Agile Supply Chain

The concept of agility was given by Goldman. It means “readiness to change”, from business perspective, agility is defined as a strategy that is more responsive in a volatile market place, where this strategy is totally demand driven. As consumers buying patterns are changing on a very rapid pace, so does the whole supply chain management changes. The fundamental drivers of agile supply chain are Speed, Cost and Efficiency. Agile supply chains are based on the sensitivity to consumers demand. Here, sensitivity refers to the ultimate consumers demand, in terms of volatility of demand.

 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.

Agility Benefits

A 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 lean concept. Since 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 has led lost costs as inventory was incapable or became unwanted over time.

 Agility also provides other benefits to the supply chain industry. By maintaining agility, supply chain entities can adapt to high variety, sudden changes in volume describes Martin Christopher. Unfortunately, this implies the supply chain may not be able to produce a high volume of goods if certain materials are available. As a result, supply chain entities who have implemented agile supply chain solutions understand that real-time data means the sudden change in demand could occur without warning, which could undermine the relationship between suppliers. Therefore, these entities have sought to find ways to still arrive at the same finished product, but at a customized result for each order.

 For example, a supply chain entity in fashion or textile printing may not print the actual materials until those materials have already been ordered by a consumer. However, this implies the printing on the materials would not be able to take place until an order has been created, and subsequently, the printing processes would need to take place as close as possible to the area where the order would be fulfilled. Ultimately, this critical point in the agile supply chain goes back to breaking down organizational silos and rigid structures to better meet the demands on a local level.

Agile Constituents

Agile supply chain framework is based on four major constituents that are as

 Virtual Integration: 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 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.

 Process Alignment: In process alignment, three things are mainly concerned, that are Co-managed inventory, in present time mostly chains are managed through the VMI (vendor managed inventory) this is one of the best solution, 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 synchronous supply chain.

 Network Based: 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 at. All actors in the chain are orchestrators of the chain, therefore, they equally own the chain and their performance level matters from each end.

 Market Sensitive: 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 markets. Therefore, daily feedback from market or sales terminal feedback is taken to meet the future demand. In present time companies are focusing on future, therefore, their efforts are to make it from today, by executing best practices to capture the emerging trends. The one of the best practice would be to listen your customer. It is said that success of supply chain is based on the end consumer’s feedback. Therefore, voice of consumer is the actual demand that drives the supply chain.