Agility in the supply chain: what defines it?

Dr. Adrian Reisch
June 21, 2021
Agility Concept Visualization

No matter how big or small, all markets are ruled by many factors and rules that are impossible to predict perfectly. In an age where conditions change by the second, it is difficult, if not impossible, to predict trends and events without the help of a framework that allows versatility and helps you to stay ahead of the game. Today, the market is defined by VUCA - Volatility, Uncertainty, Complexity, and Ambiguity. To survive and thrive in the next normal requires a transformation not to be blindsided at any point. A vital element of this transformation is agility, and the agile supply chain is one part of this epoch.

What is an Agile Supply Chain?

Agility refers to the ability of a system to have a high level of responsiveness, adaptability, and swiftness when interacting with its environment. The same properties go for an agile supply chain, meaning it can be equally defined based on the following properties:

  • The ability to respond to variations in the market
  • The innate capability of shifting with the market
  • The capacity to produce highly customized products as demanded
  • Use of technology to visualize and implement changes in real-time
  • Operating in a network fashion where each component is inter-dependent

An agile supply chain also ensures that your inventory does not suffer from either stockouts or surplus, both of which cause immense losses. It keeps track of demand, supply, and product cycles to efficiently maintain the inventory at optimum size.

What Frameworks are there for agility in the Supply Chain?

Being agile is not to be pinned down on one specific process. Instead, it is a way of working based on particular principles and practices that allow for agility.

Incorporating agility in your existing supply chain requires an overhaul of the way systems were operating previously. There are numerous approaches that a company can take to do so. For instance, you can try a balanced approach by integrating existing systems, modifying them to shift them towards agility, or prioritizing a certain property or variable you think is most important to build the agile supply chain.

In any case, it is vital to have correct data-based insights that allow you to learn what works for your company and what does not. With today’s data analytics tools, you can have constant, real-time, 360-degree visibility of the supply chain. This allows for a first-hand view that helps you understand whether modification took the system closer to agility or if two different components interact and affect the system. Data-based insights can help you with intelligent decision-making, which allows you to react to new learnings faster through quick execution of decisions. Speedy, data-based decisions and their execution both are vital to achieving agility.

On top of these practices, agility is based on certain principles that must be considered in the framework being used to redesign your supply chain. These frameworks look different across organizations, as what works for some may not work for others.

However, no matter the approach or the framework, some properties as given below must be a constituent of that framework if the supply chain is to achieve agility.

So, when designing your agile supply chain framework, think about the following:

  • Digitalization. No human or team will keep up with the fluctuations of a market and the resultant effect on the supply chain and a system running through a screen can. Digitalization allows maximum visibility and analytics capabilities that prevent unwarranted impacts on the supply chain. Tracking even the minutest of changes will enable you to prepare for any market wave that is to come.
  • Synchronicity. One of the issues supply chains suffer from is the inability to keep up with demand. Three things can happen here. The supply chain may fall short, may end up with excess, or be unable to provide the customer’s exact solution. Aligning your supply chain with customer demand will allow you to provide the customer with exactly what they need and maintain the inventory, respectively. It may even require the establishment of branches closer to the end-user to reduce the time and cost of demand fulfilment.
  • Interconnected Network. You must connect every variable and player in an agile supply chain to the network that keeps track of the supply chain. That is the only way to ensure that an oncoming change does not tumble you. Moreover, by maintaining a high level of interdependence, you can ensure that every cog in the wheel runs as it is supposed to, even when the chains moving them are shifting. It also reduces the load on any one cog and helps run the machinery smoothly.
  • Closed-loop. Agility is defined by the quick reflex of the supply chain in response to the market. The only way to make that happen is to have a closed-loop that keeps feeding information into the system. This allows the system to adjust itself in real-time to the market, thus achieving true agility.

Benefits Of Agility and Agile Supply Chain

Agility is a vital characteristic of the supply chain of the future, and its most significant benefit is that it allows you to respond way better and faster – a necessity to stay competitive in today’s volatile market environment. Moreover, when applying principles of agility, there are many direct and indirect benefits to agility in your supply chain, for instance:

  • Reduces wastage and expenditure by optimizing inventory in alignment with the market
  • Keeps customer demand and needs at the forefront
  • Helps stay ahead of unexpected market volatility
  • Imparts the ability to easily manage your inventory when you have a complex product portfolio
  • Prevents the breakdown of the supply chain in case one component of it stops working
  • Allows complete visibility of the supply chain, thus allowing flexibility and impulsiveness.

Lean versus Agile Supply Chain, what is the difference?

The lean versus agile supply chain debate is an old one. In fact, in many instances, the state of lean and agile supply chains and the process of their transformations may seem very similar. However, they are fundamentally different because the concepts driving them are different.

A lean supply chain operates to remove any unnecessary expenditure by optimizing the supply chain to its maximum. It does not contribute to the ability of the supply chain to react to the market in time at present and future times. That is where agility comes in. An agile supply chain stays ready for any market change through constant information feeding, analysis, and implementation. Nonetheless, cost optimization can be thought of as a valuable by-product of that process.

What’s next?

The future of all systems and organizations is agility. Thus, an agile supply chain is the natural next step for any supply chain that is still traditionally operated. Moreover, it is agility only that can place real control in the hands of supply chain managers and allow them to run it perfectly in a real-time environment.

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Dr. Adrian Reisch


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