Distribution Requirements Planning (DRP) in Supply Chain

6/10/18 5:56 PM

With the many aspects of supply chain planning, distribution or materials has a growing focus as being a vital component to production. As demand can vary, how can a manufacturing operation properly plan for the amount of goods that are required on-site and to be positioned? How efficiently can the goods arrive at the correct location in the amount of time given? Let's explore DRP a bit further.

Supply Chain and Distribution Requirements Planning DRP-related questions are what project managers are asking themselves about when it comes to optimizing flow in these ways: shortage minimization, reducing transportation cost, order reduction and refinement of delivery timing.

Distribution Requirements Planning (DRP) in Supply Chain

Distribution requirements planning (DRP) is the process in which goods are delivered in a more efficient manner. These include considering the aspects of establishing a good, quantity of the good, and the direct location that it is needed to arrive at in a given time. Distribution requirements planning will benefit the operation as a whole through the increase in efficiency through the following benefits:

  • Faster Decision Making
  • Utilization of Demand Forecasting
  • Planning Initiation Accuracy
  • Cost - Awareness
  • Customer Service Enhancement
  • Push or Pull Method

The pull or push method is utilized by DRP distribution, with pull and push differing from each other. The pull method includes goods shifting upward throughout the system and obtaining customer order achievement. Although management controls the amount of goods available, distribution inventory management is challenging because all orders are considered new to the supplying location as the demand is flowing upward, which is otherwise known as the “Bullwhip Effect”.Distribution Requirements Planning in Supply Chain

The push method differs from the pull method by doing the opposite of pull - sending the goods downward through the system. This method has advantages of lower cost, but also is at a disadvantage of central planning and demand not necessarily being on the same page at all times. As distribution requirements planning is gradually being implemented into the production facilities and manufacturing operations, there is a drastic increase in production efficiency, accuracy, and order fulfillment.

APS & Distribution Requirements Planning (DRP) in Supply Chain 

Since distribution requirements planning (DRP) is a vital aspect pertaining to manufacturing operations, advanced planning and scheduling systems (APS) allow for an easy insight into distribution. With optimization of distribution being the goal, APS offers the following capabilities:

  • Supply Scenarios - What-If Scenarios provide you flexibility to compare sourcing options to meet changing demands. Create realistic, efficient supply plans.
  • KPI Optimization - Watch the impact on your predicted KPI's based on changing distribution plans. Optimize with weighted business factors to evaluate different approaches.
  • Smart Sourcing - Choose the best locations to source for customer demands. Take availability, transfer times and costs into account to create an efficient supply network.

These capabilities are extremely beneficial to distribution and production and will gradually increase production and distribution efficiency for production facilities around the globe.

Related Constraints Video 

 APS Resources

Topics: Advanced Planning and Scheduling, manufacturing, ERP, MRP, theory of constraints, enterprise resource planning, Material Requirement Planning, plant simulation, Distribution Requirements Planning, materials planning, Industrial Distribution, DRP

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