responsiveness in the supply chain

Responsiveness in the Supply Chain:

Achieving a Competitive Advantage

BACHELOR THESIS L.C.A. VINKE

ANR: 655256

Name: L.C.A. Vinke

Topic: Aspects of supply chain management

Sub topic: Customer responsiveness

Study Program: 2007: BSc Business Administration (1-3)

Supervisor: dr.ir. H.R. Krikke

Date: 11-06-2010

Version: Final version

Amount of words: 9237

2 Bachelor Thesis L.C.A. Vinke ANR: 655256

Abstract

Nowadays, customer responsiveness is becoming increasingly important in the supply

chain, as a result of enhance variety and customization requirements. This thesis studied

various supply chain solutions to responsiveness. Responsiveness was divided in three di-

mensions (including time-horizons), volume (operational), product (tactical) and process

(strategic); each dimension was accompanied by a supply chain solution. These solutions

were leanness, making your processes more efficient by eliminating waste; agility, using

real-time market data to respond quickly to unpredictable and volatile demand; and leagil-

ity, a hybrid form of the two, where agility is used downstream- and leanness upstream of

the order decoupling point.

Leagility was found to be a solution for volume responsiveness, agility was related to the

product dimension and leanness was associated with process responsiveness. However,

when implementing leagility, one should include two order decoupling points, a down-

stream physical decoupling point, separating the lean from the agile part; and an upstream

information decoupling point, spreading real-time market data across the entire chain. To

achieve product responsiveness, the agile strategies of postponement and modular product

design are useful. For process responsiveness, the lean principles of modular process design

and JIT were depicted.

The three dimensions should not be seen in isolation of each other, companies should focus

on all three to achieve the greatest responsiveness. To be able to implement leagility, lean-

ness and agility should be considered, where lean is an enabler of agility. However, even

the most responsive supply chain should incorporate some form of forecasting, to mitigate

for unfavorable surprises.


Index

Abstract ............................................................................................................................................ 2

1. Introduction ............................................................................................................................. 5

1.1 Problem indication .......................................................................................................... 5

1.2 Problem statement........................................................................................................... 6

1.3 Framework of chapters .................................................................................................... 6

1.4 Relevance ...........................................................................................................................7

1.5 Research Design and data collection ...............................................................................7

2. Defining customer responsiveness ......................................................................................... 8

2.1. Responsiveness vs. flexibility .......................................................................................... 8

2.2. Dimensions....................................................................................................................... 9

2.2.1. Flexibility .................................................................................................................. 9

2.2.2. Responsiveness ........................................................................................................ 9

2.3. Time-horizons ................................................................................................................ 10

2.4. General definition ........................................................................................................... 11

3. Defining lean and agile .......................................................................................................... 12

3.1. Lean ................................................................................................................................. 12

3.1.1. Practices of lean....................................................................................................... 12

3.1.2. General definition ................................................................................................... 13

3.2. Agility ............................................................................................................................... 14

3.2.1. Practices of agility ................................................................................................... 16

3.2.2. General definition ................................................................................................... 17

3.3. Differences of leanness and agility ................................................................................ 17

4. Leagility and the order decoupling point(s) ..................................................................... 19

4.1. Leagile strategies............................................................................................................. 19

4.2. Decoupling point theory ................................................................................................ 20

4.3. Decoupling point positioning......................................................................................... 21

4.3.1. Physical decoupling point ...................................................................................... 22

4.3.2. Information decoupling point ............................................................................... 23

4.4. Leagile practices ............................................................................................................. 23

4.5. Demand consolidation................................................................................................... 24

4.6. Horizons ......................................................................................................................... 24

5. Syntheses/Discussion ........................................................................................................... 25

5.1. Volume responsiveness: Leagility................................................................................. 25

5.2. Product responsiveness: Modular product design ...................................................... 26


5.3. Process responsiveness: Modular process design ....................................................... 27

5.4. Forecasting ..................................................................................................................... 27

5.4.1. Demand consolidation ........................................................................................... 28

5.5. Remarks .......................................................................................................................... 28

6. Conclusion ............................................................................................................................. 29

6.1. Summary of findings ..................................................................................................... 29

6.2. Conclusion ...................................................................................................................... 30

6.3. Recommendations ......................................................................................................... 30

References ..................................................................................................................................... 32


1. Introduction

1.1 Problem indication

Recent market developments show that product variety and (mass)customization are increa-

singly prevalent in the market (Reichhart & Holweg, 2007). Companies across different in-

dustry sectors, such as clothing, groceries and automobiles, are becoming more and more

aware that customers can be won by supplying a wide variety of products, combined with

short, responsive lead-times (ibid). Timely responding to customer demand can be crucial

capability, possibly leading to a competitive advantage. It is therefore of great importance

that companies adopt some form of responsiveness in their supply chain. The way this can be

done will be elaborated in this paper.

To achieve responsiveness in the supply chain one should start by defining the concept.

When emphasizing responsiveness, scientific literature often shows us two paradigms, lean-

ness and agility (Harrison & van Hoek, 2008). Both concepts are widely used, both indivi-

dually and combined as leagility (Naylor, Naim & Berry, 1999). Lean refers to practices that

make the chain more efficient and responsive by eliminating unnecessary waste. Agility is

about using real-time demand data to respond quickly to end-customer demand. Leagility is

a hybrid of the two.

When implementing leagility, a supply chain problem arises. Traditionally, the order de-

coupling point(ODP) separates the supply chain‟s upstream (push) and downstream (pull)

part. When implementing leagility, leanness is used for the upstream part, whilst agility is

applied downstream (Mason-Jones, Naylor & Towill, 2000). Both concepts adopt customer

responsive pull-scheduling. Hence, a push-pull mismatch arises between the ODP and leagili-

ty (Mason-Jones & Towill, 1999), summarized in figure 1.

Figure 1.: Push-pull conflict indication


1.2 Problem statement

What are the customer responsive supply chain concepts of leanness, agility and leagility and

how can they be implemented to achieve supply chain responsiveness?

1.3 Framework of chapters

The aim of this paper is to elaborate on various ways of achieving responsiveness. Starting

with defining customer responsiveness itself, leanness, agility and leagility will be empha-

sized later. The study employs the following research questions:

1) What is customer responsiveness in the supply chain?

2) What are lean - and agile supply?

3) How can leagility be implemented, using decoupling point theory?

4) How can a firm achieve customer responsiveness in its supply chain in order to attain

a competitive advantage?

