Supply Chain Configuration and Processes
Configuration is a choice, not a default
Configuring a supply chain means deciding, for each product and market, which Level 2 process types apply and how they connect. A single company can run make-to-stock for stable SKUs and make-to-order for configured products in the same network. The configuration is captured as a thread diagram - the linked Plan, Source, Make, Deliver, and Return processes across tiers.
Push, pull, and the decoupling point
The push/pull boundary (decoupling point) determines where forecast-driven flow becomes demand-driven flow. Positioning it closer to the customer increases responsiveness and typically raises cost; moving it upstream lowers cost and raises lead time. Questions often test which process type corresponds to which demand signal: make-to-stock is push (planned to forecast), make-to-order and engineer-to-order are pull (triggered by actual orders).
Process mapping discipline
Each Level 3 process element has inputs, outputs, and metrics. A good configuration keeps the process hierarchy consistent with the metric hierarchy so that a Level 3 measure rolls up to a Level 2 diagnostic and then to a Level 1 attribute.
Worked example
A firm stocks standard parts but assembles final products only after an order arrives. Source and Make-to-stock apply upstream of the decoupling point; Make-to-order and Deliver-to-order apply downstream. The decoupling point sits at the assembly stage. If a question asks where forecast-driven flow ends, the answer is the decoupling point, not the customer.
Traps
- Assuming one configuration applies to the whole company.
- Confusing engineer-to-order with make-to-order; ETO includes design work triggered by the order.
- Forgetting that Return processes must be configured too.