The modern supply chain grows increasingly complex with each passing day. The digitization, focusing on fundamentals and change, augmented reality, artificial intelligence, and many other factors are transforming how the supply chain functions. Once, the lean supply chain was considered to be the most effective form of manufacturing and supply chain management. However, a new concept in supply chain processes, the agile supply chain, is quickly growing to replace the often overused term.
Agility in Business
Agility in business is a similar concept. It means that companies have the ability to respond quickly, adapt to their environment, and maintain momentum while doing so. One area where agility is particularly important is in the supply chain, or the way products are produced and delivered. In fact, the concept is so important it has coined its own phrase: the agile supply chain.
What Is the Agile Supply Chain?
The agile supply chain basically refers to the use of responsiveness, competency, flexibility, and quickness to manage how well a supply chain entity operates on a daily basis. Unlike the lean supply chain, the agile supply chain uses real-time data and updated information, as reported by Martin Christopher in Industrial Marketing Magazine, to leverage current operations and real-time data against demand forecast, which helps to improve the overall efficiency and productivity of the given entity.
Another key benefit of agility in the supply chain is focusing on avoiding potential shortages and eliminating excessively stocked inventory. In a sense, overstocking inventory was a typical response of the lean concept. Since the lean concept focuses on making processes more effective and efficient, many supply chain entities often ended up with a huge stock of merchandise. Unfortunately, changes in the economic market, consumer demand, and the growing customization of goods have led to lost costs as inventory was incapable or became unwanted overtime.
Agile supply chains rely on real-time data to help make decisions in day-to-day operations, as well as projected data in supply forecasts. Combined, it creates a more robust process that saves businesses and consumers money, eliminates waste of excess inventory, foresees potential shortages, and does it all quickly and productively. With an agile supply chain, flexibility is key.
Agile supply chain framework is based on four major constituents that are as follows:
in virtual integration, information is shared among concerned departments for the real demand from market or end consumers. As demand information is gathered than it is collaborative planning among the various concerned departments that how to cater to the demand from this particular market, and every department responds according to their capability and capacity to fulfill the demand. Virtually being integrated would result in end to end visibility, this is how this would be easy to identify the bottlenecks in the network and any other problem that creates hindrance in the network.
In process alignment, three things are mainly concerned, that are Co-managed inventory, in the present time mostly chains are managed through the VMI (vendor managed inventory) this is one of the best solutions, as a co-managed inventory. Collaborative product design by the concerned departments, this is how the team works to shape the consumer need or want. The ultimate result is the synchronous supply chain.
Every individual actor in the chain has to put their efforts to make it the success of the chain. This will reduce the burden on individual actors and the task is divided among the actors as per their core competencies where they are best. All actors in the chain are orchestrators of the chain, therefore, they equally own the chain and their performance level matters from each end.
Today’s chains are market sensitive where demand is sensed from the market. The demand forecasting is based on the daily Point of Sale (P.O.S), sensing demand from past trends is an obsolete way to predict the demand in such a volatile market. Therefore, daily feedback from market or sales terminal feedback is taken to meet future demand. In present time companies are focusing on the future, therefore, their efforts are to make it from today, by executing best practices to capture the emerging trends. One of the best practices would be to listen to your customers. It is said that the success of the supply chain is based on the end consumer’s feedback. therefore, the voice of the consumer is the actual demand that drives the supply chain.
Putting It All Together:
Agility in the supply chain is rapidly changing how supply chain entities operate, but executives and supply chain management solutions’ providers need to understand how agility and lean concepts must work together to produce a more efficient, demand-driven supply chain. Failure to employ both agility and lean concepts in tandem could result in severe delays for a given supply chain entity. At Cerasis, we have emphasized the need to respond to real-time data through the use of smart systems, the Internet of Things, analytics, and an effective transportation management system. However, each of these factors in the agile supply chain poses serious implications for future trends in this series of posts.
Source: medium.com, cerasis.com, study.com, www.forbes.com, www.ivoryresearch.com
www.fresatechnologies.com – Your one-stop solution for freight software needs.