The framework of chapters is as following:

1) Introduction

2) Defining customer responsiveness

3) Defining leanness and agility

4) Leagility and the order decoupling point(s)

5) Syntheses and discussion: How to implement customer responsiveness in order to

achieve a competitive advantage?

Chapter two, three and four are used for defining the concepts. They are primarily meant as

start-up for the fifth chapter, where results will be combined and discussed. The following

conceptual framework is proposed:

Figure 2.: Conceptual framework


1.4 Relevance

The academic relevance of this thesis is that it proposes a solution for two conflicting theo-

ries (leagility vs. ODPs). Also, implementations will be given for the various dimensions of

responsiveness. The managerial relevance is embedded in the fifth chapter, where the con-

cepts will be combined, showing possible ways of achieving a competitive advantage through

supply chain responsiveness.

1.5 Research Design and data collection

This research is a literature study, reviewing and extending existing literature to create solu-

tions to the research questions. The required information will be retrieved from the interna-

tional „Web of Science‟, using Tilburg University‟s iPort facility. Academic databases such as

Sciencedirect, Proquest and Abi/Inform will be addressed. While reviewing different publica-

tions, they will be classified in A- and B-papers, using Web of Science‟s citation index. One

can find related articles by using the snowball-method, retrieving literature through the ref-

erence lists of other publications, and using Web of Science‟s „related articles‟ section.

Keywords used for finding appropriate literature are „lean(ness)‟, „agil(e)(ity)‟ and „lea-

gil(e)(ity)‟. However, most of the literature was found by looking in the reference lists of key

articles like Mason-Jones(1999), Cristopher (2001) and Reichhart & Holweg (2007). Articles

found in these reference sections were retrieved by using 1) names of the authors and 2)

title(words) as keywords.


2. Defining customer responsiveness

To define an ambiguous concept as responsiveness, its various components should be consi-

dered. Using system theory, Ackoff (1971) defines a response as

“a system event for which another event that occurs to the same system or to its environment is neces-

sary but not sufficient; that is, a system event produced by another system or environmental effect (the

stimulus).” (pp. 664)

From this definition can be concluded that a response is an action that results from another

action in the (direct) environment. Hence, responsiveness can be seen as the actual ability to

respond. Putting it in a business perspective, such a response can be a reaction to changes in

customer demand.

2.1. Responsiveness vs. flexibility

Holweg & Reichhart (2007) state that, given the importance of responsiveness in contempo-

rary industries, responsiveness should be seen apart from related concepts like flexibility.

They argue that a lot of ambiguity exists in literature concerning their separation. They are

quite alike, but do not fully capture the same thing. Building on e.g. Ackoff (1971), Upton

(1994) and Zelenovic (1982), they define flexibility as

“the ability of any system to adapt to internal or external influences, thereby acting or responding to

achieve a desired outcome” (p. 1148)

Responsiveness is

“defined by the speed with which the system can adjust its output within the available range of the four

external flexibility types: product, mix, volume and delivery, in response to an external stimulus, e.g. a

customer order” (p. 1149)

In this definition of responsiveness, they build upon Slack‟s (1987) four flexibility-types. Fol-

lowing e.g. Catalan and Kotzab (2003) and Holweg (2005a), Holweg & Reichhart (2007) ar-

gue that responsiveness is generally customer driven, linked to events in the external envi-

ronment. It is here that the major difference between responsiveness and flexibility arises,

namely that flexibility is both internally and externally driven (Upton, 1994), whilst respon-

siveness is solely driven by external influences. Hence, one can see responsiveness as result-

ing from external flexibility. Therefore, this thesis will use flexibility as a prerequisite of res-

ponsiveness, as firms need to be flexible, capable of making (short-term) adjustments, in or-

der to be responsive. The various flexibility- and responsiveness-dimensions are discussed

next.


2.2. Dimensions

Dimensions are those areas where flexibility or responsiveness is actually required for.

2.2.1. Flexibility

The four flexibility-types(dimensions) defined by Slack (1987) are product, mix, volume and

delivery. Product flexibility is flexibility in supplying various products, volume flexibility is

about the actual quantity required by customers, mix flexibility is related to the variety (cus-

tomization) of supplied products, delivery flexibility refers to the processes required to deliv-

er demanded products. Every flexibility-dimension can be related to a time-horizon, as dis-

cussed later. The dimensions of responsiveness are depicted next.

2.2.2. Responsiveness

According to Holweg (2005b) customer responsiveness is highlighted by three dimensions,

product, process and volume. The product dimension is based upon customization and

product variety, the process dimension relates to production lead-times and responsive capa-

bilities (efficient processes) of the players in the supply chain. Finally, the volume dimension

depends on customer expectations and the nature, volatility, quantity and predictability of

demand. Based on Kritchanchai and MacCarthy (1999), Holweg defines responsiveness, as

“the ability to react purposefully and within an appropriate timescale to customer demand or changes

in the marketplace, to bring about or maintain competitive advantage” (p. 605)

Holweg argues that to achieve responsiveness, the system requires some type of flexibility.

Which type is needed depends on the structure and environment of that system.

2.2.2.1. Process

Kritchanchai and MacCarthy (1999) argue that responsiveness is divided into four main

components, stimuli, awareness, capabilities and goals. Stimuli are the major factors driving

firms to respond, creating incentives to develop capabilities that impact a system‟s activities

and goals. Stimuli can come from customer needs and market conditions, environmental

uncertainty or competitors. Awareness is the actual recognition of stimuli, possibly triggering

a response. Capabilities refer to the various processes and activities that enable firms to re-

spond to stimuli. Goals are the actual outcomes firms wish to achieve through their activities.

Firms tend to respond to stimuli that enable them to achieve their desired goals. As a result,

responsiveness is goal driven. However, not every company will be driven to respond to every

occurring stimulus and goals vary per company, industry and environment. Kritchanchai &

MacCarthy (1997) view responsiveness as a process, starting at the occurring of a stimulus


and ending at the actual response that leads to the achievement of desired goals, linking it to

Holweg‟s (2005b) process dimension. The processes should be designed to be efficient.

2.2.2.2. Product and volume

Fisher (1997) states that products can be divided in functional and innovative. He argues

that functional products are characterized by predictable demand, whereas innovative prod-

ucts are known for their unpredictable demand. Hence, both classes need another supply

chain. Functional product demand should be met with an efficient process, ensuring that

costs are as low as possible. Innovative products should be supplied using a market respon-

sive process, ensuring that its unpredictable demand can be met at any time, without having

to back it up with (large amounts of) safety stock.

