For companies preparing to implement Demand Driven MRP (DDMRP), one of the earliest and most consequential decisions is selecting the right pilot. This choice is often made with only a partial understanding of the methodology and the practicalities of implementation, making it a complex and sometimes uncertain process.

In a previous article, we explored real-world examples of companies that misjudged their pilot scope or determined that piloting wasn’t necessary at all. These cases underscore the importance of aligning the pilot with both the company’s specific challenges and its broader transformation objectives.

Now, assuming that a pilot is indeed the right path forward, the next step is to define its structure. Should it be functional or end-to-end? Localised or network-wide? Focused on materials, manufacturing, or distribution?

In this article, we explore the most common piloting approaches, along with their respective advantages and limitations, to help organisations make informed, strategic decisions when launching their DDMRP journey.

Piloting on Purchased Materials: A Simple Starting Point – with Strategic Limitations

One of the most straightforward approaches to piloting DDMRP is to focus on purchased materials. This approach is attractive for its simplicity, particularly in environments where inventory challenges are concentrated in the procurement and inbound supply areas.

Advantages

• Minimal Structural Complexity: Decoupling points are predefined: they are your purchased components. There’s little to no need for complex analysis to determine where to position buffers, aside from excluding a few exceptions.
  
• Reliable Data Foundations: Lead times and minimum order quantities (MOQs) for purchased parts are typically well understood, making setup relatively straightforward.
  
• No Manufacturing Dependencies: This type of pilot avoids bill of materials (BOMs) and routing complexities, significantly simplifying the data model and implementation effort.
  
• Applicable for Non-Manufacturing Environments: If your business focuses on buying, storing, and reselling, or if the primary constraint is raw material availability, this can be an effective and focused entry point.
  
• Clear Operational Gains: Expected benefits include improved material availability, reduced raw material inventory, and enhanced service levels for both internal customers (e.g., production) and external customers.
  

Limitations

• Narrow Scope of Validation: For manufacturing companies, this pilot will only demonstrate that DDMRP can effectively manage inventory. It won’t provide insight into how the methodology performs across the broader supply chain.
  
• Limited Learning on Software Capabilities: Many critical features, such as BOM explosion, dynamic buffer adjustments across production stages, or integration with capacity management, remain untested.
  
• No Impact on Variability Absorption: This scope does not allow you to evaluate DDMRP’s ability to buffer demand variability or reduce dependency on forecast accuracy across production and distribution nodes.
  
• Insufficient for Scaling Decisions: While the pilot may yield localised benefits, it provides limited information for executives evaluating the readiness and applicability of DDMRP for an end-to-end transformation.
  

This type of pilot is a good tactical option for organisations with clear supply-side constraints. But for companies with broader ambitions, it may fall short in offering the strategic validation needed for large-scale deployment decisions.

Piloting in the Finished Goods Distribution Network: High Impact, High Visibility

Implementing a DDMRP pilot in the finished goods distribution network is one of the most effective ways to generate rapid, visible business benefits. For organisations seeking to build internal momentum and demonstrate value early, this approach offers strong upside, provided that change management is handled with care.

Advantages

• Quick and Tangible Results: Service levels typically improve rapidly, while finished goods inventory is reduced, often significantly. This dual impact provides immediate business value and strong validation of the methodology.
  
• Creates Organisational Momentum: Because the results are highly visible across sales, planning, and logistics functions, this type of pilot helps build excitement and support for broader transformation.
  
• Improves Upstream Stability: By dampening demand-side variability and reducing reliance on forecasts, DDMRP can eliminate many of the fire-fighting behaviours experienced in manufacturing. In one of our earliest pilots, the explicit goal was to stabilise the plant, not optimise inventory. The resulting multi-million dollar reduction in finished goods stock and the elimination of cross-shipments between warehouses were welcomed as additional benefits.
  

Limitations

• High Change Management Requirements: Adjusting finished goods stock levels, particularly in overstocked environments, can trigger significant organisational implications. As stock is sold off and not replenished, the manufacturing plant must reduce its output accordingly.
  
• Financial and Cultural Misalignment Risks: In companies that use full cost absorption accounting, reduced production volumes can lead to higher reported unit costs, even as overall inventory and working capital improve. If plant managers are incentivised based on volume or cost absorption, this can create resistance and misalignment.
  
• Requires Executive Alignment: Successfully navigating these trade-offs requires sponsorship and alignment at the general management level, particularly between manufacturing and commercial leadership.
  

This pilot type is ideal for organisations aiming to showcase the full power of DDMRP quickly. But to realise its full potential and avoid internal friction, it must be paired with a proactive change management plan and cross-functional alignment from the outset.

.

End-to-End Piloting Across a Product Line: Comprehensive and Transformational

When the opportunity arises to run a DDMRP pilot end-to-end – from raw material procurement through manufacturing and finished goods distribution – it is, in our view, one worth seizing. This type of pilot offers the highest strategic value, as it mirrors the full complexity and interdependencies of a real-world operation.

Advantages

• Full Validation of the Operating Model: This approach demonstrates the complete power of DDMRP and the Demand-Driven Operating Model (DDOM), capturing benefits across procurement, production, and distribution.
  
• Thorough Testing of Technology and Process: By applying the methodology across all stages of the flow, the company is able to test every core functionality of the selected software platform, reducing future risk and enabling smoother scale-up.
  
• Foundation for Confident Roll-Out: A successful end-to-end pilot builds organisational proficiency and internal capability. For example, one of our clients, Valmex – a manufacturer of heat exchangers – structured their pilot around the steel business unit, one of three aligned by material type. After the pilot proved successful, the company confidently expanded the model to the aluminium and copper units, without requiring further external consulting support.
  

