SCM ST RAT E G IES

LE AN VS AG ILE
STRATEGIES

WEEK 3 FALL 2021

 TYPES OF SUPPLY CHAIN
STRATEGIES

UNDERSTAND TYPES
OF
SUPPLY CHAIN STRATEGIES
 TYPES OF SCM STRATEGIES
• THERE ARE TWO GENERIC STRATEGIES IN SUPPLY
CHAIN MANAGEMENT:
• LEAN – MEANS DEVELOPING A VALUE STREAM
TO ELIMINATE ALL WASTE…INCLUDING TIME…
AND TO ENABLE A LEVEL SCHEDULE.
• AGILE – MEANS USING MARKET KNOWLEDGE
AND A VIRTUAL CORPORATION TO EXPLOIT
PROFITABLE OPPORTUNITIES IN A VOLATILE
MARKETPLACE

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 LEAN VS AGILE 

WHEN WOULD YOU EMPLOYEE

EACH?
 A LEAN SUPPLY CHAIN
STRATEGY
• A LEAN SUPPLY CHAIN IS CONCERNED WITH COST
REDUCTION BY OPERATING THE BASIC PROCESS WITH A
MINIMAL OF WASTE
• THE PRIMARY OBJECTIVE OF A LEAN SUPPLY CHAIN CAN
BE REALIZED BY USING THE MOST BASIC FORMS OF
DATA COMMUNICATION ON INVENTORIES, CAPACITIES
AND DELIVERY PLANS AND FLUCTUATIONS WITHIN THE
FRAMEWORK OF A JIT INVENTORY PRINCIPLES.
• SOME OF THE KEY FEATURES OF A LEAN SUPPLY CHAIN
STRATEGY ARE PREDICTABLE MARKET DEMAND, A
LOWEST PRICE CRITERION, PRODUCT DEMAND BASED
ON FORECAST, A LONG PRODUCT LIFE CYCLE AND LONG
ORDER LEAD TIMES.

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 A LEAN SUPPLY CHAIN
STRATEGY

• CUSTOMERS IN A LEAN SUPPLY CHAIN ARE

DELIVERED VALUE THROUGH LOW PRODUCTION
COSTS AND LOGISTICS ACHIEVED BY USING ALL
AVAILABLE SYNERGIES AND ECONOMIES OF
SCALE.
• CRITICS OF THIS STRATEGY FEEL IT IS LACKING
IN HUMAN INTEGRATION AND IS JUST
REPETITIVE MANUFACTURING.

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 AN AGILE SUPPLY CHAIN
STRATEGY
• AN AGILE SUPPLY CHAIN STRATEGY IS THE ABILITY OF THE
SUPPLY CHAIN AS A WHOLE, AND IT’S MEMBERS, TO RAPIDLY
ALIGN THE NETWORK AND IT’S OPERATIONS TO DYNAMIC AND
TURBULENT REQUIREMENTS OF CUSTOMERS.
• THE MAIN FOCUS IS RUNNING BUSINESSES IN NETWORK
STRUCTURES WITH AN ADEQUATE LEVEL OF AGILITY TO RESPOND
TO CHANGES WHILE PROACTIVELY ANTICIPATING CHANGES AND
SEEKING NEW EMERGING OPPORTUNITIES.
• AGILITY IS AN APPROPRIATE STRATEGY WHEN COPING WITH
TURBULENCE AND RECONFIGURING OPERATIONS TO ENABLE
INDIVIDUAL CUSTOMER SPECIFICATIONS TO BE ACCOMMODATED IN
HIGH VOLUME MANUFACTURING.

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 AN AGILE SUPPLY CHAIN
STRATEGY
• AGILITY IS AN APPROPRIATE STRATEGY WHEN
COPING WITH TURBULENCE AND RECONFIGURING
OPERATIONS TO ENABLE INDIVIDUAL CUSTOMER
SPECIFICATIONS TO BE ACCOMMODATED IN HIGH
VOLUME MANUFACTURING.

• AGILITY MEASURES HOW WELL THE RELATIONSHIPS

IN THE PROCESSES CAN BE ENHANCED AND WIDELY
ACCEPTED AS A WINNING STRATEGY FOR GROWTH.

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 THE HYBRID
• A LEAGILE SUPPLY CHAIN STRATEGY IS A HYBRID OF LEAN AND
AGILE SUPPLY CHAIN STRATEGIES.

• THIS SYSTEM CAN BE DEFINED AS A SYSTEM IN WHICH THE

ADVANTAGES OF LEANESS AND AGILITY ARE COMBINED.

• A LEAGILE SUPPLY CHAIN AIMS TO INFUSE COMPETITIVENESS

INTO AN ORGANIZATION IN A COST EFFECTIVE MANNER.

• THE COMBINATION OF LEAN AND AGILE PARADIGMS WITHIN A

TOTAL SUPPLY CHAIN STRATEGY ENABLES THE POSITIONING
OF DECOUPLING POINT SO AS TO BEST RESPOND TO A VOLATILE
DEMAND DOWNSTREAM, YET STILL PROVIDE A LEVEL
SCHEDULE UPSTREAM FROM THE DECOUPLING POINT

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 THE HYBRID

• IN THIS HYBRID STRATEGY, LEAN FOCUSES ON WASTE

ELIMINATION, ACHIEVING LOW COST DELIVERY OF A
STANDARDIZED AND STABLE PRODUCT, WHILE
AGILITY FOCUSES ON COMPLEXITY BROUGHT ON BY
CONSTANT OR UNPREDICTED CHANGES.

• (A CUSTOMER ORDER DECOUPLING

POINT SEPARATES DECISIONS MADE UNDER
CERTAINTY FROM DECISIONS MADE UNDER
UNCERTAINTY)

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 ORDER QUALIFIERS & WINNERS
• THE CONCEPT OF ORDER QUALIFIERS AND ORDER
WINNERS LEADS TO THE SPECIFICATION OF AN
APPROPRIATE MANUFACTURING STRATEGY.
• ORDER QUALIFIERS ARE THE BASIC CRITERIA
THAT PERMITS A FIRMS PRODUCT TO
CONSIDERED A CANDIDATE FOR PURCHASE BY
A CUSTOMER
• ORDER WINNERS ARE THE CRITERIA THAT WIN
AN ORDER.

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INSTRUCTOR SLIDES
INSTRUCTOR SLIDES 14
The Benefits of the Agile Supply Chain
The Benefits of a Lean Supply Chain
SUMMARY : THE DIFFERENCE
THE DIFFERENCE BETWEEN LEAN AND AGILE IS
THE FLUIDITY WITH THE RESPONSE TO THE
MARKET. A LEAN SUPPLY CHAIN FOCUSES ON
CUTTING COSTS BY PRODUCING HIGH VOLUMES OF
PRODUCTS WITH LOW VARIABILITY. AN AGILE
SUPPLY CHAIN FOCUSES ON RESPONDING TO THE
MARKET DEMAND WITH SMALLER, CUSTOMIZABLE
BATCHES OF ITEMS.
 HYBRIDS ARE IN VOGUE

IN TODAY'S GLOBAL, DYNAMIC ECONOMY, IT IS

BENEFICIAL FOR COMPANIES TO OPERATE A SUPPLY
CHAIN THAT IS BOTH LEAN AND AGILE. USING LEAN
AND AGILE IN COMBINATION IS KNOWN AS HAVING
A HYBRID SUPPLY CHAIN STRATEGY.