Even if they don’t know it, the notion of a decoupling point is very familiar to your favorite pizza chef.
Last week I made a call to the excellent pizzeria near my house to order two pizzas.
- A “Pancetta” and a “Margarita”… er, no, rather an “Orientale”, please.
- No problem, what time would you like them?
- Let me know when they can be ready
- Right away, by the time you get here
- Great, thanks, see you soon!
But wait a minute. There’s a menu of 25 different pizzas, that’s a lot of different ingredients, and making pizzas is a lot of work:
- The pizza preparation process involves dough that must be prepared, kneaded, left to rest, and rolled out.
- Arugula lettuce, tomatoes, etc. must be washed.
- Chorizo slices, merguez sausages, cheeses, etc. must be cut to size.
- Tomatoes need to be washed and sliced.
- Etc.
In short, preparing a pizza from A to Z is a route that doesn’t take just a few minutes, especially when considering the time to go from my house to the excellent pizzeria next door.
If you look up a recipe for making your pizza, including the dough, the advertised time is around 3 hours: 2 hours for resting the dough, 35 minutes for preparation, and 15 minutes for cooking. I’d have to order my pizzas for lunch at breakfast…
While the cumulative lead time to get a pizza is around 3 hours, my local pizzaiolo gives me a decoupled lead time of just a few minutes.
The secret? Well known, and applied in many variants of catering: ingredients—semi-finished products—are prepared in advance and replenished as the meal is served.
There’s a bowl of Parmesan shavings, a bowl of tomato slices, a bowl of washed salad, etc., and they’re replenished. As each is consumed, a new bowl is filled.
By the way, does your favorite pizzeria make detailed order-to-delivery time forecasts and measure their accuracy? Probably not. We’re in pure flow driven by actual demand.
In industry, we call these stock decoupling points with variations such as Kanban system, DDMRP buffer, two-bin, min-max, and reorder points. This is part of the made-to-order (MTO) strategy—late differentiation flow or assembled-to-order (ATO). If you’d like to learn more about implementing decoupling strategies in your supply chain, check out our blog on Decoupling Inventory for Supply Chain Agility.
What’s intriguing is that what’s natural for your pizzaiolo, and for you as a food lover, is not at all natural in industry.
An ERP system, based on MRP, is not designed to easily manage decoupling points on intermediate levels or semi-finished products. It is designed to cascade requirements, not to keep stock points available to ensure short lead-time availability.
We’re also in the made-to-order (MTO) mode. The customer orders a Margarita… or rather an Orientale, and we manufacture this specific variant.
Often in industry, when we’re in MTO and B2B, there’s an underlying paradigm: until we have a firm order or customer commitment, we don’t supply or start the transformation stages. This hinders the implementation of an agile supply chain model, with targeted inventory investments and replenishment as consumption occurs. First, you have to convince the CFO and CEO, negotiate with customers, etc.
How about a design workshop to rethink our supply chain? Are you available today? Great, I’ll order the pizzas—what do you want?
