7 agile supply chain
TRANSCRIPT
Chapter 7
The agile supply chain
Content
The concept of agility1.
Agile practices2.
The concept of Agility
Key issueKey issue
1111What 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 capabilities
end-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 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(基于算法 )
Consultative(基于咨询 )
The concept of Agility
Characteristic Lean Agile
Logistics focus Eliminate wasteCustomers and markets
Partnerships Long-term, stable Fluid clusters
Key measureOutput measure such as productivity and cost
Measure capabilities, and focus on customer satisfaction
Process focus
Work standardization, conformance to standards
Focus on operator self-management to maximize autonomy
Logistics planning
Stable, fixed periodInstantaneous 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
1111How 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
Dem
an
d v
aria
nce 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