successful practitioner, consultant, and educator in manufacturing operations. Her pragmatic approach to complex issues and her dynamic presentation style make her a person in high demand worldwide on the subject of how to leverage these tools and achieve sustainable success.
Ms. Ptak holds an MBA from Rochester Institute of Technology and completed the EMPO program at Stanford University. She is a frequent educator at the university level and presents at many key technical conferences around the world, including conferences in South Africa, France, Israel, Australia, Ireland, and the Netherlands and 11 APICS International Conferences. She is the author of numerous articles and the books Orlicky’s Material Requirements Planning, third edition, with Chad Smith; MRP and Beyond; ERP: Tools, Techniques, and Applications for Integrating the Supply Chain; Theory H.O.W.: How Organizations Could Work with Harold Cavallaro; and Necessary but Not Sufficient with Eli Goldratt and Eli Schragenheim. Together with Dean Gilliam, she updated Quantum Leap, originally written by John Constanza. Ms. Ptak has lent her name to the internationally coveted Ptak Prize for Supply Chain Excellence that is awarded annually by ISCEA, the International Supply Chain Education Alliance.
Ms. Ptak is certified through APICS at the fellow level (CFPIM) and was certified in Integrated Resource Management (CIRM) with the first group internationally. Ms. Ptak was the President and CEO of APICS for the year 2000. Prior to her election as APICS President, she served at the Society in a variety of positions.
If I have seen further, it is by standing on the shoulders of giants. SIR ISAAC NEWTON TO ROBERT HOOKE, FEBRUARY 5, 1676
This book is truly built on the shoulders of many giants. From the original work of the practitioners who developed MRP, including Joe Orlicky, George Plossl, Richard (Dick) Ling, and Ollie Wight, to the great thinkers behind Lean, Six Sigma, and Theory of Constraints—Taiichi Ohno, W. Edwards Deming, and Eliyahu Goldratt. The authors have stood on the shoulders of these giants to unite these different theories and methodologies and take a leap forward—into a future of planning with relevant visibility that mitigates the volatile, uncertain, and variable world that seems impossible to plan. We have known many of these giants personally and wish to express our appreciation to them.
Collectively the authors would like to thank the International Supply Chain Education Alliance (ISCEA) and members of the Demand Driven Institute Global Affiliate Network for a great partnership in bringing demand driven concepts to the mainstream throughout the world. Additionally, the authors would like to thank various members of the APICS community for their amazing input and support in trying to restore the promise and effectiveness of formal planning. Those people include Keith Launchbury, Ken Titmuss, Bob Reary, and Abe Eshkenazi.
The authors would like to point out particular individuals who have made a lasting contribution to the demand driven body of knowledge. These people include Greg Cass, Debra Smith, Erik Bush, David Poveda, Dick Ling, Paddy Ramaiyengar, Kirk Black, Caroline Mondon, and Laurent Vigouroux.
The authors would like to highlight a few individuals and organizations that have been instrumental in spreading the DDMRP message. Caroline Mondon and the Fapics organization led an amazing charge in France. Philippe Bornert, Bernard Milian, and the whole Agilea team have been instrumental in supporting that charge in France. Ken Titmuss and the SAPICS organization brought these concepts to Africa. David Poveda was instrumental in starting a massive proliferation in South America.
Chad Smith would like thank his wife, Sarah, and two daughters, Sophia and Lily, for putting up with the prolonged absences and locked office door. The support and love of these three people has kept him going. Additionally, Chad would like to thank Carmine Mainiero and Nick Mantenuto for their dedication in bringing demand driven concepts to a global giant in the world of fast-moving consumer goods; what a learning experience! Chad would also like to acknowledge the team at Demand Driven Technologies and its CEO, Erik Bush, in believing in bringing real and sustainable results to customers. Chad would additionally like to thank the team at Constraints Management Group, LLC, for an amazing journey for nearly 20 years. Finally, Chad would like to thank his partner and coauthor Carol Ptak for a very rewarding and fulfilling partnership.
Carol Ptak would like to thank her husband, Jim, for the understanding and the support to keep going and to thank her parents, Dorothy and Bud, who taught her from the youngest age that she was limited only by her imagination. Carol would especially like to thank Chad Smith for an incredible experience and partnership—far beyond any imagination. Chad opened all our eyes to the deeper truth of a new world of planning. It has been an honor and a once-in-a-lifetime experience.
Demand Driven Material
Requirements Planning
(DDMRP)
To truly understand where industry is today, it is necessary to discuss the history behind conventional planning. Where did it come from? What did it replace? What circumstances was it developed for? Is it still relevant and appropriate for the environment of today?
The Material Requirements Planning Revolution
Today most midrange and large manufacturing enterprises throughout the world use a planning method and tool called Material Requirements Planning (MRP). This method and tool was conceived in the 1950s with the increasing availability, promise, and power of computers. Computers allowed for rapid and complex calculations about what and how much was needed to be bought and made given a demand input.
The more complex the products, the more powerful the promise of MRP. The APICS Dictionary1 defines MRP as:
A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase. Time-phased MRP begins with the items listed on the MPS and determines (1) the quantity of all components and materials required to fabricate those items and (2) the date that the components and material are required. Time-phased MRP is accomplished by exploding the bill of material, adjusting for inventory quantities on hand or on order, and offsetting the net requirements by the appropriate lead times. (p. 103)
By 1965 the modern acronym “MRP” was in existence. Then in 1972 capacity reconciliation was incorporated into MRP. This was called closed-loop MRP. The year 1980 saw the significant incorporation of cost accounting into MRP, transforming it into a system known as Manufacturing Resources Planning (MRP II). Finally, by 1990, as client-server architecture became available, MRP II had evolved into Enterprise Resources Planning (ERP). Throughout this progression the definition of the MRP portion of the information system has remained unchanged.
While this is not a book about MRP, a basic level of understanding of MRP will be helpful to the reader. This basic explanation, and even a demonstration of MRP, is included in Chapter 3 and
