Market Related Factors

2.3.1 Market Related Factors

Delivery lead-time requirements which are set by the market restricts how far backwards can the CODP be taken.

Product demand volatility which indicates how much fusible is it to take the product on stock or manufacture it after the customer orders it. If the market is less volatile which means there can be a forecast about the market and it will be possible to take on stock. But if the market is highly volatile then it won’t be possible to make much accurate forecast and resulting into a make to order process.

Product volume is related to demand volatility of the product. Volatility in demand can be measured with a coefficient of variation i.e. the ratio of standard deviation of demand and average demand. Demand

Due to this many manufacturers may consider to take few products on stock when the demand might be less during a particular period of the year. Thus product might shift from MTS to MTO or ATO depending in the season.

2.3.2 Product Related Factors

Modular product design is related to ATO product delivery strategy. Such a product is usually a result of customer requirement of more significant options with a shorter delivery time. Such products help the supply chain to be more efficient and quick response.

Customisation is the key in terms of deciding the manufacturing strategy. If the customisation enters at very early stage in the manufacturing then it has to a MTO process. But if the customisation enters at a very later stage of manufacturing then it can also become an ATO process.

The product complexity is indicated by the breadth and depth of the product structure. With deep product structure it will be required to look into the depth of the product at the lead time of the parts. Here we will have to ensure the lead time of all the components and take the once on stock which might have higher lead time. With higher depth it becomes difficult to search for the parts which have such critical lead

This comparison will serve the basis to consideration of various points where we can place the CODP. This is a crucial comparison to be made as this comparison will also decide the parts to be taken on stock. In short such a comparison will decide the complete flow of process. And if there is a small error or mistake in this comparison, it will make the complete process fail.

Planning points in the manufacturing process restrict the positioning of CODP. Planning points are the manufacturing sources or manufacturing source such as a work centre or a work cell that can be noted a one single entity from production and capacity point of view. If we consider a machining facility, here a single machine is also a planning point and a completer line with 6-8 machined in line is also a planning point. If we consider the machining line as a planning point then we have 2 point pre and post which restricts the options of CODP positioning.

Flexibility in production line is a pre-requisite if the customisation options are present and the process is MTO. This will reduce the changeover times which will in turn increase the efficiency of production in case of many