Hoekstra and Romme (1992) distinguish five possible positions of a decoupling point
(DP) as depicted in Figure 7. These range from having inventory in all stages of the supply
chain and delivering customer orders from stock (DP 1), to having practically no inventory in
the supply chain and starting to assemble (make) a product when the order comes in (DP 5).
Hoekstra and Romme regard the CODP as important for several reasons:
• It separates order-driven activities from forecast-driven activities.
• It is the place where ‘independent demand’ is converted into ‘dependent demand’.
• It generally coincides with the last major stock point in the goods flow.
• It creates the opportunity for upstream activities to optimize independently from
irregularities in market demand (in contrast to the JIT concept in which inventories are
seen as ‘blocking the view on problems’).
• It separates two areas in which the nature of decision-making is very different: upstream
from the CODP the focus is on planning and efficiency, downstream the focus is on the
acceptance of orders and lead time management.