CH8: Agile Supply Management

By: Ohud Altalhi

 The Need for Agility:
 The new breed of enterprises such as Zara & Dell are certainly demonstrating
apparently different success models when it come to responding to
customers in a fast-moving environment, where life cycles are short and
variety reigns. The winners in this environment are those that can respond
quickly and efficiently.

 The focus in an agile supply chain is on being fast and also on being smart
in how you aligning with the increasingly demanding customers. But the
tenet is still that supply chains are driven by the end-consumers in the dynamic
market places.
 Dell Computer is a master at assemble to order, and often the
assembly were carried out during the distribution and delivery
process, so that the customer can have their computer delivered in
just a few days.
 And for Dell, the generic components in the up part of the supply
chain were produced by the make-to-forecast model where
efficiency and low cost can be achieved; the assemble-to-order at
the final sector of the supply chain delivers the speed and
responsiveness.
 Agile Supply Chain Concept:
 Agile supply chain is: A system of product distribution that is concerned with
doing things quickly, saving costs, being responsive to the market and consumer
demands, maintaining flexibility, and keeping productivity at all-time highs.

 Agile supply chains rely on real-time data to help make decisions in day-to-day
operations, as well as projected data in supply forecasts. Combined, it creates a
more robust process that saves businesses and consumers money, eliminates
waste of excess inventory, foresees potential shortages, and does it all quickly
and productively. With agile supply chain, flexibility is key.
 An agile supply chain is focused on these traits
in the production and delivery of goods:

 Speed

 Cost efficiency

 Responsiveness

 Flexibility

 Productivity
 The operational planning of agile supply chain is focused on the
capabilities for responsiveness and constantly in anticipation of
unpredictable sudden changes in demand.
 In which business circumstances that the
agile supply chain is worthwhile?

Volume and variety observation.

 Agile supply chain framework:
 Professor Alan Harrison proposed a framework for agile supply chain.The four
key components of the framework can be interpreted as follows:
 Agile supply chain is about virtual integration:

 Agility implies that the supply chain is able to respond to the changes in the
local market requirements and much of these can perhaps be the opportunities.
To do this, agile supply chain must be able to leverage skills, assets and other
resources across the divisional units in the local region in which they operate.

 Virtual integration is characterized by informal and flexible and dynamic

relationships between the divisional units and different sectors of the supply
chain.
 Agile supply chain relies on market
sensitivity:
 Market sensitivity means that the supply chain’s internal measures linked
closely with the external market that the supply chain is operated in. All too
often, we see performance measures and business assessment are based on the
data, information from with the internal operation and mostly generated within
the supply chain.

 Market sensitivity has two implications. First is to the internal performance

measure. This means linking internal customers and external customers all to
the ultimate end-consumers.

 Second, is to quick responsiveness. How quick can a supply chain respond to

the market change is a primary measure for the agility of the supply chain.
 Agile supply chain needs improved process integration:

 Agile supply chain will require higher level of integration between internal
operational processes, such as sales, forecasting, production planning, sourcing,
and delivery.

 How fast the supply chain can react to the market change is dependent on the
speed of changes in many other internal processes.
There are number of things that the supply chain managers can
do to make difference:

1- Forecast by market not by business units.

2- Set out to create a capability of coordinating the three prime
sectors source-make-deliver.
3- Managers must link forecasting to improvement goals.

Business improvement will only make sense when it responses

to the changing directions of the market.
 Agile supply chain is often dynamic network based

Looking at the agile supply chain’s architecture, managers need to clarify how
the participating members of the agile supply chains are best connected with each
other. Supply chain configuration can be divided broadly into two types of
networks: stable network and dynamic network.

However, the dynamic network is preferred by the agile supply chain and it has a
set of very different characterizes. In the dynamic network, the ties between
suppliers and buyers, and amongst the suppliers themselves, are much looser than
that of stable network.
 The network relies on more sophisticated information systems with high level
of information disclosure between the parties, whereby instant switch of
connection can be easily established if required by the sudden change of
market. For those reasons, the dynamic network is undoubtedly a more superior
form of networking for agile operations.