Development of a calculation model for material management using Demand Driven MRP (DDMRP) for a company in the Food Industry

The selection of a proper procurement system is one of the most critical decisions from a company’s strategic plan, as this not only plays an important role in defining production continuity but also helps to shape the entire supply chain. The “Demand Driven Material Requirement Planning” model offers a dynamic way to manage the procurement order creation process, bringing in the consistency offered by a classical MRP system, but with the flexibility derived from the decoupling point buffers. This case study presents the application of the previously mentioned model in a Aromitalia, a multinational company from the alimentary sector located in Settimo Torinese, Italia. Aromitalia’s business context allows us to evaluate the models' advantages and criticalities in an international scenario, with a complex supply chain containing suppliers and clients from different corners around the world. In order to properly assess the model adaptability to the company’s context, an ABC product discrimination was developed to select a product code that can properly represent Aromitalia’s catalogue as a whole, given a set of factors like BOM complexity, annual consume and income percentual representation. After the 2-month simulation period, a cost analysis is realized to evaluate the overall improvement derived from the new model implementation in comparison to the current company’s procurement system, which showed promising results not only when taking into consideration the financial KPIs but the overall operational and business processes like warehouse management, inventory administration and time usage optimization.