Multiple decoupling point essay

Following the introduction of the customer order decoupling point by Sherman (1984), Analog et al. (1999) came up with the concept of ‘illegality, with the lean and agile processes separated by decoupling points, and then later Maim and Gosling (201 1) explored the supply chain classification in terms of illegality. The decoupling mint plays a crucial role in reducing manufacturing costs by improving manufacturing networks, material coordination, information transparency and planning (Bathwater et al. 1 993, Pantaloon and Kabob 1 999, Garcia- Desuetude and Lambert 2007).

Global corporations have manufacturing facilities in multiple geographies, where every facility operates as a profit centre responsible for its own profitability and operations. In such a supply chain set-up, when the product value chain is split into multiple lean and agile systems, it becomes a sustainable, responsive supply chain (Pam and Thomas 2005). As a result of the global nature of business today, researchers are stressing the need to consider global product value chains and not just single-entity chains (Violist et al. 1997, Garcia-Desuetude and Lambert 2007).

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With increasing costs, uncertainty, margin pressure, globalization, modularity, complexity and competition, the identification of single strategic decoupling points in the supply chain is increasingly difficult. This difficulty is mostly the result of the need for flexible and responsive lean and agile product supply systems in a global network of chains. Determination of multiple decoupling mints splits the entire product value chain into multiple lean and agile systems. Lean systems create a pull mechanism across entities and agile systems help every entity remain flexible and responsive. *Corresponding author.

Email: sartor. [email protected] Com SINS 0020-7543 print,’less 1366-XX online ; 201 2 Taylor & Francis http://DXL. DOI. Org/10. 1080/00207543. 2011. 588624 http://WV. Dandelion. Com 3052 A. Bannered et al. Nevertheless, in the existing research publications there are two aspects that are completely missing with reference to multiple decoupling points: Downloaded by Lb-on: Obligated do contentment online SISTER] at 07:17 07 (1) Multiple decoupling points in the global product value chain deserve criteria, characteristics and classification. (2) Is there any relation/pattern between these decoupling points?

This paper evaluates existing research on multiple decoupling points and establishes the criteria, characteristics and classification of multiple decoupling points in the product value chain and also discovers an underlying pattern of relationships among these decoupling points. This paper presents a case model, as in hose of Violist et al. (1997) and Garnishment’s and Yucca (2007). The paper is organized as follows: first is a brief discussion of research carried out on single strategic decoupling point, followed by a review of research on multiple decoupling points.

Based on the above discussions, criteria and characteristics are analyses for identifying multiple decoupling points, followed by a proposed classification and relation among them. The global supply chain case model is then introduced and multiple decoupling points are highlighted in the global product value chain. A mathematical modeling sing multidimensional scaling (MEDS) was considered necessary to estimate the stress factor among various dependent variables and to plot the interpretation matrix diagram.

The fuzzy set theory is used to numerically analyses the relationship so developed and determine the direction of the swing as per the supply chain characteristics. The last section concludes the paper. 2. A discussion on decoupling points Decoupling points have become a matter of strategic importance from the supply chain and logistics perspectives (Mason-Jones and Twill 1999). As described by Christopher (1992) and June et al. 2007), it is the supply chain that competes. In order to make business profitable it is best to have the leanest, most agile system or the most responsive lean system (Twill and Christopher 2002).

The concept of the decoupling point in the supply chain has been explored mainly in relation to information and material flows, to help establish the lean and agile paradigm in supply chains (Gibbets and van deer Tang 1992, Mason-Jones and Twill 1 999, Mason-Jones et al. Bibb, Laager 2003). Laager et al. (2006) proposed that market, product and production are the factors that affect the decoupling point positions. There has always been a trend in the research on the decoupling point. Initially (1990-2000), the research was more orientated towards identifying the strategic benefits of decoupling points.

Later, research was more concerned with identification of decoupling points to create leanness and agility in varied business scenarios, such as decoupling points in manufacturing (Mason-Jones et al. AAA), the poultry food business (Verso et al. 2001 ), the food-processing industry (Don 2001 , Ackerman et al. 201 0), contract manufacturing (Winner and Rudders 2005), corporate functions (Garnishment’s and Yucca 2007), pair and reverse logistics channels (Abandoning et al. 2008), timber production systems (Haney et al. 2009) and, finally, health care delivery systems (Romania and Maid 2010).

From a different perspective, we find all Of these research projects Were orchestrated towards identifying a single strategic decoupling point in the supply chain. As the product value chains become more globalizes and modularized, the move from single strategic decoupling to multiple decoupling in supply chains is inevitable. The recent trend in decoupling point research is in identifying multiple decoupling mints. 3. Multiple decoupling points (Meds) Multiple decoupling points helps create flexibility and responsiveness by partitioning the product value chain into multiple lean and agile systems.

With change in business scenarios, modeling the supply chain with single strategic decoupling points is insufficient (Wang et al. 2009). Although there are no explicit accounts of the limitations experienced by businesses results Eng from single strategic decoupling points, nevertheless multiple published researches identify several decoupling points or decoupling points in different alms of the supply chain. The concept of multiple decoupling points in supply chains was first proposed by Examination and Attar (1998).