Limitations

• Higher Complexity and Investment: This type of pilot inherently carries the full organisational complexity of a business unit. It demands more time, deeper engagement from cross-functional teams, and a greater upfront investment.
  
• Organisational Commitment Required: Success depends on strong sponsorship and sustained focus from business unit leadership and top management, given the broader scope and resources involved.
  
• Integration Challenges: Not every company has a product line or business unit that can be cleanly separated for a pilot. Shared operations or common resources between pilot and non-pilot products can introduce operational workarounds that increase complexity. In some cases, we have seen such complexity outweigh the benefits of piloting, making a full-scale implementation the more efficient path.
  

This approach is ideal for companies seeking both depth and breadth of validation before scaling DDMRP. While it demands more from the organisation, it provides unmatched learning and confidence, making it the most strategic and future-proof pilot choice when conditions allow.

Piloting Within Internal Manufacturing: Targeted and Tactical

While less common, a DDMRP pilot focused solely on the internal manufacturing process can be a valid and effective approach in specific contexts. This type of pilot is most appropriate when the core business challenge is deeply rooted in production flow synchronisation and capacity balancing.

Advantages

• Solves Highly Specific Operational Issues: This pilot can be very effective when the primary constraint lies in managing component availability for complex assembly processes or stabilising flow in highly variable Make-to-Order environments.
  
• Tactical Impact Where It Matters Most: For instance, one of our recent clients faced persistent disruptions in final assembly due to component shortages. By strategically positioning a decoupling buffer downstream of a constrained resource and focusing on a handful of high runners, the company achieved a rapid and substantial increase in service levels.
  
• Supports Capacity and Flow Management: In environments where balancing resource utilisation is critical, this type of pilot can highlight how DDMRP contributes to flow smoothing and capacity levelling, even without touching the full supply chain.
  

Limitations

• Limited Scope of Validation: Because these pilots are highly targeted, they don’t provide broad insights into how DDMRP will perform across purchasing, distribution, or customer service. They demonstrate the methodology’s validity in one area, but not its scalability across the organisation.
  
• Can Still Be Operationally Complex: Depending on the scope and the nature of the manufacturing process, these pilots may require intricate configuration and coordination, particularly if BOMs are deep or resources are shared across product families.
  
• Requires Strategic Follow-Through: Once validated in a narrow application, leadership will still need to invest time and effort in defining how to extend DDMRP principles more broadly throughout the business.
  

This type of pilot is best used as a tactical solution to a pressing operational challenge. While it may not serve as a blueprint for full-scale deployment, it can be an important first step toward building internal confidence and demonstrating the value of DDMRP in a controlled, high-impact area.

Beyond the Basics: Additional Dimensions That Shape Pilot Scope

Defining the scope of a DDMRP pilot goes beyond selecting a product line or supply chain tier. Several additional dimensions must be considered to ensure the pilot aligns with both short-term objectives and long-term strategic goals.

Scope Inclusions and Exclusions

Companies must make deliberate choices about whether to include or exclude specific operational domains in their pilot. These may include:

• Spare parts management
  
• MRO (Maintenance, Repair, and Operations) materials
  
• Consignment stocks
  
• Inventory at third-party locations
  
• Secondary or low-priority business lines
  
• Specific geographical markets or regions
  

Each of these has implications for complexity, data readiness, and organisational reach. Their inclusion should be guided by the pilot’s objectives and the strategic importance of each area.

Functional Coverage and System Capabilities

In parallel, the pilot must also define which software functionalities will be tested. While some advanced features are typically introduced in later phases of a Demand Driven transformation, it is essential to anticipate future needs early, particularly when those needs influence software selection.

Examples of advanced functionalities include:

• Prioritised share for allocation during constraint
  
• Alternate BOMs and supplier flexibility
  
• Capacity buffers and time buffers
  
• Tactical and skill-based buffers
  
• Scheduling functionalities
  
• Demand Driven Sales & Operations Planning (DDS&OP)
  
• Scenario-based planning and Adaptive S&OP
  
• Advanced KPI dashboards for operational, tactical, and strategic control
  
• Product life cycle and shelf life management
  
• Tactical expenses buffering
  

Even if these elements are not activated during the pilot, acknowledging them in the planning phase is critical. Their eventual deployment will have significant implications for both the configuration and long-term suitability of the selected software platform.

Note: A detailed discussion on the different DDMRP software types available on the market will be addressed in a future article.

Make the Right Start—With the Right Guidance

Selecting the right DDMRP pilot is a strategic decision that sets the tone for your entire transformation journey. The most effective pilots share several characteristics:

• They are scoped to test what matters — not just what’s convenient or easiest to measure.
• They surface the operational and organisational realities — constraints, integration points, decision levers—that will shape wider adoption.
• They generate insight quickly, building internal confidence and sustaining momentum.
• They create a clear link between operational improvements and financial impact.

In short: the right pilot provides proof—not just potential—and gives your organisation the conviction to scale with purpose.

At AB Advisors, we’ve guided companies across a wide range of industries through this exact process. We help you avoid common missteps and design a pilot that delivers meaningful results, while building internal alignment and supporting long-term business goals in a rapid and pragmatic manner. 

If you’re unsure where to start or weighing multiple options, we can help you define a clear, practical path forward. Our role is to make sure your first step is the right one.

Let’s talk: reach out to us for a complimentary, non-binding 30-minute call with our experts.