Application of Demand Driven Material Requirement Planning (DDMRP) methodology for components inventory management in a company of automotive industry

Actually, companies seek to continuous improve the management of their processes. Good manufacturing practices, improvement tools, and reliable information systems, among others, must support these processes in order to simplify tasks within the organization. One of the most important processes that companies have is the production planning. Within the planning there is a determining factor, that is the correct inventories management of both raw material and final products. Companies increasingly seek to work under a Make to Order production system, based on a raw material inventory that allows them to satisfy the customer requirements, but at the same time allows them to manage and reduce their costs. Most companies use MRP systems as the method for planning their production. However, in order to implement new methods that allow the company to work at the pace of demand and thus better manage inventory levels, It was proposed the methodology Demand Driven Material Requirement Planning (DDMRP), which is defined by the founders of the Demand Driven Institute as “formal multi-echelon planning and execution method to protect and promote the flow of relevant information and materials through the establishment and management of strategically placed decoupling point stock buffers”. Dayco Europe is a company that works in the automotive sector. At its plant in Ivrea, some flaws were currently found in the production schedule. First, it was found that the suppliers Lead Times of some components are high and the variability inherent in these times is considerable, as well as the variability that can occur in the demand of products by customers. In addition, the company's current MRP does not take into account the capacity restrictions that the plant has, nor does it take into account the quantity of components available in the warehouse at its time of execution. It is therefore, that the objective of this thesis is to apply the DDMRP methodology in order to propose an alternative management of component inventories. It should be noted that only the first two phases of the method were implemented, since making their proper adjustments requires a long window of time in order to collect the data necessary for the analysis.