OpenReference

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):

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*
MTS Make-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:

5.00

(2 votes)

Process(es)

ID	Name	Level	x
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

Customer Order Decoupling Point Best Practice, Customer Order, Decoupling Point, Order Cycle, Order-to-Cash, Supply Chain, Network The process or node in the supply chain network where the activities are no longer driven by individual orders