Decision model of customer order decoupling point on multiple customer demands in logistics service supply chain

Abstract

The key factor in realising competitiveness of a logistics service supply chain (LSSC) is its ability to meet customised requirements with the cost of mass service. This paper introduces the concepts of mass customisation and customer order decoupling point (CODP) into the field of logistics service to solve the problem of CODP when a logistics service integrator (LSI) in an LSSC operates under mass customisation. Two models of CODP decision, respectively, on single and multiple customer demands, are developed. Both process constraints and lead time constraints from the customised logistics service orders are considered. Unlike CODP positioning models within the manufacturing supply chain, the objective of this paper is to exclusively consider the cost of order transferring and order waiting at CODP to minimise total cost of the LSI. The applications of the two models are also discussed by two real cases, and three major conclusions are drawn. First, introducing mass customisation into an LSSC and minimising total cost of order processing of the LSI by selecting an optimised CODP is feasible. Second, total cost will decrease monotonously along with the movement of CODP toward the last service procedure under the precondition of satisfying lead time constraints. Third, parameters about the customers’ logistics service orders will bring about great influence on the selection of CODP. For instance, the lead time of orders will influence the number of feasible CODPs and the position of optimal CODP. Also, decreasing cost of order transferring and order waiting will not cause the change of optimal CODP, while increasing cost of order transferring and order waiting will lead to the switch of optimal CODP.