Ask anyone what "agility" means, and they would say the ability of a person or entity to move easily, quickly, and, most importantly, effectively. The concept of agility in business isn't far off from this definition as it refers to one's readiness to adapt to changes. Agility in the corporate setting is about being responsive and flexible to market volatilities, as well as opportunities.
Flexibility and responsiveness to market changes have a place in any supply chain. More so, since today's market demands speed and convenience in all forms of order fulfillment, it makes sense to have an agile supply chain.
What is the Agile Supply Chain?
Supply chain management is complex and traditionally filled with inflexible and permanent procedures. In contrast, an agile supply chain breaks from the traditional by being a product distribution system that prioritizes speed, productivity, responsiveness, flexibility, and cost savings.
What is the Difference Between a Lean and Agile Supply Chain?
The lean supply chain is a traditional way of handling supplies, focusing on large volumes moved at a low cost. The goal of a lean supply chain management is to add more value to customers via cost reduction of goods and minimizing waste. It is concerned with predictability and reliability.
Production is planned months or years in advance to find the lowest possible price for a high volume of goods in a lean supply chain. This advanced planning is the reason for the inflexibility of this model.
The lean supply chain was once the dominant form of production because of its focus on lowering costs. After all, customers prefer to pay less first, right? Well, not exactly as it turns out, more and more firms are shifting away from it, given the consumer's preference for fast and convenient order fulfillment and evolving market conditions.
On the other hand, an agile supply chain was designed for more flexibility to adapt to unanticipated market conditions or evolving consumer behavior and demand. This model lets businesses adjust their procurement, logistics, and sales quickly.
Why Do Contemporary Supply Chains Need to be Fast and Agile?
As the popular saying goes, even the best-laid plans can go wrong, which is particularly true in today's fast-paced market. Goods may not arrive on schedule, and production may not meet deadlines, the market can turn sluggish suddenly, and so on. These issues affect order fulfillment and strain any supply chain. Failure to adapt to external forces due to rigidness, and being unresponsive can result in lower customer satisfaction, decreased market share, and ultimately lower profits.
How Can a Business Achieve Agility and Flexibility in Supply Chain Management?
The traditional lean supply chain is characterized by fragmented and siloed operations, not to mention data. Older supply chain models have compartmentalized business units, limiting the flow of information needed to achieve better operational awareness, insights, and the resulting efficiency from taking informed-action across their supply chains.
Flexibility and agility can be achieved by evolving at an accelerated pace into a digital supply chain to overcome the problem of fragmented and siloed data hounding the traditional approach to management. A digital supply chain centralizes information and makes real-time data sharing possible. A system processing, storing, and dispensing real-time and historical data unites the disparate systems of business units. This, in turn, allows for quick decision making and action across the organization to respond to the unplanned or unexpected turn of events affecting the supply chain.
In the end, the traditional ways of doing business or models like the lean supply chain must be evaluated and, if necessary, replaced by more flexible ones. After all, market conditions and customer expectations evolve over time. Supply chains must be ready to adapt to changes quickly to remain competitive and relevant.