Customer Order

Decoupling Point (CODP)

Presented By
-Tushar Kumar

Introductio
nCoined in 1985, by Hoekstra and Romme
Widely used in Production and manufacturing fields
Main content of research topics on postponement strategies
These points are vital in optimizing Supply chain.

Defining CODP
Traditionally defined as the point in the value chain for a product,
where the product is linked to a specific customer order.
The point at which demand changes from independent to
dependent. It is the point at which the firm becomes responsible for
determining the timing & quantity of material to be purchased
made, or finished.
Its the last point at which inventory is held.
The CODP divides operations stages:

forecast-driven (upstream of CODP)

Customer order driven (the CODP and downstream).

Positioning CODP in Supply Chain

UPSTREAM

DOWNSTREA
M

Positioning Inventory in
Supply Chain
Raw Material
S

Components

Semifinished

Finished

Make to Stock

Assemble to
Order

Make to Order

R
Engineer to Order

Forecast

Order

Upstream of CODP
Goods flow control upstream of the CODP is forecast-driven
form of "push" where the release of work is governed by forecasts
& assumptions about status of shop floor
Lead Time increases from M-T-S to E-T-O

Downstream of CODP
Activities in the goods flow are planned and controlled based upon
actual customer orders
Order-driven being equivalent to working in pull flow"
Lead time impacted is impacted by customer

EFFECTS OF CODP PLACEMENTS

Types of Buffer
Inventory
Capacity
Time
MTS ensure availability by delivering directly from an inventory,
which is replenished by a materials.
MTO pipelines cannot offer instant delivery, but instead gain
the ability to use time as a buffer
Placement of the CODP must be done so that products can be
delivered to the customer within an acceptable time (tD)
IftDis shorter than the total pipeline time (tP), it becomes
necessary to decouple the supply chain.
Placing the CODP far upstream results in unstable production
for the MTO system, while placing it far downstream results in a
longertMTS, which implies higher stockholding. The schedule
stability also affects materials withdrawals at the CODP buffer,
meaning that a longer planning time will allow for more stable
inventory levels.

Market Types & CODP

Compani Market
Sector
CODP
es
Type
Honda

ATO

Bajaj

ATO

Boeing

MTO

Components,R
aw Material

Airbus

MTO

Components,
Raw Material

Nestle

MTS

Finished

Parle Agro

MTS

Finished

Sun Pharma

MTS

Finished

Alkem

MTS

Finished

Automobile

Aircraft

Food
(Packaged)

Pharmaceuti
cals

Comment

Semi finished

Multiple levels of
supplier. Accessories
& assemblies as per
Semi finished
product.
Heavy finished
product, with
complex assembly
Standard sizes of
end product &
forecast driven
The demand is
sporadic & with
intense standards,
regulations.

Thank you!