{"id":22264,"date":"2020-04-29T11:39:31","date_gmt":"2020-04-29T09:39:31","guid":{"rendered":"https:\/\/www.regestaitalia.eu\/supply-chain-managers-like-paris-to-whom-to-give-the-golden-apple-of-profitability\/"},"modified":"2025-06-03T15:32:20","modified_gmt":"2025-06-03T13:32:20","slug":"supply-chain-managers-like-paris-to-whom-to-give-the-golden-apple-of-profitability","status":"publish","type":"post","link":"https:\/\/www.regestaitalia.eu\/en\/supply-chain-managers-like-paris-to-whom-to-give-the-golden-apple-of-profitability\/","title":{"rendered":"Supply chain managers like Paris: to whom to give the golden apple of profitability"},"content":{"rendered":"<p><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container hundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-padding-top:20px;--awb-padding-right:20px;--awb-padding-bottom:20px;--awb-padding-left:20px;--awb-margin-bottom:0px;--awb-background-color:#8699b7;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"width:calc( 100% + 0px ) !important;max-width:calc( 100% + 0px ) !important;margin-left: calc(-0px \/ 2 );margin-right: calc(-0px \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:0px;--awb-margin-bottom-large:0px;--awb-spacing-left-large:0px;--awb-width-medium:100%;--awb-spacing-right-medium:0px;--awb-spacing-left-medium:0px;--awb-width-small:100%;--awb-spacing-right-small:0px;--awb-spacing-left-small:0px;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-center fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\"><p><span style=\"color: #ffffff;\"><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">All about the Demand Driven <\/span><a style=\"font-size: 16px; line-height: 20px; color: #ffffff;\" href=\"https:\/\/help.sap.com\/viewer\/3aab1d460bbd459a9ac3ff2724bc819c\/6.00.31\/en-US\/a084b853dcfcb44ce10000000a174cb4.html\" target=\"_blank\" rel=\"noopener noreferrer\" data-fusion-font=\"true\">MRP<\/a><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"> (<\/span><em><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">Material Requirement Planning<\/span><\/em><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">), but what is this stuff here? Wasn&#8217;t it enough what we already had? MRP, Lean, TOC (Theory Of Constraints), Six Sigma and now even DDMRP (  <\/span><em><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">Demand Driven Material Requirement Planning<\/span><\/em><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">)!<\/span><\/span><\/p>\n<p><span style=\"color: #ffffff;\"><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">It is not that<\/strong> <strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">the inventors of the method, <\/span><a style=\"font-size: 16px; line-height: 20px; color: #ffffff;\" href=\"https:\/\/www.amazon.it\/Material-Requirements-Planning-Version-English-ebook\/dp\/B07ZHNMZ44\/ref=sr_1_1?dchild=1&amp;qid=1588263868&amp;refinements=p_27%3ACarol+A+Ptak+Chad+Smith&amp;s=books&amp;sr=1-1\" target=\"_blank\" rel=\"noopener noreferrer\" data-fusion-font=\"true\">Chad Smith and Carol Ptak<\/a><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">, waking up in a bad moon one morning thought they were playing a trick on thousands of executives around the world, and came up with DDMRP. <\/span><\/strong> <span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">It is that the world has become a nightmare for a great many executives! The so-called VUCA world, i.e., characterized by Volatility, Uncertainty, Complexity and Ambiguity; put simply, it means that   <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">is a big mess<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">. And bringing home the bacon becomes more and more difficult.<\/span><\/span><\/p>\n<p><span style=\"color: #ffffff;\"><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">Put yourself in the shoes of Paris, one of the many Operation o <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">Supply Chain Manager<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"> who populate companies.<\/span><\/span><\/p>\n<p style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"><span style=\"color: #ffffff;\">And to Paris precisely instead of having to choose which goddess to give the golden apple to, it is up to him to simultaneously guarantee:<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-2 fusion-flex-container hundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-padding-top:30px;--awb-padding-bottom:0px;--awb-margin-top:0px;--awb-margin-bottom:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-stretch fusion-flex-content-wrap\" style=\"width:104% !important;max-width:104% !important;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_3 1_3 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:33.333333333333%;--awb-margin-top-large:0px;--awb-spacing-right-large:0%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:5.76%;--awb-width-medium:33.333333333333%;--awb-spacing-right-medium:0%;--awb-spacing-left-medium:5.76%;--awb-width-small:100%;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-center fusion-content-layout-column\"><div class=\"fusion-image-element \" style=\"text-align:center;--awb-caption-title-font-family:var(--h2_typography-font-family);--awb-caption-title-font-weight:var(--h2_typography-font-weight);--awb-caption-title-font-style:var(--h2_typography-font-style);--awb-caption-title-size:var(--h2_typography-font-size);--awb-caption-title-transform:var(--h2_typography-text-transform);--awb-caption-title-line-height:var(--h2_typography-line-height);--awb-caption-title-letter-spacing:var(--h2_typography-letter-spacing);\"><span class=\" fusion-imageframe imageframe-none imageframe-1 hover-type-none\"><img