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Chapter 7 The agile supply chain. 1. 2. The concept of agility. Agile practices. Content. What are the dimensions of the agile supply chain?. 1. The concept of Agility. Key issue. The concept of Agility. Market sensitive Supply chain is capable of reading and responding to real demand

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content

1.

2.

The concept of agility

Agile practices

Content
the concept of agility1
The concept of Agility
  • Market sensitive
    • Supply chain is capable of reading and responding to real demand
  • Virtual
    • Information-based supply chain, rather than inventory-based.

Agile supply chain

the concept of agility2
The concept of Agility
  • Network based
    • EDI and internet enable partners in the supply chain to act upon the real demand
  • Process integration
    • Collaborative working between buyers and suppliers, joint product development, common systems and shared information

Agile supply chain

the concept of agility3

Efficiency, cost

end-customers become more knowledgeable about product

Lean supply chain

1980’s

Focus

Agile supply chain

1990’s

Responsiveness

The concept of Agility
  • Demand characteristics and supply capabilities
the concept of agility4
The concept of Agility
  • Demand characteristics and supply capabilities
the concept of agility5
The concept of Agility

Comparison of characteristics of lean and agile supply

the concept of agility6
The concept of Agility

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

the concept of agility7

Supply characteristics

Hold inventory: hedge and deploy

Plan and control

Long lead time

React and execute: agile capabilities

Short lead time

JIT: pull scheduling

Demand characteristics

Predictable market

Unpredictable markets

The concept of Agility
the concept of agility8
The concept of Agility
  • Application of leagility: separation of ‘base’ and ‘surge’ demands
slide12
Application of leagility: the Pareto curve approach

Source: Martin, Christopher and Denis Towill, An integrated model for the design of agile supply chains

the concept of agility9
The concept of Agility
  • 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
content1

1.

2.

The concept of agility

Agile practices

Content
agile practices1
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.
agile practices2

Demand variance

Time

Agile practices
  • Benefiting from variance
    • Three sources of demand uncertainty
      • Seasonality
      • Product life cycles
      • End-customer demand
agile practices3

Organize

Adjust

Volume

Agile capability is needed

Start up

Micro-markets

variety

Agile practices
  • Benefiting from variance
    • Three sources of demand uncertainty
      • Seasonality
      • Product life cycles
      • End-customer demand
agile practices4
Agile practices
  • 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
agile practices5
Agile practices
  • 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
agile practices6

Variety decrease

Mass production

Flexibility

Modular supply network

Craft production

Volume decrease

Agile practices
  • Benefiting from small volume