Customer Order Decoupling Point

The positioning of the CODP in the value chain is affected by different factors which can be divided into three categories market-related factors, product-related factors, and production-related factors. 

The CODP allows for a differentiation of supply chain strategy before and after the defined point. Companies may utilize a lean strategy up to the CODP and an agile strategy beyond it as depicted in Fig. 3.14 (Christopher and TowiU 2001). 

For further information about the CODP, please see Chap. 4 on manufacturing and supply chain processes. 

Dimensions in morphological box Competitive priorities and strategic SC orientation 

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On the level of material flow, physical properties ofthe network are designed, i.e., decisions upon the existence of plant sites, warehouses and distribution centers, the transportation links between these components and their capacities are made. The decision upon the customer order decoupling point is a good example of how strategic decisions may influence the level of material flow. 

Since the leagile strategy has been defined for product 1 of the computer manufacturer, it is now important to take a closer look at the position of the customer order decoupling point (CODP), which will take place in CM2, but can be considered when looking at the determination of the supply chain strategy. 

Fig. 4.7 Positions of the customer order decoupling point, after Olhager (2003) and Hallgren and Olhager (2006)...

Supply Chain Strategies and Customer Order Decoupling Point... 

Olhager, J. (2010). The role of the customer order decoupling point in production and supply chain management. Computers in Industry, 61(9), 863-868. 

However, those five manufacturing situations are all related to different positions of the decoupling point. In recent decades the positioning of the decoupling point, sometimes also called the customer order decoupling point (CODP), has become a topic of strategic interest, since the concept highlights the involvement of customer orders. 

Modularization of product groups Identifying the customer order decoupling point... 

The customer order decoupling point separates the demand side of the supply chain (focused on delivery to the end customer) from the supply side (based on procurement and production). The decoupling point can be positioned so as to best suit the need for responding to a volatile demand downstream yet providing level schedule upstream of the decoupling point. The decoupling point approach is essentially based on the concept of postponement. 

The vertical dotted line which separates D-time from P-D time in Figure 5.3 is the customer order decoupling point (CODP). This divides the point to which a focal firm carries out processes to known customer orders from the processes it has to carry out speculatively. We return to the importance of the CODP in terms of planning and controlling materials in the next chapter. 

Where D-times are a measure of the importance of speed as a competitive factor, while P-times measure the ability to deliver. The integration of the two measures the point at which the customer order penetrates the supply chain. In Chapter 5 and Chapter 6, p. 176, we develop this issue in terms of the customer order decoupling point. 

Demand changes from independent to dependent at the customer order decoupling point (CODP, Figure 5.3). What actually happened to demand, and why is this change so important in managing material flow ... 

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