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DRP Training - Distribution Requirements Planning

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Distribution Resource Planning (DRP)

Perhaps the most significant change from an operational standpoint was the extension of the ideas of MRP into the management of stock within the distribution network. Distribution Requirements Planning (DRP) was the approach by which optimum stock levels would be maintained in multiple warehouses usually serving different geographical locations.

Distribution Resource Planning Managing Stocks

In this example the system would be built around planning parameters for the Swedish location which satisfied local market demand and also acted as the buffer by which the other Scandinavian warehouses would be replenished - presumably to avoid the long lead times from the manufacturing plant in the UK. In the simplest case the stock projection within each of the satellite warehouses would be used to calculate demands on Sweden. These would be taken into account in calculating the projection in the Swedish warehouse and this would then generate demand on the factory. As with MRP, the action messages would sometimes relate to new deliveries and sometimes to suggestions regarding re-scheduling or cancellation.

DRP was thus applying the MRP logic of passing demand down through the levels and performing a stock projection and plan review at each level. The difference was that it was looking at the finished goods distribution chain rather than at bills of material. Where it truly offered something extra was that it would recognise that where demand had dropped in Norway and Finland the resultant surplus in those warehouses could be used to replenish the stocks for Denmark and thus optimise the company's overall investment in inventory. Planners for the finished goods would thus be given action messages prompting inter-warehouse transfers.

As with MRP, the next version had to be on its way. DRPII, or Distribution Resource Planning, was coined to reflect the fact that the computer systems in this area had grown to handle more than the simple demand management calculations and now helped manage other aspects of the operation. In fact, this distinction did not last long and in most text books DRP now refers to the management of all distribution resources.

~ Ian Henderson ~

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