Fisher‟s division can be seen as an application of both the product and volume dimensions,

proposed by Holweg (2005b). Its link with the product dimension lies in the nature of the

two product classes, whether they are largely customized and available in a variety of possi-

bilities. The division is related to the volume dimension through the separation between pre-

dictable and unpredictable demand quantities.

2.3. Time-horizons

Based upon Carlsson (1989), Upton (1994) states that flexibility can be achieved by being

able to make adjustments over a range of time-horizons, strategic, tactical and operational.

Holweg & Reichhart (2007) argue that responsiveness also contains a time-horizon, it can be

divided into short-term(operational), medium-term(tactical) and long-term(strategic) res-

ponsiveness. The short-term refers to the ability to respond to rapid demand changes, called

volume responsiveness. The medium-term refers to variety and customization requirements,

hence linked to product responsiveness (Holweg, 2005b). The longer-term relates to the

process dimension.

Dimensions

/ types

Time horizon

Flexibility Responsiveness

Responsiveness

dimensions

Volume Operational Short-term

Product Tactical Medium-term

Process Strategic Long-term

Flexibility types Volume Operational Short-term

Product Tactical Medium-term

Mix Tactical Medium-term

Delivery Strategic Long-term

Table 1.: linking dimensions to time-horizons


The dimensions of flexibility and responsiveness are quite similar, and can therefore be

linked to the same time-horizons, as depicted in table 1.

2.4. General definition

As stated before, flexibility, the ability to adjust to changes, is a prerequisite of responsive-

ness, the ability to respond to these changes. Before one can respond, one should be able to

adjust.

The following definition of responsiveness is proposed: Customer responsiveness in the

supply chain is the ability of a supply chain to respond purposefully to changes in the exter-

nal environment (for example the market), doing so on time and in full, by offering the right

variety and customization.

Two popular customer responsive paradigms are „leanness‟ and „agility‟. Traditionally, these

concepts haven been seen as different. Recent trends however show that it is not necessary to

view them in isolation, and hybrids exist as „leagility‟ (e.g. Goldsby, Griffis & Roath, 2006).

The next chapter will elaborate on leanness and agility, providing definitions that allow the

subsequent chapter to address leagility.


3. Defining lean and agile

3.1. Lean

Traditionally, lean has been developed as manufacturing philosophy. In their book, „The Ma-

chine that Changed the World‟, Womack, Jones & Roos (1990) depict the various operations

Japanese car manufacturers employ to pursue optimal performance. One of the most impor-

tant techniques was Taiichi Ohno‟s „Toyota Production System‟.

Cristopher (2000) defines lean as “doing more with less”. Lean thinking is built upon adding

value by eliminating unnecessary waste (Japanese „muda‟) from processes (Womack & Jones,

1996), making the chain more efficient. Ohno (1988) has developed seven categories of waste,

1) defects in production, 2) overproduction, 3) inventory, 4) unnecessary processing, 5) un-

necessary movement of people, 6) unnecessary movement of products/goods and 7) waiting

(by employees). An eighth waste was added by Womack & Jones (1996), namely that of prod-

ucts that do not live up to the requirements of customers.

In an attempt to create customer value, firms applying lean thinking tend to identify the val-

ue embedded in products, identifying and supporting their value stream (Goldsby et al.,

2006). Hence, they try to attain perfection by making the customer pull that specific value

from the firm. In effect, lean thinking employs pull-scheduling, meaning that the firm makes

customers pull products through the system, having them ready exactly when the customer

wants. As a result, inventories are minimized. Here, customers are end-customers as well as

(manufacturing) steps in the supply chain, making it an enterprise wide system. However,

the chain is not set to work until the end-customer triggers the system by placing demand.

Increasingly, low lead-times are an important competitive advantage. Companies implement-

ing responsiveness try to reduce their lead-times, enhancing their ability to respond to end-

customer demand. Any firm applying lean thinking is supposed to do so, since excess time is

a waste. Failure to do so, will result in a poorly performing system (Naylor, Naim & Berry,

1999).

As lean thinking implies enhancing supply chain efficiency by eliminating unnecessary waste,

designing processes to achieve responsiveness, it relates to the process dimension of respon-

siveness.

3.1.1. Practices of lean

Operational practices enhancing waste elimination include producing in small batches and

applying rapid changeover (Harrison & van Hoek, 2008). Ideally, the batch size should be

one, creating the highest possible responsiveness in the chain. Changeover-time is the time it


takes for setting up a machine to produce the first good of a batch after the last good of the

preceding batch is finished (ibid). When producing batches of one, it is key to minimize these

changeover-times.

Often used lean strategies are order-to-replenishment and make-to-order. The first is based

upon only replacing those goods that are sold, characterized by very small lead-times. Make-

to-order implies that firms don‟t start production until end-customers place orders. Extend-

ing this view, firms can also decide to postpone (sub)assembly of a (part of a) product until

the end-customer places demand.

By using modular processes, dividing processes in interchangeable sub-processes(modules),

the chain can be made more responsive. Processes should be based on the same modules,

allowing employees to be deployed interchangeably across the chain, there where they are

needed most. Chains of processes should be as short as possible, like at eBay

(http://ww.ebay.com), where all unnecessary steps were eliminated from the value chain

(Poppendieck, 2002), to ensure maximal responsiveness.

A popular lean application is „Just-in-Time (JIT)‟, adopted by Toyota. JIT is found in two

forms, big-JIT, seeking perfection by enhancing all processes, and little-JIT, applying JIT to

logistics (Harrison & van Hoek, 2008). Companies excelling in little-JIT tend to 1) make

processes as simple and visible as possible, assuring 2) minimum defects and 3) minimum

machine down-time, thereby 4) minimizing delay and 5) inventory, ultimately making prod-

ucts arrive at the customer 6) just-in-time (ibid). JIT can be seen as a form of material-

resource-planning(MRP). MRP uses push-scheduling for answering the questions of when?

and how many?; whilst JIT adopts pull-scheduling, making it far more responsive than MRP.

Another way to reduce waste in the supply chain, is adopting total quality management, lean

six sigma. Increasing the quality of the system decreases defects and eliminates waste, facili-

tating the implementation of „zero inventory management‟ (de Haan & Yamamoto, 1999).

Efficient customer response (ECR), where supply chain management is aligned with demand

management, is a practical implementation of leanness. The supply chain should be designed

to meet customer demand. Thereby lowering response times, allowing minimal lead-times

and greater responsiveness.

3.1.2. General definition

The following definition is proposed: Lean thinking is enriching end-customer value by eli-

minating waste in processes, making the chain more efficient. Doing so by examining these

processes, identifying and quantifying waste, in a timely manner by employing pull-

http://ww.ebay.com/


scheduling. Thereby making customer-value flow through the process, seeking perfection at

every step. Being able to do more with less.

