent by introducing buffers to reduce lead times and stabilise demand .

“Traditional materials requirement planning makes it difficult for companies  to align their supply chain assets more closely with their actual consumption,” says Colin Seftel, consultant from PSQ. “In terms of traditional MRP, if demand for the finished product changes a little, everything else changes a lot.”

With more products, fluctuating demand and increased outsourcing to foreign countries, businesses need to re-look how they determine material requirements. Operating in the sweet spot where the amount of inventory is an asset rather than a liability is an important key to increasing revenue.

Replenishment+ is a multi-echelon materials and inventory management solution designed to facilitate a demand pull inventory system consistent with the methodology of DDMRP, and was the first solution to be fully qualified as DDMRP compliant.

“We’re delighted to be working with PFK Electronics and deploying Replenishment+ to support their DDMRP implementation,” says Erik Bush, Demand Driven Technologies CEO. “Replenishment+ is now deployed on 4 continents to a rapidly growing list of clients around the world adopting DDMRP to address their supply chain challenges.”

Bush will provide an overview of DDMRP in action during his presentation at the 37th annual SAPICS Conference to be held at Sun City from 31 May to 2 June this year.