Agile Supply Chains

By: NHK Cooray

Department of Business Management
Rajarata University of Sri Lanka
What is Supply chain agility
Supply Chain Agility represents how fast a supply chain responds to
the changes in environment, customer preferences, competitive
forces etc.
Dimensions of the agile supply chain
Dimensions of the agile supply chain
• Supply chain is capable of reading and responding to
Market sensitive
real demand

• Information-based supply chain, rather than

Virtual
inventory-based.

• EDI and internet enable partners in the supply chain

Network based
to act upon the real demand

• Collaborative working between buyers and suppliers,

Process
joint product development, common systems and
integration
shared information
 Evolution of Agile Supply chains

Lean supply chain 1980’s Efficiency, cost

end-customers
become more Focus
knowledgeable
about product
Agile supply chain 1990’s Responsiveness
Lean vs agile supply chains
Lean vs agile supply chains
(Demand supply characteristics)
Distinguishing attributes Lean supply Agile supply
Typical products Commodities Fashion goods
Marketplace demand Predictable Volatile
Product variety Low High
Product life cycle Long Short
Customer drivers Cost Availability
Profit margin Low High
Dominant costs Physical costs Marketability costs
Stockout penalties Long-term contractual Immediate and volatile
Purchasing policy Buy materials Assign capacity
Information enrichment Highly desirable Obligatory
Forecasting mechanism Algorithmic( 基于算法 ) Consultative( 基于咨询 )
 Lean vs agile supply chains
(Comparison of characteristics)
Characteristic Lean Agile
Logistics focus Eliminate waste Customers and markets
Partnerships Long-term, stable Fluid clusters
Output measure such as Measure capabilities, and focus
Key measure
productivity and cost on customer satisfaction
Focus on operator self-
Work standardization,
Process focus management to maximize
conformance to standards
autonomy
Logistics planning Stable, fixed period Instantaneous response
Agility and market leadership

Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile

supply chain
Leagility in Supply Chain
 Preconditions for successful agile
practice
• Enterprise-level reality check
• Cost of complexity sanity check
• Lowering the cost of complexity: avoiding overly expensive agility
• Forecasting: reduce the need for last minutes crises
• External: demand forecast
• Internal: financial forecast, asset forecast
Agile practices
• Three characteristics of supply chain operations related to agile

• Mastering and benefiting from variation in demand;

• Very fast response to market opportunities;

• Unique or low volume response.

Benefiting from variation
Three sources of demand uncertainty

• Seasonality

• Product life cycles

• End-customer demand
Benefiting from short time windows

• Decreased D-time requires different levels of agility (VMI & QR)

• Speed of replenishment

• Upstream time sensitivity

• Information dissemination and alignment

Benefiting from small volume
• Small volume is a result of micro-markets, customization and
rapid responsiveness.

• Three approaches of agile strategy related to small volume

• Changeover flexibility

• Modularity at the network level

• Service-based and information-based solutions

Benefiting from small volume
Variety
decrease Mass production

Flexibility

Modular supply network

Craft production
Volume
decrease
An integrated model for enabling the Agile supply chain