To be able to respond to customer demand, it is important that a very small forecast-horizon

is used. In a lean-oriented system, that horizon is often not more than two weeks (Goldsby et

al, 2006). This small horizon is necessary to ensure rapid response. It is therefore important

that firms implementing responsiveness use market knowledge to respond to end-customer

demand (Naylor et al., 1999). Nowadays, a lot of customers tend to want their products

„right-now‟, so it is not always possible to be fully accurate in forecasting customer demand.

Lean thinking is best applied when relatively predictable and stable demand exists, with low

variety and high volume (Cristopher, 2000), allowing the greatest efficiency. The principle

trying to respond real-time to customer demand, is called agility. This more elaborate con-

cept is better able of coping with highly variable demand, as depicted next.

3.2. Agility

Agility is about being nimble, quickly moving about; the ability to respond rapidly to changes

in some environment. Cristopher (2000) argues that agility is concerned with three characte-

ristics, variety (e.g. customization), variability and volume (nature of demand). Variety is

the amount of required variety and customization. Variability can be seen as predictability,

the nature of demand. Volume is the amount of goods required by the market. Hence, agility

can be linked to the product (variety/customization), as well as the volume (nature of de-

mand) dimensions of responsiveness.

Cristopher (2000) states that agility is concerned with high variety, low predictability and

low volume. He depicts an agile supply chain as being market-sensitive, able of reading -and

responding quickly to- real-time demand. Naylor et al. (1999, p. 108) state that

“Agility means using market knowledge and a virtual corporation to exploit profitable opportunities in

a volatile market place.”

Power, Rhaman & Sohal (2001) add that agility is an holistic concept, that is of operational

and tactical importance. The latter can be explained by the fact that agility deals with real-

time demand, something that cannot be forecasted on a strategic basis, linking it to short-to-

mid-term responsiveness. Cristopher (2000) states that many companies are forecast- rather

than demand-driven. He adds that the rapid development of Efficient Customer Response

(ECR) and information technology(IT) however make it easier to gather market information,

enabling companies to respond to real-time demand.

A virtual organization is information- rather than inventory-based (Cristopher, 2000). Part-

ners in the supply chain employ the same real-time demand data in their system, allowing


them to work together in a far more efficient way than they would, using their own data.

Process alignment and integration enhances information-sharing within the supply chain.

Cristopher (2000) names the increasingly prevalent process integration and collaboration

between supply partners the „extended enterprise‟, which knows no boundaries and is ruled

by trust and commitment. Hence, these partners are linked together in a supply chain net-

work. Wrapping up, the four characteristics of agility are that it is market-sensitive, virtual,

process integrated and network based (see figure 3.) This view is supported by e.g. Cristo-

pher (2000) and Naylor et al. (1999).

Figure 3.: Characteristics of agility (based upon Harrison & van Hoek, 2008)

Goldsby et al.(2006, p. 60) state that “agility employs a „wait and see‟ approach to demand, not

committing to products until demand becomes known”. They argue that firms implementing agili-

ty should produce on a make-to-order basis, only producing those goods that are demanded.

They also support the „extended enterprise‟ by stating that companies should be flexible

throughout the entire supply chain to be agile. Also, they argue that a company‟s workforce

should be flexible as well, cross-training employees to enable deployment across a variety of

tasks and processes. This is enhanced by employing modular design of processes, a lean prin-

ciple.

Power et al. (2001) state that the effectiveness of a firm‟s responsiveness is dependent of the

capabilities of its supply chain partners. If one link in the chain misses the capabilities to de-

liver quality and on-time delivery, this will have significant impact on the rest of the chain,


even in times of stable demand. It is key that every player identifies and captures opportuni-

ties in the marketplace faster than its competitors (Cai-feng, 2009), thereby creating sus-

tained competitive advantage. Goldsby et al. (2006) argue that agile supply chains are often

very short, consisting of a limited number of intermediaries, characterized by process inte-

gration and information sharing, resulting in minimal lead-times.

3.2.1. Practices of agility

Harrison & van Hoek (2008) argue that firms implementing agility should first try to under-

stand the causes of demand unpredictability, after which they should find out how to benefit

from this uncertainty. Secondly, the various processes in the supply chain should be speeded-

up. Speeding up the upstream part, the firms‟ suppliers and their suppliers, is especially im-

portant. Finally, the corporations should develop capabilities and processes that facilitate

customer serving, enabling the firm to respond quickly to changes in demand.

They also argue that postponement is increasingly prevalent in organizations. Postponement

exists whenever a company decides to delay the exact specification of products until the exact

end-customer demand is known, and then delivering the product to the customer within an

acceptable lead-time. It is a form of assemble-to-order, also prevalent in lean thinking. To be

able to apply postponement, a company should take it into account at the design of the prod-

uct itself (ibid), for instance by using modular design of components, allowing parts (mod-

ules) to be used interchangeably across products. Here, customization can be enhanced by

postponing the assembly of the modules, allowing customers to choose whichever modules

they want in their product. See for example pc manufacturer Dell (http://www.dell.com).

Dell uses a variety of modular parts in its products, offering various assembly-packages to let

customers choose whichever set-up they want, offering variety and customization.

In order to be as agile as possible, a firm should ensure that its supply chain is as short as

possible (e.g. Goldsby et al. (2006)). Large numbers of players result in a greater chance of

bottlenecks, decreasing the agility of the chain. A chain is as agile as its weakest link. Harri-

son & van Hoek (2008) furthermore state that a firm should align its goals with the various

players in the chain, as this will result in better performance of the virtual organization, ulti-

mately leading to greater agility. Joint decision making is vital as well, ensuring that every

player pursues the same goals.

To enable the greatest market-sensitivity, firms should listen to what the customer has to say.

Harrison & van Hoek (2008) argue that „voice of the customer’, where an active, ongoing

conversation with possible end-customers is pursued, allows companies to achieve greater

sensitivity, whilst mitigating the possibility of false demand interpretations.

http://www.dell.com/


An application of the virtual organization can be found at the Spanish fashion-retailer Zara

(Inditex group) (http://www.zara.com), where store managers constantly communicate with

designers. The managers use IT-devices to communicate to the designers what customers

want. As a result, the designers can design exactly that product customers require, supplying

it within a two week lead-time. Hence, Zara stores are delivered new (fashion and customer

driven) products every two weeks, rather than every season (which is accustomed to the fa-

shion industry). Therefore, Zara is an agile company, using real-time demand data to supply

whatever the customers want, within an acceptable lead-time.