decoding=\"async\" width=\"1080\" height=\"1080\" alt=\"Supply Chain Manager\" title=\"supply chain manager2\" src=\"https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2.jpg\" data-orig-src=\"https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2.jpg\" class=\"lazyload img-responsive wp-image-20833\" srcset=\"data:image\/svg+xml,%3Csvg%20xmlns%3D%27http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%27%20width%3D%271080%27%20height%3D%271080%27%20viewBox%3D%270%200%201080%201080%27%3E%3Crect%20width%3D%271080%27%20height%3D%271080%27%20fill-opacity%3D%220%22%2F%3E%3C%2Fsvg%3E\" data-srcset=\"https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2-200x200.jpg 200w, https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2-400x400.jpg 400w, https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2-600x600.jpg 600w, https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2-800x800.jpg 800w, https:\/\/www.regestaitalia.eu\/wp-content\/uploads\/2020\/04\/supply-chain-manager2.jpg 1080w\" data-sizes=\"auto\" data-orig-sizes=\"(max-width: 640px) 100vw, 600px\" \/><\/span><\/div><\/div><\/div><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-2 fusion_builder_column_2_3 2_3 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:66.666666666667%;--awb-margin-top-large:0px;--awb-spacing-right-large:2.88%;--awb-margin-bottom-large:0px;--awb-spacing-left-large:0%;--awb-width-medium:66.666666666667%;--awb-spacing-right-medium:2.88%;--awb-spacing-left-medium:0%;--awb-width-small:100%;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-center fusion-content-layout-column\"><div class=\"fusion-text fusion-text-2\"><ul>\n<li><i><strong style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">Stock reduction<\/strong><span style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\"> and thus <\/span><strong style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">better turnover ratio<\/strong><span style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\"> of the same; if not, the CFO will maul it.<\/span><\/i><\/li>\n<li><i><strong style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">Increased Level of Service<\/strong><span style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\"> (OTD-C, On Time Delivery to Commit, i.e., punctuality on promised date); if it doesn&#8217;t the Sales Manager eats it up.<\/span><\/i><\/li>\n<li><i><strong style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">Increased Responsiveness<\/strong><span style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">, resulting in reduced OFLT (Order Fulfillment Lead Time) and improved customer request fulfillment (OTD-R On Time Delivery to Request), ditto as above, and the Marketing Director also attends the banquet, because the company has focused everything on responsiveness to differentiate itself from competitors.<\/span><\/i><\/li>\n<li><i><strong style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">Reduced order handling cost<\/strong><span style=\"font-size: 14px; line-height: 20px;\" data-fusion-font=\"true\">, i.e., optimization of the time resources spend on order management (order release and follow-up on the execution phase) and the resulting induced costs (expediting). Because let&#8217;s face it, ROI, value is fine but at the end of the day a nice cost reduction we all want, first and foremost the CEO. <\/span><\/i><\/li>\n<\/ul>\n<\/div><\/div><\/div><\/div><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-3 fusion-flex-container hundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-padding-top:20px;--awb-padding-right:20px;--awb-padding-left:20px;--awb-background-color:#8699b7;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"width:calc( 100% + 0px ) !important;max-width:calc( 100% + 0px ) !important;margin-left: calc(-0px \/ 2 );margin-right: calc(-0px \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-3 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:0px;--awb-margin-bottom-large:20px;--awb-spacing-left-large:0px;--awb-width-medium:100%;--awb-spacing-right-medium:0px;--awb-spacing-left-medium:0px;--awb-width-small:100%;--awb-spacing-right-small:0px;--awb-spacing-left-small:0px;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-3\"><p style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"><span style=\"color: #ffffff;\">Paris dreams of going back to the time of mythology (three goddesses is a lot of stuff) and instead he is here on planet Earth; he has tried with Lean, with Six Sigma, he has not yet tried with TOC because he is not convinced, it seems too beautiful to him; but he is still far from having satisfied the four \u201cbeasts\u201d that are hunting him.<\/span><\/p>\n<p style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"><span style=\"color: #ffffff;\">And now this Demand Driven MRP comes up! Without going into too much technical detail, let&#8217;s try to focus on why DDMRP should succeed where others have failed. <\/span><\/p>\n<p><span style=\"color: #ffffff;\"><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">The culprit is as usual one of the house, our \u201cbutler,\u201d whose name is MRP<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">; the system by which an exaggerated number of companies plan their Supply Chain to meet customer demands. In reality, MRP alone cannot combine all the \u201cmesses\u201d we find in companies. It needs a powerful ally, which is called the    <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">forecast<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">. Since if I wait for the customer order to arrive to leave I arrive too late (the cumulative lead time is much greater than the customer is willing to wait) I use the forecast to get ahead of the work. It would work in theory if it weren&#8217;t for variability. Which in the VUCA world is a lot of stuff.  <\/span><\/span><\/p>\n<p><span style=\"color: #ffffff;\"><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">What are the main consequences induced by the use of traditional MRP (with the complicity of forecasting)?<\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #ffffff;\"><i><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">I have <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">too much stock of materials that I don&#8217;t need<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"> (risk of overstock and obsolescence), and <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">too little of the materials I need<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"> (stock-out and low service levels), <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">and in general too much immobilized stock <\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">(low capital turnover, too much fixed assets in stock).<\/span><\/i><\/span><\/li>\n<li><span style=\"color: #ffffff;\"><i><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">At <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">each subsequent planning cycle the MRP messes up all my priorities <\/strong> <span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">considered in the previous round. The planner is bombarded with \u201cMRP Alerts,\u201d which it tends not to consider. <\/span><\/i><\/span><\/li>\n<li><span style=\"color: #ffffff;\"><i><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">One is able to <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">send planning forward only because of the experience of the planner<\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">, who based on his knowledge of the materials is able to discern the relevant information that comes from the new planning cycle. <\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">To do this he somehow \u201caugments\u201d the needs report output from the MRP with external files <\/strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">(Excel or similar).<\/span><\/i><\/span><\/li>\n<\/ul>\n<p><span style=\"color: #ffffff;\"><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">Despite investing a lot of money<\/span><strong style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"> on Supply Chain evolutions in the Demand Planning area trying to improve the forecast, in the belief that better forecasting ability solves all my problems, <\/strong> <span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">the results are not visible. In fact, the problem lies elsewhere. <\/span><\/span><\/p>\n<p style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"><span style=\"color: #ffffff;\">An injection is needed, TOC would say. And two good TOC experts found the injection (for the record that&#8217;s what TOC is for, finding injections when the road to ROI seems inexorably blocked). <\/span><\/p>\n<p><span style=\"color: #ffffff;\"><strong><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">It is the key principle of Demand Driven MRP: decoupling buffers to react to customer orders only.<\/span><br \/>\n<span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\"><br \/>\nNo more forecasting (which is actually used for purposes other than Supply Chain planning), no more devastating effects of MRP.<\/span><\/strong><\/span><\/p>\n<p><span style=\"color: #ffffff;\"><span style=\"font-size: 16px; line-height: 20px;\" data-fusion-font=\"true\">Are you interested but also perplexed? No fear you can request our guide to Demand Driven MRP. <\/span><\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-4 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-padding-bottom:0px;--awb-margin-bottom:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-stretch fusion-flex-content-wrap\" style=\"max-width:calc( 1440px + 0px );margin-left: calc(-0px \/ 2 );margin-right: calc(-0px \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-4 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-padding-top:50px;--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:0px;--awb-margin-bottom-large:0px;--awb-spacing-left-large:0px;--awb-width-medium:100%;--awb-spacing-right-medium:0px;--awb-spacing-left-medium:0px;--awb-width-small:100%;--awb-spacing-right-small:0px;--awb-spacing-left-small:0px;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-4\"><p style=\"text-align: center;\">Article by <strong>Claudio Vector<\/strong>, Demand Driven Planner Professional, Certified by the Demand Driven Institute<\/p>\n<\/div><div class=\"fusion-separator fusion-full-width-sep\" style=\"align-self: center;margin-left: auto;margin-right: auto;margin-top:20px;margin-bottom:20px;width:100%;\"><\/div><div style=\"text-align:center;\"><a class=\"fusion-button button-flat fusion-button-default-size button-default fusion-button-default button-1 fusion-button-default-span fusion-button-default-type\" target=\"_self\" href=\"https:\/\/www.regestaitalia.eu\/contatti\/\"><span class=\"fusion-button-text awb-button__text awb-button__text--default\">Contact us<\/span><\/a><\/div><\/div><\/div><\/div><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":20832,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[144],"tags":[],"class_list":["post-22264","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-supply-chain"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Supply chain managers like Paris: to whom to give the golden apple of profitability - Regesta Group<\/title>\n<meta name=\"description\" content=\"Supply Chain Manager - Demand Driven MRP, what it is and why it can change the lives of executives. 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