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A practical alternative to forecast-driven planning for variable environments

Most planning systems assume the world is predictable. Forecasts are treated as truth. Schedules are built months in advance. Variability is managed by expediting, replanning, or carrying excess inventory. For many Australian manufacturers and product businesses, this simply doesn’t reflect reality. Demand is volatile. Lead times move. Supply is unreliable. Production constraints change. Planning teams spend their time reacting rather than controlling flow. Demand Driven Planning, often referred to as DDMRP, offers a fundamentally different approach.

What Demand Driven Planning actually is

DDMRP is not about abandoning forecasts. It is about putting them in the right place.

Instead of using forecasts to drive day-to-day execution, Demand Driven Planning uses strategically positioned inventory buffers to absorb variability and protect flow. Execution decisions are then triggered by actual consumption, not forecast noise.

In practical terms, this means:

·       Planning focuses on flow, not precision

·       Inventory is positioned deliberately, not everywhere

·       Replenishment is driven by real demand

·       Planners manage exceptions, not constant rescheduling

The result is a planning system that is calmer, more stable, and better aligned to how businesses actually operate.

Why traditional forecast-driven planning struggles

In many businesses, forecast accuracy becomes the primary measure of planning effectiveness. The unintended consequence is that variability is pushed downstream and absorbed through inventory, overtime, and expediting.

Common outcomes include:

·       Inventory building quietly to protect service

·       Planners chasing daily forecast changes that add little value

·       MRP outputs that are technically correct but operationally impractical

·       Production schedules that are constantly being reworked

DDMRP addresses this by redesigning the planning logic itself, rather than asking planners to work harder within a flawed system.

When Demand Driven Planning makes sense

Demand Driven Planning is particularly effective in environments where:

·       Demand is variable or difficult to forecast accurately

·       Lead times are long, unreliable, or externally constrained

·       Product ranges are broad or growing

·       Service levels matter, but inventory is under pressure

·       Planning teams are overloaded with manual intervention

It is not a silver bullet. It is a planning approach designed for reality, not ideal conditions.

How Demand Driven Planning works in practice

At its core, DDMRP is built on a small number of principles applied consistently.

Strategic inventory positioning
Buffers are placed at key decoupling points to protect flow and isolate variability, rather than spreading inventory everywhere.

Consumption-based replenishment
Replenishment decisions are driven by actual usage against buffer targets, not short-term forecast changes.

Clear planning priorities
Visual buffer status provides planners with clear signals on what needs attention and what does not.

Forecasts used appropriately
Forecasts inform medium- to long-term planning, capacity decisions, and scenario analysis, not daily execution.

When implemented properly, this dramatically reduces noise in the planning process.

My approach to Demand Driven Planning

I apply Demand Driven Planning pragmatically to your operating environment.

The focus is on whether the method improves flow, service, and decision-making in your specific environment, not whether it is implemented “by the book”. Typical engagements include:

Assessing planning suitability
Not every business needs full DDMRP. We assess whether demand driven principles are appropriate and where they add the most value.

Designing buffer strategy and positioning
Identifying where inventory should sit to protect flow and where it should not.

Integrating with existing systems
Demand Driven Planning can often be implemented within existing ERP and planning tools. New software is not always required.

Building planning capability
Ensuring planners understand the logic, signals, and decision rules so the approach holds beyond the engagement.

Embedding governance and review rhythms
Demand driven systems still require discipline. Clear rules, ownership, and review cycles are essential for long-term success.

How this fits with other planning and inventory services

Demand Driven Planning sits alongside and strengthens:

·       Inventory Management Consulting

·       Production Planning

·       Inventory Governance

·       Value Stream Mapping

It provides a practical execution model for businesses that want to move away from reactive planning without losing control.

Outcomes businesses typically see

When Demand Driven Planning is applied well, businesses commonly experience:

·       More stable production schedules

·       Reduced expediting and firefighting

·       Lower inventory without service degradation

·       Clearer planning priorities

·       Improved confidence in planning decisions

Importantly, planning becomes calmer and more deliberate.

Next step

Demand Driven Planning is not about chasing the latest methodology. It is about designing a planning system that works under real world conditions. If forecast-driven planning feels increasingly fragile in your business, I can help assess whether a demand driven approach is appropriate and how to apply it pragmatically.