Agile Supply Chain

The Agile Supply Chain

A supply chain involves all facilities, functions, and activities associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flow. The supply chain is an integrated group of processes to “source”, “make”, and “deliver” products (Operations). It is a network of enterprises that must work together for a common goal. In the supply chain there must be room for flexibility and maneuverability to allow for changes in the market. If demand for a product changes there must be room for the supply chain to evolve around those changes in order to keep up with the needs of the consumer. Today the business world is using the term agility to represent that flexibility and maneuverability within the supply chain. Agility allows for improvements and simple modifications.

Agility is a business-wide capability that embraces organizational structures, information systems, logistic processes, and, in particular, mindset. A key characteristic of an agile organization is flexibility. To be truly agile, a supply chain must possess a number of distinguished characteristics besides flexibility such as market sensitivity, be network based, be virtual, and have process integration. For a supply chain to be market sensitive it must be capable of reading and responding to real demand. Most organizations such as the service business are forecast driven and therefore are able to predict need, but in a more realistic economy nothing can be exactly predicted. The predicted forecasts come from past sales reports and inventory. Depending solely on forecast sometimes gives organizations too much leftover inventory. If a supply chain is market sensitive it produces as the market determines what the need is. (Christopher)

Being virtual, another characteristic of an agile supply chain, allows organizations to link together with information that gives real-time needs of the consumer and allows the organization to produce what is necessary. Being virtual allows suppliers to see exactly how much inventory a company has in stock compared to their sales. If the supply is getting low and the demand does not seem to go down the manufacturer will then produce more product. Also by being virtual supply chain partners are fully leveraged through process integration. That is being collaborative, working between buyers and suppliers, joint product development, common systems, and shared information. Many companies today are outsourcing most of their activities and with being virtual and having process integration the companies are able to produce more and be more successful which calls for cooperation within the supply chain from all participating parties. By networking all the partners and tying all this together makes the supply chain more agile and forms relationships between the buyers, sellers, and the consumer. Agile companies have sought to identify a limited number of strategic suppliers with whom they work as partners through linked systems and processes because of the lack of flexibility some companies have. (Christopher)

Complexity is considered the makeup of a process or structure. Complexity is one of the biggest barriers to agility because of the way it tends to increase as companies extend and grow their marketing research. Reducing complexity should be a major priority for marketing and logistics people working together. Product complexity includes not only product design issues but also excessive variety that does not contribute to greater customer or consumer value. Complexity is also caused by the way in which organization structures and management processes are designed. Restructuring to reduce the complexity of the situation can be beneficial to the organization and the consumer because it reduces items that are not value adding to the product or the manufacturing process. (Chirstopher)

Looking at most businesses will reveal that they serve a variety of markets, with a diverse range of product characteristics. Markets today demand a great variety that makes forecasting almost impossible. This is where agile supply chains come into action. The agile supply chain revolves around a new philosophy that makes the manufacturing, distributing, marketing, and other factors of the supply chain much easier and on an as needed basis. Agile calls for companies to be nimble and reactive. To satisfy the range of product requirements most businesses will find that they need multiple supply chain strategies. The whole purpose of this idea is to sell an item and then produce an item to replace it in a real-time environment. With forecasts difficult to predict and execute properly many items are to be built to order. Incorporating the agile supply chain