3.2.2. General definition

The following definition is proposed: Agility is the ability to be market sensitive, responding

rapidly to unpredictable changes in end-customer demand, using information technology

and market information. Integrating the various processes in the supply chain, collaborat-

ing with the various players and creating a virtual corporation that is based upon a lean

philosophy of pull scheduling.

3.3. Differences of leanness and agility

A useful overview of the differences between lean and agile is depicted in table 2, illustrating

that lean is about efficient processes, keeping costs low. Agility is more about being respon-

sive. However, lean is an enabler of agility, since process-efficiency is necessary to be respon-

sive.

Distinguishing attributes Lean Agile

Customer-demand Predictable Unpredictable

Product-types Commodities (functional goods) Fashion (innovative) goods

Product variety Low High

Product life-cycle Long Short

Customer drivers Cost (as low as possible) Availability (when necessary)

Profit margin Low High

Dominant costs Physical Cost Market mediation cost

Information enrichment Highly desirable Obligatory

Responsiveness dimensions Process Volume / Product

Modularity In processes In products

Focus Efficiency Market sensitivity

Table 2.: Distinguishing attributes of lean and agile (based upon Harrison & van Hoek, 2008)

As lean was defined as doing more with less, the distinction with agility becomes clear. Agility

is more about quickly responding to demand, while leanness is about enriching and speeding

http://www.zara.com/


up the processes in a supply chain. In effect, agility is more capable of dealing with highly

variable and unpredictable demand. Lean is based upon process-efficiency, that works best

when demand is predictable. Agility on the other hand extensively uses (real-time) market

information, thereby integrating and aligning the various processes, enabling firms to re-

spond quickly to changes in demand.

Linking leanness and agility to Fisher‟s (1997) framework, lean is viewed as useful for more

predictable demand, therefore applicable on functional products. Lean is then seen as effi-

ciency. Since leanness was associated with making processes more efficient, this makes sense.

Lean should therefore be used in order to minimize physical logistics cost, hence focused on

minimizing total cost. Agility on the other hand is seen as responsive, able of coping with un-

predictable demand, therefore applicable to more innovative products, which require a res-

ponsive chain. As a result it should be used for minimizing market mediation cost, that for

instance arise from losing customers by not meeting demand.

However, defining lean as only being efficient is not completely fair; if applied correctly, it is

a major contributor to a firm‟s responsiveness, as efficient processes allow companies to re-

spond faster to customer demand. Hence, leanness and agility need not necessarily be seen as

two different concepts. They can be combined in the hybrid form leagility (Naylor et al.,

1999), elaborated next.


4. Leagility and the order decoupling point(s)

4.1. Leagile strategies

As stated in the previous sections, leanness and agility are applicable to different situations.

Lean was found to be of better use in environments with relatively high volumes of stable

demand, whereas agility is better capable of dealing with low-volume, unpredictable demand.

As a result, lean is better applicable in controllable situations, where companies are able to

forecast demand on some time scale (mostly two weeks). Agility on the other hand is more

useful in demand driven situations, where demand is not known in advance.

Naylor et al. (1999) depict leagility as a hybrid strategy, consisting of lean and agile parts.

They argue that both lean and agile are complementary to each other and that neither one is

better than the other; which one to implement is dependent of the specific situation. Cristo-

pher & Towill (2001) argue that three ways exist to successfully „marry‟ the lean and agile

paradigms. They are the Pareto curve approach, the „Separation of ‘base’ and ‘surge’ de-

mand approach’ and the Decoupling point approach. These three possibilities should be

seen as complementary to each other, applicable to specific situations, rather than being mu-

tually exclusive strategies.

- The Pareto approach is a segmentation principle built on Koch‟s (1997) 80/20 rule,

meaning that 80% of a firms total profit is generated by only 20% of its customers.

Cristopher et al. (2001) argue that those 20% of important customers should be

treated otherwise than the 80% of less influential customers. Because the demand of

the smaller amount of customers is likely to be less predictable, it is advisable to use

an agile approach for serving these clients. For instance by assemble-to-order

processes, postponing assembly and utilizing quick response concepts. The other 80%

should be approached with lean principles, making the processes concerned with

their more predictable demand more (cost) efficient by eliminating waste, enabling

economies of scale and using demand forecasts.

- The „Separation of base and surge demand‟ resolves around Gattorna & Walter‟s

(1996) base - and surge demand distinction. They argue that base demand is predict-

able on an historical basis, whereas surge demand is not. Hence, base demand can be

met by using lean principles, enabling economies of scale, while a more responsive

agile approach should be applied for dealing with surge demand.

- The Decoupling point approach is built around the theory of postponing certain parts

of the production process (ibid). Lean principles should be used up to some down-

stream point, the decoupling point, and continue with agility from thereafter. Thereby

enabling efficiency up to that point and responsiveness afterwards.


Since leagility is mainly about rapidly responding to demand-volume differences, making

day-to-day decisions about what should be supplied, it is related to the volume dimension of

responsiveness.

4.2. Decoupling point theory

The most common used strategy in literature is the decoupling point approach, e.g. Cristo-

pher et al. (2001), Mason-Jones et al. (2000) and Naylor et al. (1999). Traditional decoupling

point theory is concerned with a point in the supply chain where a separation is made be-

tween a push and a pull part in the pipeline. This point, the order decoupling point (ODP) is

often used as an important inventory point, where stocks of the final product are being held

until the end-customer requires them. Hence, the ODP protects upstream players from fluc-

tuating demand, allowing them to attain smooth system dynamics. Thereby serving as a se-

paration between a forecast driven (upstream) push part and a demand driven (downstream)

pull part (Mason-Jones et al., 1999). This is depicted in figure 4.

Figure 4.: Traditional ODP theory

Leagility however requires both sides of the ODP (lean upstream and agility downstream) to

employ pull-scheduling, hence creating a conflict. Mason-Jones et al. (1999) argue that to

solve this push-pull problem, the „information enriched‟ supply chain should be considered,

where demand data is used up to a certain upstream point in the pipeline. As a result, market

sensitivity is reached throughout a large part of the supply chain, enabling greater respon-

siveness. They argue that in order to attain this information enriched chain, firms should

separate the ODP in a physical- and an information decoupling point.

