THE authoritative work on DDMRP

This history of our collaboration is taken from Appendix 1 of Simon Eagle's book Demand-Driven Supply Chain Management: Transformational Performance Improvement (Kogan Page, 2017)

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The journey to discover and articulate DDMRP is one of two very different paths that crossed.  Each path was able to bring crucial knowledge and articulation to make DDMRP what it is today; one about the extent and depth of the MRP problem, the other about the extent and depth of what to do about it.  Both were necessary conditions to get where we are today.  First, we need to talk about the paths before they crossed.

 

Chad Smith:

I got my start working for Eli Goldratt (bestselling author of the book The Goal) at the Goldratt Institute in New Haven, CT in 1995.  Dr. Goldratt had an amazing analytical mind – I have never met anyone like him.  I learned a set of very powerful thinking processes that allowed me to look at companies and supply chains as systems.  Over the next 20 years we used this set of powerful tools to develop and articulate DDMRP and the Demand Driven Adaptive Enterprise Model.  When I left the Goldratt Institute I co-founded a consulting company called Constraints Management Group with Debra Smith.  I served as the Managing Partner from 1997 to 2015. 

 

We did a lot of pioneering work in the Theory of Constraints field in large complex manufacturers.  We had to constantly fight against the native systems in order to implement common sense in planning and on the floor.  In many cases we were working directly with several IT departments coding new functionality within their ERP products.  It led us to get into software planning, scheduling and execution systems in 2003.  Writing software specifications really forces you to understand and articulate desired inputs and outputs as well as cause and effect.  We developed a product called Replenishment+®.  It seemed to have an enormous amount of promise. 

 

In 2008 I scheduled an online meeting with a Senior Account Executive at Infor.  I had known him for years and felt comfortable getting his opinion on what we had developed from a solution and software perspective.  That meeting convinced me were on right track.  After taking him through the basics of the method and showing how that method could be achieved in software he said, “I don’t know if you have any idea how big this is.  I sell 5 different major ERP platforms and none of our MRP or SCM modules can come close to this.”

 

This convinced me and my partners to reach out to Carol Ptak.  I had known Carol for several years and she was living and working close to my home in the Tacoma, WA area.  I knew we had something big but I simply didn’t know what I didn’t know.  That meeting proved to be a watershed event.

 

Carol Ptak:

My start was very different.  In college I got my bachelor’s degree in Biology with a specialty in genetics!  I expected to be in the research lab for the rest of my career but I ended up in a company that manufactured biologicals for the medical market.  It was there that I discovered that manufacturing was far more interesting than biology.  I stayed in operations and project management for the next almost 20 years – biotech, aerospace, machine shops. Fortunately for me I had a mentor that urged me to join my professional society and get involved.  That started my association with APICS for the next 40 years and resulted in serving as APICS President and CEO in 2000.  I was the first and still remain the only female to ever serve in that role.  I was hired by IBM in 1999 into executive sales and moved around the company ending up in a position responsible for analyzing ERP companies and how IBM could support their offerings. 

 

Moving to Washington State and doing a green field start up in aerospace led to my first book MRP and Beyond because of discussions with the CFO on how the MRP system should be set up.  His favorite way to end the conversation was “you didn’t write the book on it” so I did.  After that I was encouraged to write one of the first two books ever published on ERP.  That book came out in 1999 and during the presentation summary at the APICS conference that year, Eli Goldratt walked in.  We had a cup of coffee with Eli Schragenheim and the result of that meeting was the collaboration that produced Necessary but not Sufficient in 2000.  Quickly that new knowledge was incorporated into the ERP book and the 2nd edition of that book came out in 2002.

 

When a head hunter called me at IBM and told me he had the perfect job for me, I decided to go have a chat since this company kept popping up on my analysis at work. After a full day of interviews at PeopleSoft I accepted the position of Vice President of Manufacturing, Distribution and Retail industries.  It was there that the term “Demand Driven Manufacturing” was coined after PeopleSoft purchased the software assets from JCIT.  I knew the direction manufacturing had to go but did not have a good idea how to get there.  I knew it had something to do with leveraging Lean, TOC, Six Sigma and MRP.  So during my tenure there I had the opportunity to work with the CEO of JCIT to rewrite Quantum Leap: the Next Generation as well as to write a book with Harold Cavallaro called Theory H.O.W. – How Organizations Could Work. 

 

After the hostile takeover by Oracle was lost I was invited to be the Distinguished Executive in Residence at Pacific Lutheran University in Parkland, WA.  It was there that Chad came to visit me to ask for feedback on some innovation that he and his team at Constraints Management Group had been doing.  As Chad said it was a watershed event.

 

The Collaboration Begins:

It only took about one hour for both of us to get very excited about the future.  Carol demonstrating and explaining the magnitude of the problem and Chad demonstrating and explaining the extent of a practical solution.  The immediate problem became how to get the word out since these ideas were truly breakthrough concepts.  Articulating the new concepts and critical differences between the new demand driven approach to planning and the standard and insufficient approaches was the next big obstacle. 

