Agile supply chain management

Agile supply chain management involves new concept of organizing and implementing supply chain operations in complex logistic and distribution systems.

Application of agile supply chain management

Agile Supply Chain Management is applicable in the case of so-called innovative products, which are characterized by the following features:

• short life cycle
• difficult to predict demand
• Production in many variants and often in small quantities

Specifics of agile SCM

The specificity of innovative products requires the Agile Supply Chain:

• launch new products onto the market relatively often
• supply of these products in many different variants
• placing them on the market in shortest possible time

Factors of optimal implementation of agile SCM

The key elements of the optimum management of the system of Agile Supply Chain:

• "being close" to the market, consisting of its continuous observing and tracking trends taking place in it
• operate with a broad base of suppliers
• to have access to information, and efficient sharing of information within the network (i.e. using EDI)

See also:

• Supply logistics subsystem
• Principles of Supply Chain Management
• Strategy wheel

Examples of Agile supply chain management

• Cross-Docking: Cross-docking is a logistics practice that involves the consolidation of shipments and the immediate shipment of those goods to their final destinations, without any additional storage time in the warehouse. This is done by the coordination of the incoming and outgoing shipments, which allows the goods to move quickly from the receiving dock to the shipping dock without any intermediate storage. This process reduces the time spent on handling and warehousing, and improves the efficiency of the supply chain.
• Vendor Managed Inventory (VMI): Vendor Managed Inventory (VMI) is a supply chain model where the supplier takes responsibility for the management of the inventory of the customer. In this model, the customer shares real-time sales data with the supplier, and the supplier then takes responsibility for managing the inventory and adjusting the replenishment accordingly. This model is beneficial for both the supplier and the customer, as it reduces the customer’s costs and simplifies the replenishment process for the supplier.
• Just-in-Time (JIT) Manufacturing: Just-in-Time (JIT) manufacturing is a system of production that seeks to reduce costs by only producing what is needed and when it is needed. This is done by employing a pull system of production, where the customer’s demand signals the production of goods, and the supplier then produces the goods. This practice is beneficial as it reduces the costs associated with producing too much or too little, and allows for the fast delivery of goods.
• Lean Manufacturing: Lean manufacturing is a system of production that seeks to reduce waste by focusing on the value-adding activities in the production process. This is done by identifying and eliminating any non-value adding activities, streamlining processes, and reducing inventory levels. This practice is beneficial as it reduces costs associated with waste, and increases the efficiency of the production process.

Advantages of Agile supply chain management

Agile supply chain management is a dynamic approach to managing the flow of resources through a supply chain. It involves the use of advanced techniques and technologies to enable companies to respond quickly to customer demand and market changes. Here are some of the key advantages of agile supply chain management:

• Improved customer service: Agile supply chain management allows companies to quickly and accurately respond to customer orders, resulting in faster delivery times, improved customer satisfaction, and higher revenue.
• Increased visibility: Agile supply chain management enables companies to have greater visibility into their supply chain operations. This includes insights into supplier performance, inventory levels, and customer demand.
• Reduced costs: Agile supply chain management helps companies reduce costs by streamlining operations and eliminating unnecessary activities. It also helps companies identify cost-saving opportunities and reduce inventory levels.
• Enhanced flexibility: Agile supply chain management enables companies to quickly modify processes and operations in order to adapt to changing customer needs and market conditions. This makes it easier for companies to respond to customer demand and remain competitive in the market.

Limitations of Agile supply chain management

Agile supply chain management is an innovative approach to organizing and implementing supply chain operations in complex logistic and distribution systems. However, there are certain limitations to this approach, which include:

• Limited visibility of the entire supply chain: Agile supply chain management often entails a lack of visibility into the entire supply chain as new systems are rapidly implemented and changed, making it difficult to accurately monitor the entire process.
• Difficulty in maintaining consistency: As the supply chain shifts and changes quickly, it can be difficult to maintain consistency in the products and services being offered, as well as in the customer experience.
• Increased complexity: Agile supply chain management requires a high degree of complexity in order to be successful, as it requires a large number of stakeholders and partners to be coordinated in order to ensure the smooth functioning of the system.
• High cost: The implementation of agile supply chain management often involves high costs due to the need to purchase new technology and hire additional personnel to manage the increased complexity.
• Difficulty in measuring success: Agile supply chain management often involves rapid changes, which can make it difficult to measure the success of a particular strategy or process.

Other approaches related to Agile supply chain management

At the core, Agile supply chain management focuses on improving the efficiency and responsiveness of supply chain operations. However, there are other approaches to managing the supply chain that can be used to supplement and maximize the efficiency of agile supply chain management. These include:

• Collaborative planning, forecasting, and replenishment (CPFR): CPFR is an approach that involves the collaboration between customers and suppliers to plan, forecast, and replenish inventory. This approach helps to reduce supply chain costs by allowing for better inventory management and higher levels of customer service.
• Vendor managed inventory (VMI): VMI is a process where the supplier takes responsibility for managing the inventory levels of the customer. This approach allows for better visibility of inventory levels and helps to reduce inventory costs by ensuring that the right amount of stock is available at the right time.
• Just-in-time (JIT) supply chain management: JIT is a process where inventory is delivered just as it is needed. This approach helps to reduce inventory costs by ensuring that the right amount of stock is available when it is needed and not before.
• Lean supply chain management: Lean supply chain management is an approach that focuses on reducing the amount of waste and unnecessary costs in the supply chain. This approach aims to streamline supply chain operations in order to reduce costs and improve efficiency.

In summary, Agile supply chain management is a great approach for improving the efficiency and responsiveness of supply chain operations. However, there are other approaches such as collaborative planning, forecasting, and replenishment, vendor managed inventory, just-in-time supply chain management, and lean supply chain management that can also be used to supplement and maximize the efficiency of agile supply chain management.

Agile supply chain management — recommended articles

Efficient Consumer Response — Agile supply chain — SCM system — Integrated supply chain — Principles of Supply Chain Management — Contract logistics — Lean supply chain management — Agile manufacturing — IT systems in production management — Self paced learning

References

• Bruce M. and Daly L. (2004), Lean or agile, a solution for supply chain management in the textiles and clothing industry?, International Journal of Operations &Production Management Vol. 24 No. 2, p. 151-170
• Childerhouse P. and Towill D.(2000), Engineering supply chains to match customer requirements, Logistics Information Management, Vol. 13 No. 6, p. 337-345
• Christopher, M. (2000). The agile supply chain: competing in volatile markets. Industrial marketing management, 29(1), 37-44.
• Dove, R. (1996). Agile supply chain management. Automotive Production, 108(4), 16-17.
• Yusuf Y, Gunasekaran A, Adeleye E. O, Sivayoganathan K. (2004), Agile supply chain capabilities: Determinants of competitive objectives, European Journal of Operational Research 159 p. 379-392