Chapter 7 The agile supply chain

1. Chapter 7The agile supply chain

2. 1. 2. The concept of agility Agile practices Content

3. What are the dimensions of the agile supply chain? 1 The concept of Agility • Key issue

4. 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

5. 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

6. 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

7. The concept of Agility • Demand characteristics and supply capabilities

8. The concept of Agility Comparison of characteristics of lean and agile supply

9. The concept of Agility Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile supply chain

10. 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

11. The concept of Agility • Application of leagility: separation of ‘base’ and ‘surge’ demands

12. Application of leagility: the Pareto curve approach Source: Martin, Christopher and Denis Towill, An integrated model for the design of agile supply chains

13. Application of leagility: the de-coupling point approach

14. 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

15. 1. 2. The concept of agility Agile practices Content

16. How can we use agile practices to benefit from turbulence in the marketplace? 1 Agile practices • Key issue

17. 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.

18. Demand variance Time Agile practices • Benefiting from variance • Three sources of demand uncertainty • Seasonality • Product life cycles • End-customer demand

19. 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

20. 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

21. 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

22. Variety decrease Mass production Flexibility Modular supply network Craft production Volume decrease Agile practices • Benefiting from small volume

23. An integrated model for enabling the Agile supply chain