Customer Order Decoupling Point is a Term describing the process or node in the supply chain network where the activities are no longer driven by individual orders. Managing Customer Order Decoupling Points is a Best Practice.
Understanding the Customer Order Decoupling Point of a supply chain is important for Supply Chain Management processes. The behavior of processes upstream and downstram of the Customer Order Decoupling Point is quite different:
- Upstream processes are driven by forecast based planning information (blue in the diagram), Materials are pushed downstream. Optimization is realized by balancing inventory and capacity.
- Downstream processes are driven by actual customer orders (green in the diagram). Materials are pulled by the order. Optimization is realized by balancing capacity and lead-times.
The OpenReference Supply Chain Operations Domain recognizes these differences in behavior at level-2: Make-to-Stock (MTS), Make-to-Order (MTO, CTO, ATO, PTO), and Engineer-to-Order (ETO). Customer Order Decoupling Points (white rounded box in the diagram) typically reside in the first MTS process (when looking upstream):
Contents
Strategy | Supplier | Receive, Store | Pre-build/ Produce | Assemble/ Finish | Package, Store | Pick, Load, Ship | Invoice | Customer |
VMI (MTS)Vendor Managed Inventory | D* | S1 | M1 | M1 | M1 | D1 | D1 | S* |
MTSMake-to-Stock | D* | S1 | M1 | M1 | M1 | D1 | D1 | S* |
PTO (MTO)Package-to-Order | D* | S1 | M1 | M1 | M2 | D2 | D2 | S* |
ATO (MTO)Assemble-to-Order | D* | S1 | M1 | M2 | M2 | D2 | D2 | S* |
CTO (MTO)Configure-To-Order | D* | S1 | M2 | M2 | M2 | D2 | D2 | S* |
D* | S2 | |||||||
Supplier | Source | Make | Deliver | Customer |
For Engineer-to-Order replace Customer Order with Customer Intent.
Use Cases
- Align Network
- Define Network Process Flow
- Define To-Be Supply Chain Network
- Align Strategy
- Define Supply Chain Network
Community Importance Rating:
Process(es)
A108 | Define Supply Chain Network | 3 | A108 |
A202 | Define Supply Chain Network | 3 | A202 |
A203 | Define Network Process Flow | 3 | A203 |
A210 | Define To-Be Supply Chain Network | 3 | A210 |