The physical decoupling point (PDP) can be used to follow a postponement strategy, allowing

firms to produce in advance whilst postponing the final assembly until the customized end-

customer demand is known. In this way, it is possible for companies to produce the various

modules in advance, creating system dynamics and (small) economies of scale. If one in-


cludes the information decoupling point (IDP), firms that are further upstream can use the

real-time demand information in their ordering and manufacturing processes (ibid). This

enables them to achieve enhanced market-sensitivity, allowing these firms to be more cus-

tomer responsive. Since the supply chain is as agile as the responsiveness of the least respon-

sive player, this enhances the responsiveness of the entire chain. As a result, lead-times and

inventories are reduced, speeding up processes and making the chain more efficient. This is

summarized in figure 5.

Figure 5.: Introducing two decoupling points in a assemble to order case.

The exact positioning of the ODPs is dependent of a variety of factors (e.g. Olhager, 2003 and

van Donk, 2001). These factors are elaborated next.

4.3. Decoupling point positioning

Because of e.g. shorter lead-times, increasing customization requirements and the rising im-

portance of responsiveness, ODP-positioning is becoming of greater importance. To be as

efficient as possible, whilst keeping the supply chain‟s agility at a maximum, companies have

to determine the optimal locations for the two ODPs.

Following Hill (2000), Olhager (2003) argues that whichever position is chosen depends on

which factors are seen as order winners, and which as order qualifiers. Order qualifiers are

factors that need to be present in order to be able to compete, whereas order winners incen-

tivize customers to order at the focal firm. For example, if responsiveness is an order qualifi-

er, firms that are not responsive will not be able to compete. Firms should focus on order

winners, as competitive advantage cannot be achieved by excelling at order qualifiers. Note

that companies can be able to change order qualifiers in order winners.


4.3.1. Physical decoupling point

Olhager (2003) argues that factors related to PDP-positioning can be divided in market,

product and production characteristics. The factors associated with market characteristics

consist of demand volatility, volume requirements, product variety and -customization re-

quirements and lead-times. Factors related with the product category are modular design,

customization options, material blueprints and product complexity. Factors related to pro-

duction are production-times, the amount of planning points and production-flexibility. Of

these factors, volume, demand volatility and lead-times appeared to be most important.

Note that these factors are also the major drivers of agility, related to volume responsiveness.

As a result of the close link with agility, speed of delivery and hence the demand lead-time

are of greatest competitive importance. If speed is an order winner, companies should strive

to be as agile as possible, positioning the PDP as close to the end-customer as possible. Up-

stream of this point, where speed is less important, process efficiency (lean) is seen as the

most important strategic advantage. Hence, eliminating waste from the processes by imple-

menting leanness. Olhager (2003) found low prices as an important competitive advantage,

being able to process the various upstream stages at the lowest physical cost (lean).

Van Donk (2001) follows Hoekstra & Romme‟s (1992) decoupling point logic in stating that

the position of the PDP is determined by product and market - and process and inventory

factors. Market and product factors are required delivery-time and -reliability and demand

predictability and specificity. Process and inventory factors are lead-times, risk of obsoles-

cence, inventory costs and production-controllability. Upon analyzing van Donk (2001) and

Olhager (2003) one can see that especially the market and product factors, although named

differently, are quite similar. Olhager‟s production characteristics are also quite similar with

van Donk‟s process characteristics, however the latter includes inventory-costs and -risks.

Van Donk divides his categories in constraining and requiring(enhancing) activities, either

constraining or enhancing the up- or downstream positioning of the PDP. Long lead-times

and bad production control constrain effective downstream positioning, whereas short deli-

very-times and high reliability requirements enhance a downstream PDP. On the other hand,

irregular market demand and product-specificity constrain effective upstream positioning,

whilst low stock levels and low inventory risks (obsolescence) enhance an upstream PDP.

The best strategy from a leagile viewpoint should be assemble-to-order, postponing final as-

sembly until end-customer demand is known. To achieve this, the entire chain should be

market-sensitive, allowing demand data to flow as far upstream as possible. It is therefore

important to look at the positioning of the IDP as well, as discussed next.


4.3.2. Information decoupling point

Mason-Jones & Towill (1999) argue that the IDP should be placed as far upstream as possi-

ble, enabling as many players in the chain to benefit from market data. Information should

be as transparent as possible. The frequency of using information depends on the individual

firm. Ensuring that information is spread across the chain without distortion, the informa-

tion enriched model should be implemented (ibid). This model is part of the previously dis-

cussed information enriched chain, using electronic point of sales(EPOS) links to ensure un-

distorted data across the chain.

4.4. Leagile practices

One leagile approach is Vendor-managed Inventory(VMI) (Harrison & van Hoek, 2008),

where suppliers manages the inventory of their customers (retailers). It is a Business-to-

Business principle, where suppliers are responsible for replenishing the stock of their retail-

ers. This is done on basis of retailers‟ EPOS information, only responding if the end-customer

places demand upon the retailers whilst stocks are low. For VMI to be effective, suppliers

should have access to real-time demand data, allowing them to respond quickly. Hence, it is

an agile practice that becomes leagile due to the fact that 1) the best performance is guaran-

teed when inventories are as low as possible (lean), 2) it is key that every process runs as

smooth as possible, without unnecessary waste (waiting) and 3) real-time demand data

(EPOS) is used across the chain to ensure that products are present when they are needed

(agile + IDP). It can be seen as an elaboration of JIT. VMI performs best when goals are

aligned and supplier and retailer effectively work together.

Another leagile practice is Quick response (QR) (ibid). Quick response is about meeting cus-

tomer demand by supplying exactly the right products, variety and quality on time and in full.

It adopts an holistic supply chain approach, allowing an overview of all processes in that

chain. Thereby making it easier to improve these processes, enhancing their efficiency by

eliminating unnecessary waste. It is therefore a lean process (continuous improvement and

elimination of waste) that is made leagile by enabling real-time demand information to flow

across the supply chain (agility + IDP). QR has a lot in common with JIT, because products

are only supplied when the end-customer places demand.

VMI and QR are similar in the way that suppliers only supply (and produce) products when

the retailers need them. Retailers only need goods when customers place demand. It is key

that retailers are able to supply exactly when customers require the product, making custom-

ers pull customer value through the chain in a JIT fashion.


4.5. Demand consolidation

Dependent demand is independent demand (of individual products) that is consolidated up

to some batch level. It is not feasible to supply to every individual customer that places de-

mand on the chain. For firms to supply, demand should have reached the batch level. It is too

costly to supply every individual product. Hence, products cannot always be supplied exactly

when the customer wants it, if the batch level is not reached yet. It is therefore important that

batch levels are accurately determined, hence assuring that the optimal level is chosen and

products can be supplied as quickly as possible.

