What Is an Agile Supply Chain?
An agile supply chain is nimble enough to respond smoothly to sudden changes in supply and demand. Through constant emphasis on efficient processes and empowered employees, the agile supply chain benefits the greater organization by allowing it to act quickly and decisively in the face of disruption and achieve positive business outcomes despite adverse circumstances.
In contrast, supply chains that aren’t agile tend not to possess fast access to information, leaving their people to offer best guesses about the right response to changing conditions. That only increases the odds of making the wrong decision. Emphasizing agile and lean logistics management will allow you to outperform slower competitors through the ability to make informed decisions on the fly, rather than relying on gut instinct or incomplete information.
To reach this point, organizations need to ensure that their people are not only trained to perform in the job but also equipped with the right tools and processes to bolster their chances of success. No matter the size of your organization, the outcome is the same: supply chain operators are empowered to make quick, informed decisions without needing to waste time waiting for approvals from different layers of management.
Learn more about building agility with real-time transportation visibility
Why Is Agility Important for the Supply Chain?
Logistics managers today must contend with a growing number of unforeseen factors and disruptions. Bottlenecks, delays and other unfavorable circumstances are increasingly prevalent amid a supply chain ecosystem beset by a global pandemic. As emergency safety protocols sent the economy into a tailspin, the global on-demand economy came under unprecedented pressure as sharply fluctuating demand triggered widespread shortages on everything from laptops to toilet paper. Collectively, this new normal is presenting the supply chain industry with its biggest test in years.
The COVID pandemic may have been an extreme example of what can go wrong, but it also underscored the importance of planning and decision-making in the event of sudden disruptions that upend the normal working of the complicated modern supply chain apparatus. In this post, we’ll take a look at how organizations can make use of a lean and agile and adaptive approach to managing supply chains to rapidly adjust to rapidly changing or unexpected situations.
What Are Characteristics of the Agile Supply Chain?
A few universal characteristics of agile supply chains include:
Accurate Information:The mantra of agile supply chain managers everywhere is “You can’t control what you can’t see.” The first step in increasing agility is to shorten your response times, broaden your available options, and improve the quality of information you have available to make quick, effective decisions.
Comprehensive Control: Agile supply chains strive to understand the entire supply chain, including the key enablers and inputs needed to produce the best possible customer experience. They invest in new technologies and data-driven processes that allow them to exercise precise control over the business.
Rapid Decision-making: While no one can possibly predict all disruptions, having processes and technology in place that enable quick decision-making is key to building an agile supply chain that can respond quickly to the unexpected and seize new opportunities despite the uncertainty inherent in the space.
What Is the Difference Between a Lean Supply Chain and an Agile Supply Chain?
We often see people confuse the idea of supply chain agility with the idea of lean supply chain management. While there are similarities between these two ideas, there are also important differences as well.
In essence, where the agile supply chain is nimble and able to easily handle any surprises that occur, the lean supply chain focuses on continuous improvement and operating with minimal dependencies and safety measures. For example, a manufacturing company loses incredible amounts of money every time an assembly line is forced to stop due to insufficient raw materials (known as a “line down cost”). However, though keeping an excessive amount of inventory on hand may boost your agility, it’s also expensive in its own right (known as “inventory carrying costs”).
Today, new technologies are making it possible for businesses to integrate the two ideas more seamlessly than ever. In the scenario described above, for example, more accurate information about inbound deliveries and their actual arrival times can reduce the need for keeping large stockpiles of excess inventory on hand.
How to Create an Agile Supply Chain
Generally speaking, the pillars of agility include having the people, processes, and intelligence in place that allow you to make strong decisions quickly while promoting resilience throughout your operation.The following is a more detailed roadmap for companies looking to lay the foundation for an agile supply chain within their organization.
- Establish goals and key performance indicators that the organization should fulfill around production or customer requirements.
- Define the challenges and roadblocks your organization needs to hurdle to reach its goals.
- Create project teams focused on driving improvements across the network. This role should evolve over time, continually tracking performance and adjusting based to find new ways to improve the management of the supply chain.
- Empower employees to make decisions and drive your strategy forward at all levels of the organization. Don’t rely upon a top-down approach and complicated approvals processes. Instead, train internal teams to be ready to deal with any setbacks that might arise and equip them with the right tools to handle problems proactively.
- Emphasize communication with customers and keep them informed of what’s going on. Understand their challenges and collaborate with them to achieve mutual goals and success metrics.
- Take steps to simplify business processes as much as possible. Identify both quick, low-hanging improvements as well as longer-term, continuous improvements. Emphasize attention to detail and quality among your change managers, without allowing them to get too bogged down in the pursuit of perfection.
How to Improve Agility With Supply Chain Visibility Software
Supply chain visibility is now table stakes for companies that care about improving agility. Given the rapid change and uncertainty in the market, logistics managers need accurate data that spans the breadth of their supply chains – from procurement teams to store managers.
Previously, logistics professionals could only rely on past experience and hunches to make decisions. Today, companies can process large amounts of data faster than ever, allowing employees to act immediately and with greater effect than ever before. In the event of a crisis, supply chain leaders can instantly know which of their orders and shipments may be impacted, as well as which resources exist for contingency planning and recovery.
Even after the pandemic is over, supply chain crises will never stop arising. Leaders need to be prepared to address these challenges to the best of their ability. This puts a premium on the need for cutting-edge technology and accurate information, allowing companies to make the right choices whenever surprises occur.
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Bottlenecks, delays and disruptions are commonplace in logistics management, and balancing supply with anticipated demand is a delicate art even in the best of times. Forced to deal with spikes in demand that far exceed any reasonable projections, organizations need better data to track their products as they travel to their final destinations.
This is where lean and agile companies alike can take action to accelerate their reaction times. Reliance on manual processes and old-fashioned track and trace techniques is no longer enough. Managers not only need to be able to closely monitor high-priority loads. Their internal transportation management teams need to also be able to separate the signal from the noise and keep track of their most critical or at-risk loads.