Michelin’s tag line reads: “A better way forward.” And, an internal newsletter leaked to the public suggests that they recently discovered a better way forward for their manufacturing and supply chain efforts. The way is DDMRP (Demand Driven Material Requirements Planning).
Ron Watson, of Michelin, is quoted in the newsletter as saying:
I am the DDMRP coordinator and responsible for the North America DDMRP pilot. The whole OE (original equipment) perimeter has been operating in DDMRP mode since November 2016, and we are going to extend [our DDMRP operations further] during June 2017.
Since [implementing DDMRP], we have noted several improvements. Globally the [demand] signal is more stable and we now have better control over stock… management by adjusting the size of the buffers [and], as a result, the factory feels more empowered. Equally, the short-term planning is more accurate because it better reflects the customer’s needs.
Thanks to more accurate demand signals, all the changes in the factory contribute to satisfying customer requirements…, not just to ensure… a certain level of stock. The planners are the ones that have seen the most changes. [DDMRP] enables them to have better visibility and smooth the work throughout the week. They have more flexibility to react quickly….
…[T]he entire factory has felt the benefits, with an improvement in its productivity and responsiveness. We reduced the stock of tires by 30,000 in 3 months! So improvements have come quickly. [Emphasis added.]
So, was everyone at Michelin’s US1 plant eager to make the switch to DDMRP?
Here’s what Codi Sbardella, a planner at Michelin, had to say:
When I found out I would be managing another planning system, DDMRP, I was… not too enthusiastic about the whole thing.
I was worried…, [but between] November and December 2016, I devoted myself to fine-tuning the [DDMRP] model, making sure that the buffers were logical and aligned with our needs and that the data were accurate.
At the end of the year, I made a comparison with the traditional systems and found that DDMRP was the only system that gave an accurate demand signal. During January, with DDMRP, I could directly see the demand of [our] OE customers, whereas the forecast accuracy of the other systems continued to fluctuate sharply.
Today, I really trust the DDMRP demand signal and I am looking forward to deploying the approach for [other markets]. [Emphasis added.]
Here’s the thing
Companies large and small, in the U.S. and around the world, are discovering that their traditional planning systems (like traditional MRP) aren’t really working for them.
Actually, they probably discovered this a long time ago and (like you!) they have been supplementing their traditional planning systems’ data with home-grown applications in Microsoft Access or Excel for many years.
Now, they are coming around to admit the failures of their traditional systems.
You can continue to operate your supply chain the way you have been for the last ten, 20 or 30 years, and suffer the consequences. Or, you can join the success being experienced in the DDMRP revolution.
Joining the DDMRP revolution means a paradigm shift for your organization. But, if you want to still try for incremental improvements by making incremental adjustments—the same incremental adjustments you have tried again and again over the last decade or longer—you might get incremental improvement.
Big improvements come from big changes. That’s just the nature of things most of the time.
Let us know what you’re thinking about DDMRP by leaving your comments below, or by contacting us directly, if you prefer.