What is the decoupling point in supply chain management?
The decoupling point in supply chain management refers to the point in the production process where a product or component is separated into two or more streams. It is the point that signifies a shift in the supply chain from a make-to-stock to a make-to-order strategy. The decoupling point allows for customization and individualization of products based on customer demands. By postponing the customization process until after the point of decoupling, companies can reduce inventory levels, improve lead times, and better respond to changing customer preferences. The location of the decoupling point is a critical decision for businesses as it directly impacts their agility and ability to meet customer needs efficiently.