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Introduction and challenges

In a multi-level logistics network (factory and central inventories, zones or regional inventories, or even inventory in points of sale), positioning the right products at the right time and in the right quantity over time is essential to optimize theoretically conflicting objectives: cost, inventory and service. 

The distribution planning process contributes primarily to the achievement of these objectives, being at the heart of the processes of an integrated supply chain. It is based on different methods depending on the need: DRP (distribution requirement planning) to synchronize the supply chain when forecasts have a good level of quality and stability. On the contrary, DDMRP (demand-driven materials requirement planning) is used to simplify supply chain management whilst preventing the industrial upstream from the bullwhip effects, well known in B2B.

Implementing such a process makes it possible to eliminate several internal causes of dysfunction (lack of integration between the participants in the value chain, inappropriate use of supply parameters, etc.) while limiting the effects of external hazards, taking into account fluctuations in demand and supplier reliability in the design of security, deadlines, stocks and buffers. 

The structuring and the hierarchical/functional reporting of the organization in charge of the distribution planning process can be a complex issue to address. Finally, successful deployment of inventory relies on a good understanding of customer needs at the local level, on good stock-parameter dimensioning rules, and on rules and tools to help spread needs across the network.

How we can help

We support our clients in:

  • Identifying the issues related to current dysfunctions and estimating the costs of changing organizations and tools (“business case”)
  • The redesign of processes in line with best practice, adapted to the specificities of the company (products, customers) and suiting its supply chain model
  • Clarification of the target organization in terms of skills, size, roles, responsibilities and structure (central vs. local, by product line/plant or by market)
  • Integration of the “distribution planning” process into all other processes (demand planning, S&OP, MPS) in line with the company’s supply chain model and its supply chain management (synchronized or decoupled)
  • The dimensioning of optimal stock parameters (or DDMRP buffer parameters) on each decoupling point (security, anticipation and rotating stocks or buffers, etc.), creating multiple management methods to adapt to various product families, customer types and periods (dynamic management)
  • The development of rules to optimize transport constraints and costs
  • The choice and implementation of tools to calculate stock replenishment needs and deployment optimization. This process is generally part of a larger project based on an APS or DDMRP software
  • The deployment of the improvement plan (training, model configuration, etc.) and change management (evolution of culture, behaviors, skills, communication, etc.)