TY - GEN
T1 - On the placement of the customer order decoupling point
AU - Hedenstierna, Philip
AU - Ng, Amos H.C.
PY - 2010
Y1 - 2010
N2 - It is often suggested that supply chains should start working directly towards customer orders as far upstream as possible, mostly for inventory reduction reasons. However, the customer order decoupling point (CODP) cannot be pushed further upstream than customers are willing to wait. In this paper, we use a system dynamics model to show that the optimal placement of the CODP depends on the demand signal. Our findings indicate that placing the CODP downstream allows for short-term fluctuations in demand to be absorbed by the order book, leading to a stable production rate. This benefit must however be weighed against any additional safety stock a CODP placed far downstream may require.
AB - It is often suggested that supply chains should start working directly towards customer orders as far upstream as possible, mostly for inventory reduction reasons. However, the customer order decoupling point (CODP) cannot be pushed further upstream than customers are willing to wait. In this paper, we use a system dynamics model to show that the optimal placement of the CODP depends on the demand signal. Our findings indicate that placing the CODP downstream allows for short-term fluctuations in demand to be absorbed by the order book, leading to a stable production rate. This benefit must however be weighed against any additional safety stock a CODP placed far downstream may require.
KW - Customer order decoupling point
KW - System dynamics
UR - http://www.scopus.com/inward/record.url?scp=79551509329&partnerID=8YFLogxK
M3 - Conference Proceeding
AN - SCOPUS:79551509329
SN - 9789623676960
T3 - SCMIS 2010 - Proceedings of 2010 8th International Conference on Supply Chain Management and Information Systems: Logistics Systems and Engineering
BT - SCMIS 2010 - Proceedings of 2010 8th International Conference on Supply Chain Management and Information Systems
T2 - 2010 8th International Conference on Supply Chain Management and Information Systems: Logistics Systems and Engineering, SCMIS 2010
Y2 - 6 October 2010 through 8 October 2010
ER -