What is an Agile Supply Chain? Supply chain agility is a cost-effective, strategic model you can adopt in your supply chain management to help improve your operations.
An agile supply chain puts constant emphasis on efficient processes and empowered employees. Agile supply chains are nimble enough to respond smoothly to sudden changes in supply and demand.
Adopting an agile model benefits the greater organization by allowing it to act quickly and decisively. And empowers it to achieve positive business outcomes even in the face of adverse circumstances.
In contrast, supply chains that aren’t agile do not possess fast-access to information. This lack of agility leaves their people to “best-guess” the right response to changing conditions. This only increases the odds of making the wrong decision.
Emphasizing agile and lean logistics management will allow you to outperform slower competitors. How? Through the ability to make informed decisions on the fly, rather than relying on gut instinct or incomplete information.
To build a truly agile supply chain organizations need to start with two things.
1) The organization needs to train their people properly. Well-trained people can master their roles, make the rights calls, and become high-performers.
2) Organizations need to equip their people with the right tools and processes to improve their chances of success.
No matter the size of your organization, the outcome of adopting an agile strategy 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.)
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.
A few universal characteristics of agile supply chains include:
The mantra of agile supply chain management is “You can’t control what you can’t see.” Supply chain agility requires you to collect and act on the most relevant ant timely information. In turn, this may require a few adjustments to your organization’s strategy. Empower your team to collect and quickly share accurate information. Shorten your response times. Broaden your available options. Improve the quality of information you have available to make quick, effective decisions.
Agile supply chains strive to understand the entire supply chain. This includes the key enablers and inputs needed to produce the best possible customer experience. Agile organizations invest in new technologies and data-driven processes that allow them to exercise precise control over the business.
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, meaning it can respond quickly to the unexpected and seize new opportunities despite the uncertainty inherent in the space.
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.
Agile supply chain management ensures the supply chain is nimble and can easily handle any surprises that occur. Meanwhile, a 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”). And, although 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 (agile and lean) 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.
To achieve supply chain agility, you need to have 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 adopt an agile supply chain model within their organization.
Supply chain agility can be improved with the use of supply chain visibility software. Visibility platforms are great agile supply chain solutions because they provide real-time data and insights necessary for teams to make smart, on-the-fly decisions and react quickly to changing conditions.
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, agile supply chain management 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.
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 supply chain 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.
Agile supply chain management not only needs 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.