Chapter 7
The agile supply chain
Content
The concept of agility1.
Agile practices2.
The concept of Agility Key issueKey issue
11What are the dimensions of the agile supply chain?
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 chainAgile supply chain
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 chainAgile supply chain
The concept of Agility Demand characteristics and Demand characteristics and
supply capabilitiessupply capabilitiesend-customers become more knowledgeable about product
Lean supply chain
Agile supply chain
1980’s
1990’s
Efficiency, cost
Responsiveness
Focus
The concept of Agility Demand characteristics and supply capabilities
Distinguishing Distinguishing attributesattributes
Lean supplyLean supply Agile supplyAgile supply
Typical products Commodities Fashion goodsMarketplace demand Predictable VolatileProduct variety Low HighProduct life cycle Long ShortCustomer drivers Cost AvailabilityProfit margin Low HighDominant costs Physical costs Marketability costsStockout penalties Long-term
contractualImmediate and volatile
Purchasing policy Buy materials Assign capacityInformation enrichment
Highly desirable Obligatory
Forecasting mechanism
Algorithmic(基于算法 )
Consultative(基于咨询 )
The concept of AgilityCharacteristic Lean AgileLogistics focus Eliminate waste Customers and
marketsPartnerships Long-term, stable Fluid clusters
Key measureOutput measure such as productivity and cost
Measure capabilities, and focus on customer satisfaction
Process focusWork standardization, conformance to standards
Focus on operator self-management to maximize autonomy
Logistics planning Stable, fixed period Instantaneous
response
Comparison of characteristics of lean and agile supplyComparison of characteristics of lean and agile supply
The concept of Agility
Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile supply chain
The concept of Agility
Long lead time
Short lead time
Supply Supply characteristicharacteristi
cscs
Demand Demand characteristicharacteristi
cscsPredictable market
Unpredictable markets
Plan Plan and and
controlcontrol
JIT: pull JIT: pull schedulinschedulin
gg
React and React and execute: execute:
agile agile capabilitiescapabilities
Hold inventory: Hold inventory: hedge and hedge and
deploydeploy
The concept of Agility Application of leagility: separation of
‘base’ and ‘surge’ demands
Source: Martin, Christopher and Denis Towill, An integrated model for the design of agile supply chains
Application of leagility: the Pareto curve approach
Application of leagility: the de-coupling point approach
The concept of Agility Preconditions for successful agile Preconditions for successful agile
practicepractice Enterprise-level reality checkEnterprise-level reality check Cost of complexity sanity checkCost of complexity sanity check Lowering the cost of complexity: avoiding Lowering the cost of complexity: avoiding
overly expensive agilityoverly expensive agility Forecasting: reduce the need for last Forecasting: reduce the need for last
minutes crisesminutes crises External: demand forecastExternal: demand forecast Internal: financial forecast, asset forecastInternal: financial forecast, asset forecast
Content
The concept of agility1.
Agile practices2.
Agile practices Key issueKey issue
11How can we use agile practices to benefit from turbulence in the marketplace?
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 practices Benefiting from varianceBenefiting from variance
Three sources of demand uncertainty Seasonality
Product life cycles End-customer demand
Demand variance Time
Agile practices Benefiting from varianceBenefiting from variance
Three sources of demand uncertainty Seasonality Product life cycles
End-customer demandvariety
Volume
Start up Micro-markets
Organize AdjustAgile Agile
capability is capability is neededneeded
Agile practices
Benefiting from short time Benefiting from short time windowswindows Decreased D-time requires different levels
of agility (VMI & QR) Speed of replenishment Upstream time sensitivity Information dissemination and alignment
Agile practices Benefiting from small volumeBenefiting 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 practices Benefiting from small volumeBenefiting from small volumeVariety
decrease
Volume decrease
Mass production
Flexibility
Modular supply network
Craft production
An integrated model for enabling the Agile supply chainAn integrated model for enabling the Agile supply chain