For fixed materials, a decoupling point was available preceding final assembly, at mid- assembly and at finished stock. Later, Mason-Jones and Twill (1999) introduced decoupling in two realms of business material and information. Garcia-Desuetude and Lambert (2007) identified multiple decoupling points in various tiers of the supply chain, following a time-based postponement strategy. It highlighted the need to view the entire product chain and identify coupling inventories across organizations/tiers of supply chains for least- cost inventory models.

Downloaded by [b;on: Obligated do contentment online SISTER] at 07:1 7 07 3053 Chunk and Eng (2008) presented multiple decoupling points in the electronic product value chain with three types of postponement: form-based, time- based and place-based. The research highlighted the need to view the entire product chain in order to identify decoupling points in various tiers of the value chain. Sun et al. (2008) discussed the identification and positioning of multiple decoupling points in bill of materials based on MOTTO-MATS interactions and how they can be effectively used for least manufacturing cost.

Winner and Rudders (2005) introduced a dimensional customer order decoupling point, the customer order decoupling zone, by integrating production and engineering perspectives and moving them away from traditional single strategic decoupling point. Wang et al. (2010) introduced a three-dimensional customer order decoupling point concept integrating product, engineering and production activities. Overdue et al. (2006) discussed the need for multiple decoupling points in a dairy business supply chain and Bannered et al. 201 0), based on survey-based research, highlighted the acceptance of material and supply network decoupling points.

Bannered and Hydra (2010) presented multiple decoupling points in an TAT bill of material, reducing production lead time. From all of this research it can be concluded that multiple decoupling points are an established phenomena and an acceptable and necessary paradigm in real life product supply chains. 3. 1 Criteria for and characteristics of multiple decoupling points Based on available research, the following criteria can be drawn for multiple decoupling mints: (1) Consider time, form and place when determining multiple decoupling points.

As an extension, the following considerations can also be made: decoupling points in terms of position (supply network), form (bill of material) and time (information). (2) When determining the decoupling points, consider the entire product value chain and not just individual tiers of the supply chain. (3) When determining decoupling points, consider the product with respect to both design (engineering) and production (manufacturing). (4) Consider uncertainty in the supply chain by analyzing two main sources of emend: actual orders and forecasts.

In some scenarios and business conditions individual tiers of a supply chain have conflicting interests to those Of the overall global product value chain. This further necessitates creation of multiple decoupling points to manage both individual segments/entities and global chains. 3. 2 Classification of multiple decoupling points Based on available research and practical experiences, the following classification of multiple decoupling points is proposed. 3. 2. 1 Supply structure decoupling points (Ships) In today’s global value chains the final product comprises of numerous monuments sourced from across the globe.

Assembly of all these components for final product to the customer forms a worldwide supply structure. Existence of multi-tier entities across the globe leads to demand-supply exchange at multiple levels, forming a network of supplies. This suggests that every supply segment in the value chain is interdependent and integrated and has a reflective influence on successive supply. In this global network of chains there exist multiple decoupling points. So each final product involves multiple decoupling points in the supply structure and offers a position-based decoupling point.

These multiple decoupling points are manifested predominantly in the overall inventory strategy of the individual plant/facility but also play a vital role in the overall final delivery of the product. These multiple decoupling points are essential for flexible functioning and cost control of supply chains. Manifestation of multiple supply structure decoupling points can be seen in the research of Chunk and Eng (2008). 32. 2 Product structure decoupling points (Steps) The position of decoupling points in product bill of material plays a key role in the manufacturing economy. As per Sun et al. 008) in the product value chain, the manufacturing bill of material (BOMB) consists of a chain of components (represented by nodes) forming a network. These components/ nodes can be either made-to-order 3054 (MOTTO) or made-to-stock (MATS) items. This network of nodes forms the product structure and every MATS-MOTTO nodal interaction forms the decoupling point. Thus in a multi-component manufacturing scenario, there are multiple instances of MATS-MOTTO component interaction resulting in multiple decoupling points; these are freebased decoupling points. These decoupling points are called product structure decoupling points.

So any manufacturing plant having MOTTO and MATS components will have multiple product structure decoupling points. Multiple decoupling points are fundamental to flexibility and cost-effectiveness in manufacturing. See Gratitude’s and Lambert (2007) for an analysis of multiple product structure decoupling points. 3. 2. 3 Demand transfer decoupling points (HTTPD) In a global product value chain there are numerous supply chain tiers/entities involved, resulting in interrogations demand transfers. These demand transfers are logical and involve information decoupling.

We propose that coupling points exist within these transfer layers and these decoupling points logically separate the supply chain tiers. The decoupling point in the demand transfer scenario is referred to as the logical break point, where dependent demand meets independent demands in a global supply chain. As stated by Mason-Jones and Twill (1999), the information decoupling point is the point in the pipeline where market driven and forecast driven information meet each other, and in the present case it is proposed as a demand transfer decoupling point.

