Distribution Requirements Planning (DRP)

The Distribution Requirements Planning process ensures that goods are delivered in the most efficient manner. This includes assessing the quantities of various materials needed for production and precisely determining where and when these materials must be available.

This enables the company to make faster decisions with greater cost awareness and improved customer service thanks to the ability to operate in two phases—push and pull—where, in the first case, retailers send orders to distribution centers, while in the second, distribution centers send products to retailers.

How sedApta manages end-to-end distribution:

• Distribution network design: Define the supply chain topology: supplier nodes, demand nodes, rules for preferential distribution or percentage allocation among multiple supply sources.
• Master Production Scheduling with infinite capacity: Transforms external demand into replenishment requirements for all production nodes, optimizing safety stock in line with service targets and financial constraints.
• Finite-capacity planning and feasibility check: Verifies the feasibility of the replenishment plan in relation to production capacity, available materials, and other operational constraints, resulting in a viable plan.
• Push/pull management and hybrid modes: Supports both push logic (the distribution center sends goods to retail locations) and pull logic (retail locations initiate restocking), with the ability to manage hybrid scenarios by product or channel.
• Multi-tier inventory optimization: Calculates optimal safety stock levels at each node in the network, balancing storage costs, lead times, and fill rate targets by product and location.
• Inventory allocation to maximize profit margin: During the implementation phase, the allocation logic distributes available inventory across nodes to maximize the overall profit margin, not just the service level.

sedApta supports the Distribution Requirements Planning process in three phases:

• Master production scheduling: The pull phase is executed by transforming external demand at warehouse nodes into induced demand at production nodes. The result of this phase is a replenishment plan for all production nodes in the infinite-capacity logistics network. This will result in optimized inventory management through the calculation of safety stock, which enables companies to achieve a service level consistent with sales forecasts and established financial and logistical parameters, as well as greater control over inventory, helping companies determine the best management strategy.

• Finite-capacity production: The main objective of the second phase is to verify the feasibility of the replenishment plan generated under infinite-capacity conditions and to produce a finite-capacity production plan. This involves prioritizing demand, monitoring production capacity, verifying material availability, and managing any other production constraints.

• Implementation: The final step in Distribution Requirements Planning is implementation, which aims to plan the allocation of inventory across the entire logistics network with the primary goal of optimizing profit margins.