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  • Multi-Echelon Resource Management in Supply Chain Based on Demand Driven Material Requirements Planning Methodology

Multi-Echelon Resource Management in Supply Chain Based on Demand Driven Material Requirements Planning Methodology

Student: Rudnev Vladislav

Supervisor: Anastasia Ivanova

Faculty: Graduate School of Business

Educational Programme: Logistics and Supply Chain Management (Bachelor)

Year of Graduation: 2021

In 2011, the Demand Driven Material Requirements Planning (DDMRP) methodology was introduced. It is a demand-driven planning methodology that takes actual demand, not forecasts, as a planning basis, strategically dividing the supply chain into sections and placing dynamic inventory buffers at these points of separation.Hybrid methodology is aimed at inventory management in the entire multi-echelon structure of supply chains. The purpose of the study is to increase the degree of formalization of several provisions of the DDMRP methodology and justify the effectiveness of their use through application on the example of a manufacturing company. Main objectives: 1. Analysis of the theoretical foundations of the Demand-Driven MRP methodology and comparison with traditional approaches to inventory management; 2. Structuring of the generalized theoretical material on the DDMRP methodology of a descriptive nature in a formalized form; 3. Analysis of international experience and "best practices" in applying the DDMRP methodology; 4. Evaluation of potential of DDMRP as a positive business effect for domestic business practices; 5. Development of proposals to improve a number of aspects of DDMRP to increase the degree of formalization and theoretical development of the methodology; 6. Analysis of a domestic DDMRP implementation project for a multi-echelon supply chain of a manufacturing company in the metallurgical industry; 7. Application of the obtained research results to optimize inventory management parameters within the framework of the considered project; 8. Development of a list of recommendations for improvement and conduct a proof of their economic feasibility. The object is the management of material resources (inventory) in the supply chain of manufacturing enterprises. The subject is the management of material resources in the supply chain of manufacturing enterprises on the basis of multi-echelon inventory management methodology DDMRP. The main hypothesis is that the DDMRP methodology is an effective tool for multi-echelon management of material resources of an enterprise, which allows to provide an increase in the level of service and/or reduction in the level of inventories. The methods of the conducted research include: quantitative and qualitative analysis, research of profile literature and business cases, simulation modeling, semi-structured questionnaire-based surveys, in-depth interviews of experts in the field of supply chain management. The graduate qualification work consists of an introduction, four chapters, conclusion, list of references and appendices. Descriptive presentation of the theory was presented in a formalized structure in the form of tables, formulas and algorithms. The analysis proved the validity of the terminology and principles of DDMRP chosen by the authors. A comparison with traditional inventory management systems allowed us to conclude about the hybrid nature of the methodology. The analysis of international implementation practices and related industry studies allowed to form a reference base of economic effects that a company can expect when switching to the methodology for different scenarios. The analysis was supported by a study of the potential of the methodology already for domestic business practices. More than a dozen leading experts in supply chain management participated in the survey. The analysis concluded that, first and foremost, an increase in service levels should be expected from the application of the methodology, rather than a reduction in inventory levels, although the latter is also possible. In the last chapter the developed set of modifications and improvements of the focus methodology was applied for practice of implementation in NLMK for distribution of metallurgical slabs in the European sales region. Based on the results of the optimization of the current parameters of buffer management on the basis of scenario modeling, a positive economic effect of the growth of return on equity was achieved due to the achievement of the service level of over 98.7%.

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