Think for instance about supermarkets, it is not feasible to replenish every product that is

being sold. As a result, certain amounts of stock have to be in place. When stocks are getting

low and can be replenished by the amount of individual products in a batch, the batch should

be supplied.

4.6. Horizons

The time-horizons related to responsiveness can be divided in operational, tactical and stra-

tegic. Operational is about day-to-day adjustments; tactical is about medium-term adjust-

ments (every quarter or half a year) that have a greater impact on the firm, requiring some

effort and commitment by management and employees. The strategic horizon refers to ad-

justments on a long-term basis (a few years) requiring substantial effort and commitment.

Strategic adjustments require considerable change within the company, involving significant

amounts of capital.

The various implementations of responsiveness, e.g. leanness, agility, leagility, modularity

and postponement are all applicable to their own horizon. The way this can be done is elabo-

rated next.


5. Syntheses/Discussion

How to implement customer responsiveness in order to achieve

a competitive advantage?

The dimensions of responsiveness were linked to the three time-horizons, volume respon-

siveness coincided with the operational level, product- was operational and process- was re-

lated to the strategic level. The three time-levels require their own responsiveness solution.

The following framework is proposed:

Dimension Horizon Solution Implementation

Volume Operational (Short-term)

Two ODPs Leagility

Product Tactical (Medium-term)

Modular product de-sign

Customization / Agili-ty, postponement, vir-tual organisation

Process Strategic (Long-term)

Modular process de-sign

Lean (design), JIT

Table 3.: Responsiveness solutions

5.1. Volume responsiveness: Leagility

Volume responsiveness is about the nature and quantity of demand, it deals with quickly res-

ponding to unpredictably changing amounts of demand. Hence, volume responsiveness is

achieved by implementing leagility. ODP positioning is crucial for effective leagility. As many

factors are needed to position the PDP, as few are needed to ensure the best location of the

IDP. The position of the PDP depends on a variety of supply chain- and company specific

factors, where demand volume, volatility and optimal lead-times are most important. The

position of the IDP is dependent of how large a part of the chain should be able to use real-

time demand data. However, is best positioned as far upstream as possible.

When integrating both decoupling points in one chain, it is key that all information, including

demand data and plant-stock info, is sent to one central location. Mason-Jones et al. (1999)

call that location the (global) material planning system (MPS). From there the info is spread

across the various stages in the chain. The IDP should be positioned as far upstream as poss-

ible, ensuring that the largest amount of players benefit from the market sensitivity. The PDP

should be positioned accordingly to the strategy employed. If that strategy is make-to-stock,

the PDP is placed at the finished goods inventory. In case of an assemble-to-order strategy, it

is positioned where the final assembly is done, thereby postponing the final assembly to in-

crease agility.

The (global)MPS pushes the collected data into a (global) materials plan, based upon actual

market data (ibid). This plan is used as a general guideline for the various players in the

chain. Because all players are then able to use real-time market data, they can pull whatever


they need from their upstream supplier. The materials plan ensures that everyone knows

whatever its downstream customers need, enabling them to supply just that. Inventories are

minimized and unnecessary waste is eliminated, adding value through process-efficiency. So,

the stages between MPS and PDP are able to adopt lean principles to improve their efficiency

by eliminating waste. Downstream of the PDP is the agile part. As a result of supplying exact-

ly what the customer requires, on time and in full, demand lead-times are minimized, max-

imizing the firm‟s agility and thereby ensuring its responsiveness.

Figure 6 summarizes the above case in the form of an assemble-to-order strategy.

Figure 6.: Linking the physical to the information decoupling point (assemble-to-order strategy).

(Based upon Mason-Jones et al. (1999))

5.2. Product responsiveness: Modular product design

Product responsiveness is based upon the variety of products supplied. It is not possible to

introduce new varieties on a day-to-day basis, it is a tactical process, related to medium-term

responsiveness. It is about responding to needs of enhanced customization and variety.

Modular product design should be applied, allowing more varieties and customization. Prod-

ucts should consist of interchangeable modules, so that firms only need to produce a few key

components, allowing lean process-efficiency. The various components are assembled, pack-

aged and delivered in different ways to create options and varieties. Postponing the final as-

sembly until the exact end-customer demand is known allows firms to respond quickly to

customization requirements. Here, lean is also applied as an enabler of agile responsiveness.


Responding quickly to customization needs is a major order winner and competitive advan-

tage.

Product responsiveness can also be enhanced by using IT to communicate between front-end

store managers and rear-end designers (virtual organization). Zara, for instance uses mobile

devices found in every store to communicate whishes of the customer to designers, allowing

them to design products according to the customer‟s wishes. Afterwards, a designer-to-store

lead-time of two weeks allows these new (customer driven) products to be supplied on a very

timely basis. This short lead-time is necessary as fashion rapidly turns obsolete. Slowly res-

ponding to customer wishes might result in products that were fashionable last week, but will

not be sold today because of fast-moving fashion trends.

5.3. Process responsiveness: Modular process design

Strategic responsiveness is about designing processes in a fashion that best allows respon-

siveness. Lean (modular) process-design was found to be a major enabler for this type of res-

ponsiveness. Lean design is about dividing processes into several interchangeable sub-

modules that can be used interchangeably to design the various processes in a chain. Em-

ployees can then be deployed across the chain wherever they are most needed, enabling res-

ponsive processes. These processes can however not be changed on a day-to-day basis. It re-

quires large amounts of effort, involvement and strategic planning. It is therefore necessary

to forecast ahead to see what future trends might occur.

JIT is also a tool for enhancing supply chain efficiency. JIT assures a continuous flow through

the chain, where parts and (sub)assemblies are supplied exactly when they are needed.

Processes should be designed accordingly, ensuring efficient goods-flow, minimizing waiting

and inventories.

Concluding, process responsiveness is achieved by designing processes to assure an efficient

flow of goods, allowing the chain to respond rapidly to customers pulling demand through it.

Eliminating all unnecessary waste enables efficiency and agility. Therefore, leanness is once

again an enabler of agility and responsiveness.

5.4. Forecasting

It is always - and for every firm - necessary to look ahead a little further than the day-to-day

processes, enabling companies to pick up trends, making it easier to make long-term adjust-

ments to processes and anticipate expensive panic-shipments. In the end, this will result in

greater efficiency and responsiveness. Also, ODP-positioning is a longer-term practice, it is

not easily changed. It is therefore of tactical and even strategic importance that the ODPs are

positioned in the firm‟s best interest.


