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Optimization of costs and service level by choosing the best Customer Order Decoupling Point

: Schmidt, M.; Spee, D.

Ellis, K. ; College Industry Council on Material Handling Education -CICMHE-:
Progress in material handling research 2010 : Based upon invited papers submitted for the 11th International Material Handling Research Colloquium (IMHRC) held in Milwaukee, WI, USA, 21 - 24 June 2010
Charlotte, NC: Material Handling Institute, 2010
ISBN: 978-1-882780-16-7
International Material Handling Research Colloquium (IMHRC) <11, 2010, Milwaukee/Wis.>
Conference Paper
Fraunhofer IML ()
costumer order decoupling point (CODP)

The costumer order decoupling point (CODP) as the link in the supply chain between processes based on uncertain information, such as sales forecasts, and certain information in the form of costumer orders is crucial for production efficiency, storage costs, and the quality of logistics. This paper focuses on developing an approach for identifying a CDOP that provides the highest potential for achieving business objectives. Within the context of the above-mentioned topics, this paper focuses on the interrelations and the tradeoffs that have to be made when positioning the CODP. The goal of the paper is to present an effective and chronological sequence of tasks, analyses and methods, criteria, and indicators that can help a production planner determine the CODP. In the first part of the paper, the factors affecting the positioning of the CODP (internal and external to the company) and their characteristics are identified. Based on extensive literature research, these factors are then mapped to manufacturing concepts, such as make-to-stock, assemble-to-order, and make-to-order. The factors that lead to moving the CODP are also identified and used as the foundation for the development of an iterative procedural method with four stages. In stage 1, the as-is state and current goals are captured and suitable CODPs are identified for the above-mentioned logistic factors. In stage 2, the products are combined into groups to reduce the complexity of the analysis and a procedure for accomplishing this is proposed. The number of suitable CODPs is reduced in stage 3 and the factors that influence the positioning of CODPs are taken into consideration. In stage 4, a financial and qualitative evaluation is performed on the various CODPs.