In distribution requirements planning or DRP, the focus is on the distribution side of the supply chain. This includes everything from the distribution center and production schedules to supply chain and customer demand.
Several factors go into a successful distribution requirements plan, and it can be challenging to get it all just right.
This blog post will discuss some of the most critical aspects of DRP and how to optimize your distribution network for maximum efficiency.
What is Distribution Requirements Planning?
Distribution Requirements Planning (DRP) is an organized process and part of supply chain management to optimize the distribution of goods.
DRP ensures that the right amount of manufactured goods is shipped to each distribution center based on customer orders. This information is then translated into purchase orders.
The main objective is to avoid goods shortages and reduce the ordering, transporting, and holding costs.
Terminologies Related to DRP
A few related terms you need to know before proceeding are,
Production schedules
It is a business term used in operations management that refers to manufacturing or assembling products in a factory according to a specific timetable.
Supply chain
It is the network of organizations involved in creating and efficiently delivering a product or service.
Customer demand
It is how much of a product or service customers are requesting.
Distribution center
It is a facility that receives, stores, and distributes products to retailers or other businesses.
The Distribution Requirement Planning Process
We can summarize it into the following steps:
- Establish delivery centers and supply locations
- Identify market demand planning and distribution planning parameters
- Plan for specific inventory control parameters
- Determine allocation requirements and resource requirements
- Generate a disbursement plan
- Evaluate results and make necessary adjustments
How Does a Distribution Center Work?
A distribution center is a facility that receives, stores and distributes finished goods to retailers and other businesses. It is the backbone of the logistics network, and it is essential to have one or more delivery centers to serve consumers effectively.
Many factors go into choosing the optimal locations for centers. Some of the most important factors include:
- The distribution network map includes the distribution centers, suppliers, and buyers. Therefore, it should be easy to identify where each entity is located and connected.
- The customer base is essential to consider where most of your customers are located. This will help you determine how many locations for holding goods you need and how far apart they should be.
- The distribution network topology – This is how the locations are connected. There are three main topologies: radial, star, and mesh. It can also be a tree-like structure.
- The distribution requirements include the number of products, the weight and dimensions of products, and the delivery time.
- The transportation network includes the modes of transportation (road, rail, water, and air), the distance between warehouses, and the delivery time.
- Labor availability – It is vital to ensure enough workers are available at the allocation center when it opens.
- Cost – The warehouse should be located where the price is the lowest.
Distribution Planning and Distribution Networks
DRP is crucial for making sure that companies can meet customer orders. Distribution resource planning includes ensuring enough resources for the distribution network, including distribution centers, transportation networks, and labor. It’s also essential to maximize product availability at a lower cost.
A distribution network collects disbursement centers and other cooperations to serve buyers. Therefore, companies must carefully plan the disbursement network to ensure that they can deliver finished goods on time.
Supply Chain Planning and Strategies for DRP Success
Key supply chain planning and optimization strategies can help ensure DRP success.
One is to have accurate and timely data regarding market requirements. This information is used to create the distribution plan, so it must be as precise as possible.
An effective distribution center (DC) network is also essential for getting products to customers quickly and efficiently.
Finally, having a well-run inventory management system is critical for ensuring that products are available when customers need them while minimizing shortages.
Six must-consider ideas while making supply chain optimization strategies are,
- Adjusting the warehouse locations
- Planning production schedule
- Allocating resources to meet disbursement demands
- Minimizing shortages and maximizing customer satisfaction
- Set safety stock levels
- Considering disbursement requirements in inventory control
The supply chain strategies should try to achieve the following.
- Distribute products quickly and efficiently
- Minimize shortages
- Follow key tips for success
Key Parameters for Distribution Requirements Plans
Some of the key parameters for supply chain distribution requirements plans include:
- Customer orders
- Safety stock
- Inventory management
- Central planning
- Central facility
- Distribution planning
- Supplying location
- Actual demand signals
- Minimize shortages
- Regional facilities
Distribution Requirements Planning Tools
A few software solutions that enable DRP are,
- Microsoft Dynamics AX
- Oracle EBS Distribution
- Infor Distribution Planning
- JDA Distributed Order Management
- SAP Distributed Order Management
- Manhattan SCALE
Each software tool has its strengths and weaknesses, so it’s important to choose the one that will work best for your organization.
Some of the benefits of using this software include:
- Increased data accuracy and timeliness of data
- Improved network design
- More effective inventory control
- Easier compliance with government regulations
FAQs
What is the difference between the push and pull methods in distribution requirement planning?
The push method and the pull method in allocation planning rely on distribution centers to send products to retailers. In contrast, the pull method relies on retailers to send orders to distribution centers.
What is demand forecasting in DRP?
Demand forecasting is the process of predicting future customer demand for a product. This information is used to create the allocation plan, so it must be accurate. This information will help us meet forecasted demand.
What are current inventory levels?
The current inventory levels are the number of products currently available for delivery. This information is used to create the allocation plan.
Conclusion
Distribution requirements planning is a complex process that can be difficult to get right. However, it is essential to optimize your distribution network for maximum efficiency.
There are many factors to consider when distribution planning your disbursement network, and it is vital to consider them all.
This blog post has discussed some of the most important aspects of logistics requirements planning. By following these tips, you can optimize your business.