The long-term forecasts should (largely) be done by the (global)MPS. The MPS should ensure

that the forecast data is dispersed across the various players in the chain. As a result, the

players downstream of the MPS are better prepared for making tactical adjustments for these

trends. It remains however a necessity for every player to forecast for mid- to long-term

changes in their own environment. The MPS is not able to forecast for every firm, only for

changes in end-customer demand.

5.4.1. Demand consolidation

When looking at consolidated (dependent) demand, firms should forecast ahead on a tactical

basis, so that they can make a relatively accurate prognoses of what volume of demand can be

expected over the coming period. As a result, they can define the optimum batch size needed

to supply as responsive as possible. The optimal batch size in a JIT situation is one, which

however is impossible for most products. For instance, products supplied in a supermarket

are commodities, it not feasible to supply these in batches of one. Hence, the optimal batch

size is dependent of what product is being supplied. Relating this to Fisher‟s (1997) frame-

work, functional products should be supplied in large batches, whilst innovative products

should be supplied in smaller batches. It is also necessary to account for obsolescence; prod-

ucts that quickly go obsolete (either because of trends or preservability) should not be sup-

plied in large batches if demand is relatively low.

Here, VMI can be used to supply the exact amount of batches. The size of the batches can be

determined through forecasting, historical data or mathematical tools. The retailer sends its

real-time EPOS data to its supplier, so that the supplier can respond by supplying when

stocks are getting low. However, products should only be supplied when demand has reached

the batch level. Also, obsolescence should be taken into account.

5.5. Remarks

When combining literature, different explanations of the concepts pass by. Concluding from

this, the author found lean and agile to be two different, but similar, concepts. However, in

order to be agile, one needs to make the supply chain more efficient. So, lean can be seen as

an important enabler of agility and therefore of responsiveness. Leagility is a hybrid form,

employing principles of both concepts. As lean was used for the upstream part and agility for

the downstream part, the enabling function of leanness occurs again. Without efficient

processes it is impossible to be fully agile and responsive.


6. Conclusion

6.1. Summary of findings

This research elaborated on supply chain responsiveness. Responsiveness was defined as the

ability to respond purposefully, timely and in full to changes in a firm‟s external environment.

Hence, it is about responding quickly to customer demand by supplying what is required

within a minimal lead-time. Responsiveness is based upon three dimensions, each related to

its own time-horizon, volume (short-term, operational), product (mid-term, tactical) and

process (long-term, strategic). Lean thinking is a major enabler of responsiveness.

Lean is about adding customer value by eliminating all waste from the supply chain, thereby

allowing parts and (sub)assemblies to efficiently flow through that chain without unduly

waiting and inventories, focusing on minimizing physical cost. Lean employs pull-scheduling,

making customers pull the product through the chain. Goods are only supplied exactly when

they are needed, within fast lead-times. Lean is best applied in environments of predictable

and stable demand, making it difficult to cope with rapidly changing requirements. As a re-

sult, agility was introduced.

Agility uses real-time demand data to enhance market-sensitivity, allowing rapid response to

unpredictable and volatile end-customer demand. IT is used for 1) process-integration, con-

verting the chain into a virtual organization; 2) communicating and dispersing market infor-

mation across the chain, focusing on minimizing market mediation cost. Hence, the chain is

seen as a network of players, where processes are integrated and goals shared. As lean was

about making processes more efficient, eliminating waste from the chain, it is a major enab-

ler of agility.

Both leanness and agility employ pull-scheduling. As customers pull products through the

chain, the chain responds by supplying whatever is needed on time and in full. Combining

both concepts results in the hybrid leagility. In leagility, the order decoupling point (ODP) is

used to separate the upstream lean part from the downstream agile part. However, this ODP

was traditionally designed to separate an upstream (forecast driven) push part from a down-

stream (demand driven) pull part. The ODP is therefore divided into a physical decoupling

point (PDP), positioned downstream (context-dependent), and an information decoupling

point (IDP), positioned as far upstream as possible. Here, the PDP is used to divide the lean

from the agile part, whilst the IDP is used to disperse real-time market information across

the chain (see figure 6), allowing the players downstream of the IDP to benefit from this data.

Hence, all players in the chain are able to produce and supply only that what is needed, on a

very timely basis.


6.2. Conclusion

Responsiveness was found to be based upon a number of dimensions, each related to a cer-

tain time-horizon. For every dimension, responsive solutions were given (see table 3). Leagil-

ity was used to achieve volume responsiveness, since it is capable of responding rapidly to

unpredictable and volatile quantities of demand. Agility itself was related to product respon-

siveness, as it is capable of dealing with variety and customization needs. Lean as a concept

was used to attain process responsiveness, as the main philosophy behind lean is adding val-

ue by making processes more efficient, eliminating all unnecessary waste from the supply

chain.

A competitive advantage can be achieved by attaining responsiveness across the entire chain.

Employing the depicted concepts will enable the chain to be responsive. When a supply chain

is as efficient as possible, continuously improving and redesigning (modular) processes, the-

reby being able to rapidly respond by supplying the right quantity, variety and customization,

using real-time market data to enhance market sensitivity, one can say that the supply chain

is responsive. It is however always necessary to excel in everything you do, doing things bet-

ter than your competitors. The competitive advantage achieved is differentiation through

customer responsiveness.

To achieve the greatest responsiveness, every dimension should be taken into account. It is

difficult to achieve volume responsiveness if the processes in the chain are not able to re-

spond quickly to changes in demand. Hence, the various processes should be seen as an ho-

listic concept, rather than being mutually exclusive. It is however possible to pursue lean effi-

ciency without concerning yourself with agile responsiveness. But, in order to be agile, one

should pursue lean processes. Lean is an enabler of agility, using lean principles combined

with IT, process integration, a (virtual) network and real-time demand data to achieve res-

ponsiveness.

6.3. Recommendations

As with any other research-paper, limitations exist to the results presented above. This paper

does not fully elaborate on differences across product segments. It is relatively certain that

the ability to be responsive differs per product-type, possibly resulting in other ODP-

positions. This might also count for different customer segments. Another limitation is that

the conclusions of this paper are not supported by quantitative results. This paper is a litera-

ture study, the results collected were (sometimes) supported by data, but the way things are

discussed in this thesis is not.

Every limitation can also be seen as a recommendation for further research; a limitation

points out a short-coming of a paper. These short-comings can be researched in a following


study, for instance focusing on various product- and customer-segments. Second, as this the-

sis was not completely supported by quantitative data, other studies can collect supporting

data around the conclusions. Also, there has been little elaboration on the demand consolida-

tion issue, various implications were given, but no concrete quantitative models were pre-

sented for determining optimal batch sizes. Another study might provide insight in this com-

plex mathematical matter.


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