The role of the customer order decoupling point in operations and supply chain management

Abstract

In the field of operations and supply chain management (OSCM), the customer order decoupling point (CODP) has
been recognized as an important strategic parameter for roughly 30 years. It is the point in the value chain where
forecast-driven material flows get separated from order-driven material flows. Despite its long history in the field,
multiple calls for further consideration of the CODP in OSCM research have been made recently, particularly for
empirical research. Since further inclusion of the CODP is warranted, this doctoral thesis sets out to identify
research areas in which the role of the CODP lacks substantial, empirical verification. Once these areas have been
identified, a selection of them are investigated to highlight the importance of the CODP and contribute to theory
and practice. The thesis is based on the results of five articles. The first article is a systematic review of empirical
research which explicitly considers the CODP. This review serves as a point of departure for the other articles by
identifying areas in which the importance of the CODP lacks substantial empirical assessment. The other articles
concern selected research topics where further assessment of the CODP’s role can benefit theory and practice:
supply chain integration (article II), mass customization and modular design (article III), and environmental supply
chain sustainability (articles IV and V). The lion’s share of the results is obtained via analysis of the fourth and
latest round of the High Performance Manufacturing study. This is a multinational survey study which collected
information from 330 manufacturing plants in 15 different countries. Multiple respondents at each plant have
answered different questionnaires, making it a highly credible data source. The fourth article also includes a case
analysis of an industrial symbiosis network in Sotenäs, Sweden. The results of the five papers are analyzed
together and a pattern among the results becomes clear: plants operating based on forecasts who manufacture
standardized products, so called make-to-stock plants, are not reaping the same benefits from improvement
initiatives such as increased supply chain integration, increased customization capabilities, and more
environmentally sustainable operations, as their counterparts who manufacture and customize products based on
customer orders, so called make-to-order plants. These findings are largely novel to the OSCM field and plausible
explanations for them are provided. Concisely speaking, external factors such as market and demand
characteristics of the different product types are likely very important influences behind the results, as well the
organizations’ operational and competitive foci. The thesis has several important implications for both researchers
and managers. Firstly, the framework presented in the literature review illustrates multiple factors and decision
areas which are related to the CODP. This framework can be used as a guide for both researchers and practitioners.
It allows researchers to assess whether a certain topic would benefit from considering the CODP, and practitioners
can see which of their strategic decisions that have direct linkages to their CODP positions. Secondly, since the
CODP has not been sufficiently included in the selected research areas before, the results highlight the need for
further inclusion of this concept in the future. In fact, some of the results presented even illustrate that
recommendations from research might be wrong if the CODP is ignored. Furthermore, the CODP is measured both
as a categorical variable, which has been used to create sub-sets of data in articles II, IV and V, and as a continuous
variable, which has been used to measure interaction effects between the CODP, mass customization and modular
design in article III. Hence the thesis exemplifies two ways in which the CODP position can be measured and used
in research. For practitioners, the results of the thesis emphasize the fact that organizations of different types, from
a CODP perspective, should not invest in and focus on the same types of improvement initiatives. This insight can
help managers strategize and avoid organizational fads which would offer little in return for the effort and money
spent on them. Lastly, topics for future research are outlined.

Abstract (Swedish)

In the field of operations and supply chain management (OSCM), the customer order decoupling point (CODP) hasi been recognized as an important strategic parameter for roughly 30 years. It is the point in the value chain where forecast-driven material flows get separated from order -driven material flows. Despite its long history in the field, multiple calls for further consideration of the CODP in OSCM research have been made recently, particularly for empirical research. Since further inclusion of the CODP is warranted, this doctoral thesis sets out to identify research areas in which the role of the CODP lacks substantial, empirical verification. Once these areas have been identified, a selection of them are investigated to highlight the importance of the CODP and contribute to theory
and practice. The thesis is based on the results of five articles. The first article is a systematic review of empirical research which explicitly considers the CODP. This review serves as a point of departure for the other articles by identifying areas in which the importance of the CODP lacks substantial empirical assessment. The other articles concern selected research topics where further assessment of the CODP’s role can benefit theory and practice: supply chain integration (article II), mass customization and modular design (article III), and environmental supply chain sustainability (articles IV and V). The lion’s share of the results is obtained via analysis of the fourth and latest round of the High Performance Manufacturing study. This is a multinational survey study which collected information from 330 manufacturing plants in 15 different countries. Multiple respondents at each plant have answered different questionnaires, making it a highly credible data source. The fourth article also includes a case
analysis of an industrial symbiosis network in Sotenäs, Sweden. The results of the five papers are analyzed together and a pattern among the results becomes clear: plants operating based on forecasts who manufacture standardized products, so called make-to-stock plants, are not reaping the same benefits from improvement initiatives such as increased supply chain integration, increased customization capabilities, and more environmentally sustainable operations, as their counterparts who manufacture and customize products based on
customer orders, so called make-to-order plants. These findings are largely novel to the OSCM field and plausible explanations for them are provided. Concisely speaking, external factors such as market and demand characteristics of the different product types are likely very important influences behind the results, as well the organizations’ operational and competitive foci. The thesis has several important implications for both researchers and managers. Firstly, the framework presented in the literature review illustrates multiple factors and decision areas which are related to the CODP. This framework can be used as a guide for both researchers and practitioners. It allows researchers to assess whether a certain topic would benefit from considering the CODP, and practitioners can see which of their strategic decisions that have direct linkages to their CODP positions. Secondly, since the CODP has not been sufficiently included in the selected research areas before, the results highlight the need for
further inclusion of this concept in the future. In fact, some of the results presented even illustrate that recommendations from research might be wrong if the CODP is ignored. Furthermore, the CODP is measured both as a categorical variable, which has been used to create sub-sets of data in articles II, IV and V, and as a continuous variable, which has been used to measure interaction effects between the CODP, mass customization and modular design in article III. Hence the thesis exemplifies two ways in which the CODP position can be measured and used in research. For practitioners, the results of the thesis emphasize the fact that organizations of different types, from a CODP perspective, should not invest in and focus on the same types of improvement initiatives. This insight can
help managers strategize and avoid organizational fads which would offer little in return for the effort and money spent on them. Lastly, topics for future research are outlined.

• author: Harfeldt-Berg, Magnus
• supervisor: Jan Olhager; Louise Bildsten
• opponent: Prof. van Donk, Dirk Pieter, University of Groningen, The Netherlands.
• organization: Engineering Logistics
• publishing date: 2024
• type: Thesis
• publication status: published
• subject: Business Administration; Transport Systems and Logistics
• keywords: Customer order decoupling point, CODP, make-to-stock, make-to-order, performance, strategy, supply chain integration, mass customization, modular design, sustainability, survey, statistical analysis
• defense location: Lecture Hall M:A, building M, Ole Römers väg 1F, Faculty of Engineering LTH, Lund University, Lund.
• defense date: 2024-10-07 09:00:00
• ISBN: 978-91-8104-164-4
• ISBN: 978-91-8104-163-7
• language: English
• LU publication?: yes
• id: ea3e705d-a4cd-4f09-95aa-245883fe0b5f
• date added to LUP: 2024-09-09 12:18:57
• date last changed: 2025-04-04 15:16:48