Multiple decoupling point paradigms in a global supply chain syndrome: a relational analysis

Abstract

A responsive and flexible supply chain in the global product value chain set-up links the manufacturer with various inter-company entities, such as suppliers, distributors, contract manufacturers and customers to deal with volatile demand. It is imperative and prudent to look at the overall product chain rather than focusing on any single supply chain entity. From a supply chain perspective, it is crucial that these individual entities are lean and agile (leagile) themselves, as well as the overall product value chain. As a result of the global nature of the product value chain, the concept of the decoupling point has undergone a paradigm shift. Through the literature review the authors establish three different types of decoupling point existing in product value chains, namely: (1) product structure decoupling point (PSDP), bill of materials decoupling; (2) supply structure decoupling point (SSDP), supply network decoupling; and (3) demand transfer decoupling point (DTDP), associated with information sharing. It is argued that such decoupling points are already an established and accepted phenomena, but have not been comprehensively discussed until now. It is proposed that, in the global supply chain, PSDP and SSDP are elemental decoupling points and DTDP is a logical decoupling, which is a function of PSDP and SSDP. It is proposed that DTDP swings between PSDP and SSDP and the swing direction is a critical piece of supply chain information that helps identify distortion. A multidimensional scaling (MDS) method is proposed to discover the relationship of DTDP with SSDP and PSDP using interpretation matrices and stress coefficients. Considering the supply chain as a fuzzy system, a combined effect of MDS over fuzzy applications has been used to determine the extent of swing of DTDP in the particular application of the supply chain.