One of the concepts that goes into the ‘push/pull’ view is the Customer Order Decoupling
Point (CODP) – also referred to as the Demand Penetration Point (DPP); this point separates
the part of the supply chain whose management decisions are governed by customer orders
(pull process) from the part of the supply chain where production plans are made based on
forecasted demand of consumers and/or forecasted orders from partners downstream in the chain (push process). Downstream of the CODP- that is towards the customer - the material
flow is directly controlled by customer orders and the focus is on customer responsiveness (lead
time and flexibility). Upstream towards suppliers, the material flow is controlled by forecasting
and planning and the focus is on efficiency (usually employing large lot sizes) and taking into
account inherent properties of material flows and production capacities and resources. It must
be determined where the decoupling point should be for each product-market combination or
product group in the company.