The decoupling point in the transfer layer helps the lower bevel supply chain tiers to act in a leaner way and help the final assembly plant be more agile. It is proposed that this decoupling point is a logical decoupling point and is a function Of SODS and STEPS. 3. 3 Proposed relationship among decoupling points Based on analysis of multiple decoupling points, we propose that there exists a relationship among them. SODS and STEPS are elemental or material decoupling points, which are bound to exist irrespective of the type of supply chain.

HTTPD is an information decoupling point, which comes into the picture whenever independent demand transfuses into a dependent demand in the alee chain. It is thus proposed that HTTPD is a function of both BOMB/form (STEPS) and supply/position (SODS). It can be seen that HTTPD is a function of SODS and STEPS, and HTTPD correlates with both. As SODS and STEPS are individually fundamental structures, drawing a plane of X-Y coordinates with HTTPD as a function of both will measure the direction of swing between SODS to STEPS, as illustrated in Figure 1 based on various supply chain conditions.

Figure 1 shows that SODS and STEPS are fundamental/elemental and are the X and Y axes, respectively. HTTPD can be equidistant or can swing to either of the axes. The proposed swinging of HTTPD to either SODS or STEPS is based on critical supply chain factors, such as the type of business, manufacturing strategy, product structure and lead times. A methodology is proposed to identify the direction and measure the extent of swing using multidimensional scaling and fuzzy set theory. The direction of Figure 1.

Representation of HTTPD-SODS and HTTPD-STEPS relations. 3055 swing of HTTPD helps understand the potential distortion of demand information. It is an indication for supply chain managers to enhance supply chain performance, such as inventory, cost and operational effectiveness. The swing of HTTPD towards an elemental decoupling indicates the alignment of demand transfer information towards that business aspect. For example, if HTTPD swings toward SODS, it indicates that demand transfer information is aligned with the overall inventory and supply network.

The swing of HTTPD away from STEPS indicates that there is a potential demand transfer information distortion in the manufacturing process or vice versa. In an ideal world, the HTTPD should be equidistant from both of the elemental decoupling 4. Cases of multiple decoupling points in the supply chain 4. 1 Industrial equipment manufacturing case The proposed classification of the decoupling points in supply network, bill of materials and demand transfer layers and its relationship among them is studied through the case of an industrial equipment manufacturer’s product value chain.

The product value chain includes global suppliers for its made-to- stock (MATS) components and discrete work order processes for its manufactured components. Figure 2 provides an overview of BOMB and the manufacturing chain. In Figure 2, generic components are made-to-stock, which is forecasted and stocked. Designed components are made-to-order ND need engineering and tooling confirmation before production. Subassembly and third-tier assembly are carried out in different locations and transferred to the finished goods plant for final assembly and shipment.

In the current case, each individual plant will need to stock generic components and make design components based on actual demand. The supply structure decoupling point (position decoupling) is based on the overall inventory perspective of the individual plant. Multiple SODS comes into the picture to help make the overall supply chain, as well as the individual plant, more agile with least operating costs. Similarly, the product structure decoupling point (form decoupling) is from the bill of material perspective. 4. Multiple supply structure decoupling point Figure 3 depicts the multi-tiered product value chain. The value chain can be described as the final assembly plant that books the customer orders, which is supported by sub-assembly plants in terms of component supply. Based on an order, a product is designed, detailing the components to be obtained from various sub-assembly plants. Generic components are forecasted and stocked in all the facilities. As can be seen in Figure 3, there exists a coupling point in the final assembly plant and similarly there are decoupling points in the sub-assembly plants too.

Thus, as per Chunk and Eng (2008), it is a case of multiple position-based supply structure decoupling Figure 2. Overview of bill of material and manufacturing chain. Downloaded by [b-on: Obligated do contentment online SISTER] at 07:1 7 07 3056 Figure 3. Supply Structure decoupling point. 4. 3 Multiple product structure decoupling point As per Sun et al. (2008), the BOMB structure forms a product network and the boundary of MOTTO-MATS components creates decoupling points. The research f Garcia-Desuetude and Lambert (2007) contemplates multiple-form based decoupling points.

Figure 4(a) shows the manufacturing bill of material for final assembly. The shaded components are designed components (M TO), sourced from various sub-assembly plants and produced through discrete work orders. The non shaded components are generic (MATS) and are forecasted and stored. Figure 4(b) provides a more detailed representation. The shaded components are marked as MOTTO and non-shaded components are marked as MATS. In order to produce the designed components (shaded), the generic components (non- headed) will be needed, leading to an M TO-?MATS interaction.

Every M TO-?MATS interaction is marked by a decoupling point (dots). Thus Figure 4(b) depicts multiple product structure decoupling points (form-based). 4. 4 Multiple demand transfer decoupling point Global manufacturing is a multi-tier value chain. In these multi-tier value chains, demand is transformed from independent demand to dependent demand with change in ownership. The transfer layers facilitating these transformations are logical points in the supply chain, which separate the lean and agile paradigms to an information decoupling point.