What is the DDMRP (Demand Driven MRP) methodology?

DDMRP (Demand Driven Material Requirements Planning) is a planning approach that combines traditional MRP with strategic buffer stocks positioned at key points in the Supply Chain. Instead of relying solely on forecasts, DDMRP uses actual demand signals to drive replenishment, absorbing variability and reducing the bullwhip effect. It helps maintain optimal inventory levels while improving service rates.

In practice, DDMRP positions buffers where variability matters most — typically at decoupling points between suppliers, production, and distribution. Each buffer is dynamically sized based on lead time, average usage, and variability, and monitored through a color-coded zone system (green, yellow, red) that gives planners clear priorities without overreacting to forecast noise.