Replenishment Systems (Reorder Systems)
Introduction
Distribution Resource Planning or Distribution Resource Planning (DRP) is a method used in business administration to plan the issuance of product orders within the supply chain. The DRP enables the user to set certain parameters for inventory control (such as safety stock) and calculate the phase time between inventory requirements.
The DRP uses different variables:
The DRP needs the following information:
History
Material requirements planning (MRP) systems have been in vogue since the early 1970s. The MRP approach provides much-needed forward visibility and the ability to coordinate plans for dependent demand inventory items. However, MRP-based systems mainly focused on materials planning and organizing activities on the shop floor. Therefore, its scope was limited to the manufacturing function. In addition to its limited focus, the MRP approach also had several weaknesses, including the absence of a formal feedback mechanism, especially to handle situations where the material plan was found to be unviable due to capacity shortages.
Recognition of the weaknesses of the MRP approach led to a cycle of improvements. With these developments came recognition of the need to take a more holistic, organization-wide approach. To some extent, simultaneous advances in the area of computer technology (both hardware and software) greatly facilitated the rapid growth of a new integrated approach to manufacturing planning. This led to the development of general approaches to capacity planning and capacity requirements planning. In turn, these developments resulted in better plan execution and made it easier to base financial planning on the detailed manufacturing plan, leading to a new framework of systems known as Sridharan manufacturing resource planning systems (V., LaForge R.L., 2000).
As you should know, not all production units directly distribute their products to final consumers; In some cases, distribution is carried out throughout a network of warehouses located at different levels, through which the items pass until they reach the final customers. In this type of organizations or systems, DRP appears as an alternative method for planning and controlling inventories in such cases.
DRP is a time-phased, back-scheduling technique that integrates distribution inventory planning with manufacturing planning to ensure that the right materials are available when needed at the right location. The DRP system pulls inventory throughout the system.