Inventory classification based on decoupling points

Abstract

The ideal state of continuous one-piece flow may never be achieved. Still the logistics manager can improve the flow by carefully positioning inventory to buffer against variations. Strategies such as lean, postponement, mass customization, and outsourcing all rely on strategic positioning of decoupling points to separate forecast-driven from customer-order-driven flows. Planning and scheduling of the flow are also based on classification of decoupling points as master scheduled or not. A comprehensive classification scheme for these types of decoupling points is introduced. The approach rests on identification of flows as being either demand based or supply based. The demand or supply is then combined with exogenous factors, classified as independent, or endogenous factors, classified as dependent. As a result, eight types of strategic as well as tactical decoupling points are identified resulting in a process-based framework for inventory classification that can be used for flow design.