 

We wrote a white paper called, “Beyond MRP.”  On a whim we sent it off to APICS to see if they had any interest in it.  The response was almost immediate.  APICS asked us to condense the article for their magazine.  APICS not only put it in the magazine but made it the cover article under the title “Brilliant Vision” (July/August 2008 edition).  Shortly after that APICS sponsored a webinar in August 2008 with us on the subject of the article.  Over 200 companies signed up!  Then in September 2008 Carol spoke on the topic at the APICS International Conference in Kansas City, MO.   The response was standing room only!  In short a few short months, these responses were enough to convince the authors that they had struck a chord with the mainstream world’s difficulty in trying to plan materials in a volatile and complex world using antiquated approaches.

 

With this encouragement we began to further articulate the solution.  We initially gave the solution the name “Actively Synchronized Replenishment (ASR)”.  Chad spoke on the topic in November 2008 at the TOCICO Conference in Las Vegas, NV.  At that conference we were approached by Dr. Jim Cox to continue writing on this topic.  Dr. Cox is well known in both the TOC and APICS worlds.  He was to be the co-editor with John Schleier of a new book to be published by McGraw-Hill that was to be called “The Theory of Constraints Handbook.”  Dr. Cox asked the authors to contribute a chapter to the book.  The chapter was submitted about nine months later.  Jim and John were very enthusiastic about the chapter content and sent it to McGraw-Hill telling them that there should be a whole book dedicated to this.  Below is what John had to say:

 

Wow!  What a chapter.  My head is spinning around networks of interconnected buffers pulling production from the market side of the supply chain through multi-levels in a shop with other buffers protecting its supply side.  This is really an exciting story about a very creative piece of work.  I wrote the first MRP system for John Deere's Ottumwa, Iowa plant in the late 1950’s; automated the BoM’s, Routings, Inventory Records, MRP, Shop Floor Scheduling, and the Purchasing System.  Then in the early 60”s I then headed the development team that built the compliment of logistics systems for the IBM Rochester Plant, later implemented at the IBM plants in Boulder and Boca Raton, with elements in IBM European plants.  I only mention this to frame my appreciation for the incredible progress reflected in your work on ASR.  Congratulations!  I wish we had some of these solutions back then.…  I am really blown away by the caliber and scope of this work.  John Schleier

 

In the Spring of 2010, McGraw-Hill, acting on John’s recommendation, offered Chad and Carol a contract to write the third revised edition of “Orlicky’s Material Requirements Planning.”  In 1975 Joe Orlicky wrote the first book on MRP called Material Requirements Planning.  This first MRP book is still seen today as the “bible” and the genesis of standardized MRP to which every software company coded their product.  In 1994, Joe’s close friend, George Plossl revised the book and it was called “Orlicky’s Material Requirements Planning (Second Edition)”.  George was one of the thought leaders at the time in the implementation of these concepts with Joe, Oliver (Ollie) Wight and Richard (Dick) Ling.  These two book editions have sold over 175,000 copies combined - clearly demonstrating this significant impact.

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Through 542 pages the third edition not only allowed us to thoroughly describe the conventional MPS-MRP approach and its challenges but also offer an alternative that we now called “Demand Driven MRP” and its benefits.  The name Demand Driven MRP came to us at Carol’s kitchen table preparing for the book.  We knew Actively Synchronized Replenishment (ASR) would not work – we were writing a definitive work on MRP!  Carol explained the story of how they came up with the name Demand Driven Manufacturing at PeopleSoft.  Then it hit us; the method still incorporates elements of MRP yet it utilizes a different element of demand to drive supply order generation – it is Demand Driven MRP!  The name fit like a glove in the context of the Orlicky book and being in the book would also quickly bring DDMRP into the mainstream.

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Based on initial reaction and the release of Orlicky’s third edition we knew that people would want to know more.  Where and how could that happen?  We also knew that there would need to be consistent and standardized education and training around the method.  Furthermore, the method could not be dominated by one brand of consulting and technology – that was precisely the path that would severely constrain its growth.

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In 2011 we founded the Demand Driven Institute.  Its mission was to focus on education and certification for the method – to get the world to say, “Yes!” to DDMRP.  In 2012 the Demand Driven Institute partnered with the International Supply Chain Education Alliance (ISCEA) to offer the Certified Demand Driven Planner (CDDP) certificate.  The  preparatory education (DDI's Demand Driven Planner (DDP) Program) and the certificate test is designed to provide consistent global standards for the DDMRP approach and to teach and certify practitioners in those standards.  From 2012 to 2015 over 1,000 people took the DDP program on six continents.  By the end of 2016 that number was well over 2,000!

 

In July of 2016 we released Demand Driven Material Requirements Planning (Industrial Press) which is the authoritative work on the DDMRP with 343 pages of content.

 

But DDMRP is just the engine of a Demand Driven Operating Model (DDOM) and the DDOM is just part of becoming a Demand Driven Adaptive Enterprise.  The Demand Driven Institute is continuing to drive research and articulation in order to help organizations transform and sustain in the New Normal.

 

We are very excited about books like this one and look forward to many more!  It shows the proliferation of and hunger for a new breed of organizational management based on common sense and properly applied mathematics, physics and economics.

 

The Demand Driven Institute has published several white papers and case studies on DDMRP and the Demand Driven Operating Model.  A repository of case studies and white papers is available at www.demanddriveninstitute.com.