The constraints of DRP are:
- Inventory planning systems require accurate and coordinated forecasts for each distribution center. The forecast is necessary to direct the flow of goods through the distribution channel. To the extent that this level of forecast accuracy is possible, inventory-planning systems operate well. However, this requires forecasts for each distribution center and SKU as well as adequate lead-time to allow product movement. However there are 3 potential sources for error exist. The forecast itself may be wrong, it may have predicted demand at the wrong location, or it may have been predicted demand at the wrong time.
- Inventory planning requires consistent and reliable performance cycles for movement between the distribution centers. While variable performance cycles can be accommodated through safety lead times, performance cycle uncertainty reduces planning system effectiveness.
- Integrated planning is subject to system nervousness and frequent rescheduling, because of production breakdowns and delivery delays. The system nervousness leads to fluctuations in capacity utilization, rescheduling cost, and confusion in deliveries. This is intensified by the volatile operating environment characteristic of distribution. Uncertainties such as supply transportation performance cycles and vendor delivery reliability can cause an extremely nervous DRP system.
- DRP is not the universal solution for inventory management.