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It has become increasingly necessary to move the de-coupling point in the supply chain to minimise the dependence on the forecast and to maximise the reactionary or demand-driven supply chain elements. This initiative in the distribution elements of the supply chain corresponds to the
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Guven-Uslu, P., Chan, H.K., Ijaz, S., Bak, O., Whitlow, B. and Kumar, V., 2014. In-depth study of ‘decoupling point’as a reference model: an application for health service supply chain. Production
Planning & Control, 25(13-14),
302:- (D>P) Here, the product is based on a standard design, but component production and manufacture of the final product is linked to the order placed by the final customer's specifications; this strategy is typical for high-end
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The order fulfilment strategy has also strong implications on how firms customize their products and deal with product variety. Strategies that can be used to mitigate the impact of product variety include
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The order fulfilment strategy also determines the de-coupling point in the supply chain, which describes the point in the system where the "push" (or forecast-driven) and "pull" (or demand-driven see
588:, Chapter: "A classification scheme for master production schedule", in Efficiency of Manufacturing Systems, C. Berg, D. French and B. Wilson (eds) New York, Plenum Press 1983
289:- (D>>P) Here, the product is designed and built to customer specifications; this approach is most common for large construction projects and one-off products, such as
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strategies. The decoupling point can place a much stronger emphasis on the supply chain based on the process as well as the nature of supply chain configurations.
509:). Typically, the higher the P:D ratio, the more the firm relies on forecasts and inventories. Hal Mather suggests three ways to tackle this "planning dilemma":
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336:- (D=0) Here, the product is built against a sales forecast, and sold to the customer from finished goods stock; this approach is common in the
653:
Holweg, M. and Pil, F.K. (2001) "Successful build-to-order strategies start with the customer." MIT Sloan
Management Review, 43. pg 74-83
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Keely L. Croxton. (2003) "The Order
Fulfillment Process", International Journal of Logistics Management, The, Vol. 14 Iss: 1, pp.19 - 32
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always is an inventory buffer that is needed to cater for the discrepancy between the sales forecast and the actual demand (i.e. the
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Delivery lead time is the blue bar, manufacturing time is the whole bar, the green bar is the difference between the two.
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319:- (D<P) Here, the product is built to customer specifications from a stock of existing components. This assumes a
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architecture that allows for the final product to be configured in this way; a typical example for this approach is
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261:, and was continued by Hal Mather in his discussion of the P:D ratio, whereby P is defined as the production
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or the logistics function. In the broader sense, it refers to the way firms respond to customer orders.
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265:, i.e. how long it takes to manufacture a product, and D is the demand lead time. D can be viewed as:
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or warehouse is responsible to fill order (receive and stock inventory, pick, pack and ship orders).
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enquiry to delivery of a product to the customer. Sometimes, it describes the more narrow act of
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361:. Copies are created on-demand, downloaded and saved on customers' storage devices, such as
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Based on comparing P and D, a firm has several basic strategic order fulfilment options:
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401:– The formal order placement or closing of the deal (issuing by the customer of a
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In the broader sense, the possible processes in a logistic-production system are:
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The first research towards defining order fulfilment strategies was published by
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381:– Initial enquiry about offerings, visit to the web-site, catalogue request
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Response to a customer order in terms of design, manufacture and delivery
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466:– Determine the current and past locations of the goods during transit
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Build a process to recognize forecasting errors and quickly correct
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420:– The presentment of the commercial invoice/bill to the customer
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430:– Determining the source/location of item(s) to be shipped
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Hal Mather, Competitive manufacturing, Prentice Hall 1988
241:) is in the most general sense the complete process from
553:(BTO) strategies—all of which are generally referred as
480:– The payment of the charges for goods/services/delivery
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Handbook of material and capacity requirements planning
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Oden, H. W., Langenwalter, G. A., Lucier, R. A. (1993)
411:– Confirmation that the order is booked and/or received
488:– In case the goods are unacceptable/are not required
474:– The delivery of the goods to the consignee/customer
615:2nd ed. South-Western Publishing Co. 1991 pp.2-3
269:The lead time quoted by the firm to the customer
458:– The shipment and transportation of the goods
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8:
549:, option bundling, late configuration, and
357:and inventory is maintained with a single
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501:) elements of the supply chain meet. The
327:'s approach to customizing its computers.
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272:The lead time the customer wishes it was
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613:Production & Inventory Management
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334:(MTS); syn: Build-to-Forecast (BTF)
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409:Order acknowledgment/confirmation
389:– Budgetary or availability quote
353:- (D=0, P=0) Where products are
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36:
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317:(ATO); syn: Assemble-to-request
300:(BTO); syn: Make-to-Order (MTO)
611:Fogarty, Blackstone, Hoffman.
438:– Changes to orders, if needed
98:Distribution resource planning
1:
126:Warehouse management system
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141:Field inventory management
537:initiatives pioneered by
446:– Process step where the
275:The competitive lead time
88:Sustainable distribution
690:Supply chain management
499:Demand chain management
165:Industry classification
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121:Packaging and labeling
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103:Third-party logistics
515:forecasting accuracy
493:Strategic importance
63:Digital distribution
58:Distribution centers
50:Distribution methods
527:production planning
448:distribution center
393:Order configuration
184:Commercial aviation
136:Delivery (commerce)
555:mass customisation
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179:Maritime transport
151:Stock keeping unit
146:Inventory turnover
112:Management systems
93:Commercial vehicle
25:Business logistics
680:Freight transport
644:McGraw-Hill, Inc.
567:Fulfillment house
315:Assemble-to-order
285:Engineer-to-order
239:order fulfillment
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78:Order fulfillment
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304:motor vehicles
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131:Supply chain
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73:Trade routes
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521:flexibility
386:Sales quote
674:Categories
573:References
547:modularity
478:Settlement
685:Inventory
428:/planning
416:Invoicing
370:Processes
291:Formula 1
263:lead time
561:See also
513:Improve
471:Delivery
455:Shipment
426:sourcing
418:/billing
344:sectors.
308:aircraft
485:Returns
338:grocery
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539:Toyota
424:Order
342:retail
293:cars.
287:(ETO)
617:ISBN
351:(DC)
340:and
325:Dell
306:and
233:(in
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593:^
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211:e
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