An Empirical Comparison of DRP and Demand-Driven DRP

Abstract

Companies are nowadays challenged to offer high service levels while minimising inventory costs in an ever-increasing competitive market. One of the keys is to manage and improve the product flow in the distribution network continuously. In this paper, Demand Driven Distribution Resource Planning (DDDRP) is a proposed model for product flow management in distribution networks. It allows to optimise the flow by managing customer demand fluctuations. A literature review about flow management policies is presented, and then a case study is provided to make a comparison of the DDDRP concept with conventional management methods such as Distribution Resource Planning (DRP). To achieve this comparison, a discrete event simulation (DES) is adopted to measure the effectiveness of each model regarding the demand fluctuations, using key performance indicators. The simulation gives empirical results and illustrates the interests and benefits of the DDDRP approach in terms of inventory costs and service levels. The originality of this document concerns the assessment of Demand-Driven Distribution as a new approach of management and opens up new opportunities for optimising inventory and product flow in distribution networks.