agile supply chain

Group members:-
Group 5
NMIMS Family Business
2009 – 2011 Div B
AGILITY: Definition

 The ability to respond rapidly to

unpredictable changes in demand.

 Agility is not a single company concept,
it extends from one end of the supply
chain to the other.

 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 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, Agile supply chain
common systems
 The concept of Agility

 Demand characteristics and

supply capabilities

Lean supply 198 Efficiency,

chain 0’s cost
Focu
come more knowledgeable about product
s
Agile supply 199 Responsiven
chain 0’s ess
 The concept of Agility
 Demand characteristics and supply
capabilities
Distinguishing Lean supply Agile supply

attributes
Typical products Commodities Fashion goods
Marketplace demand Predictable Volatile
Product variety Low High
Product life cycle Long Short
Customer drivers Cost Availability
Profit margin Low High
Dominant costs Physical costs Marketability costs
Stockout penalties Long-term contractual Immediate and volatile
Purchasing policy Buy materials Assign capacity
Information enrichment Highly desirable Obligatory
Forecasting mechanism Algorithmic Consultative
 The concept of Agility

Comparison of characteristics of lean

and agile supply
Characteristic Lean Agile
Logistics focus Eliminate waste Customers and markets
Partnerships Long-term, stable Fluid clusters
Key measure Output measure such as Measure capabilities, and
productivity and cost focus on customer
satisfaction
Process focus Work standardization, Focus on operator self-
conformance to standards management to maximize
autonomy
Logistics planning Stable, fixed period Instantaneous response
The concept of Agility

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

supply chain
 The concept of Agility
Supply
characteristics

Long lead Plan and Hold inventory:

time control hedge and deploy

React and
Short lead JIT: pull execute: agile
time scheduling capabilities Demand
Predictable Unpredictabl characteristics
market e markets
 Application of leagility: the Pareto curve
approach

Source: Martin, Christopher and Denis Towill, An integrated model

for the design of agile supply chains
 Application of leagility: the de-coupling point
approach
 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
Agile practices

How can we use agile practices

to benefit from turbulence in the
marketplace?
Agile practices
 Threecharacteristics 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 variance
Three sources of demand uncertainty
Seasonality



variance
Demand



Product life cycles
Time
End-customer demand
Agile practices

Benefiting from variance

Three sources of demand uncertainty
Seasonality
Product life cycles
Organiz
 e
Adjust
Volume  Agile capability
 is needed

Micro-
 Start up
markets
variety
End-customer demand
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 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 practices

Benefiting from small volume

Variety Mass
decrease production
Flexibility

Modular supply network

Craft
production
Volume
decrease
Impact of
Agile Waste
Waste
Impact of
Manufacture Standardis
Standardis
Reduction
Reduction Vendor
Vendor Agile
Managed
Managed
ation/
ation/
Inventory
Inventory
Logistics
Modularisa
Modularisa Synchron
Synchron
tion
tion ised
ised
Economies
Economies Operatio
Operatio
of
of Scale
Scale ns
ns
Lean
Lean
Production
Production Agile
Agile Process
Process
Supply
Supply
Capacity
Capacity Manage
Manage
Manage
Manage ment
ment
ment
ment

Set-up
Set-up Agile
Agile Rapid
Rapid Organisati
Organisati
Time
Time Flexible
Flexible Postponed
Postponed Supply
Supply Replenish
Replenish onal
onal
Reductio
Reductio Response
Response Fulfillment
Fulfillment Chain
Chain ment
ment Agility
Agility
nn

Cross
Principles Cross
Function
Function
al
al
Process
Process
Demand Teams
Teams
Re-
Re- Quick
Quick Demand
engineerin
engineerin Response
Response Driven
Driven Visibility
Visibility
gg of
of
Programmes Continuou
Continuou
Real
Real
Non-Value-
Non-Value- Demand
Demand
Adding
Adding ss
Time
Time Replenish
Replenish
Reduction
Reduction ment
ment
Program
Program
mes
mes
Actions
 


THANK YOU