Supply Chain Agility - Is it for Real?
Supply Chain Agility represents how fast a supply chain responds to the changes in environment, customer preferences, competitive forces etc. It doesn't talk about random variations in executing day-to-day supply chain operations. It rather specifies how a company's supply chain responds to changes, once business is aware of external changes which can negatively/positively affect the business in achieving its objectives. It is a measure of how companies adapt their supply chain to these changes and then how fast it is able to achieve it.
Supply Chain Agility comes with a cost and sometimes that cost might be huge enough to turn down the profitability. Companies have to decide how much agile the business has to be and where in the value chain they need agility and whether it fits in well with overall strategy of the company.
Sensing the change much in advance gives lot of room for companies to respond to changes in business environment. That said leveraging this knowledge to proactively respond to the change with the right velocity, differentiates winners from laggards.
Companies aspiring to be Agile should build flexible organization and design flexible processes. Organizational structure should encourage co-ordination among various departments/units within the same organization as well as partners (Vendors, Logistics Partners etc.).
Setting target for lead times and then working towards reducing those lead times specially "Order to Fulfillment" lead time would greatly help organizations achieve the velocity that is needed to be Agile in today's competitive and changing business environment. Velocity, in how information progresses across the supply chain and how fast the physical product moves down the supply chain, is a critical factor in being a leader among the pack.
Thus Advanced Sensing, Flexibility, Coordination and Velocity are four pillars for achieving an Agile Supply Chain.
"Advanced Sensing + Flexibility + Co-ordination + Velocity = Agility"
And, IT systems can greatly help in strengthening all the four pillars of Agility. It would need Business Process Re-engineering (BPR) along with Best of Breed IT systems to achieve this goal and choosing a right transformation partner like Infosys would be the key towards building an Agile Supply Chain.
In my next blog, I will share my point of view on how each of these pillars can be strengthened using the right processes and best of breed IT systems in the meanwhile, do share your opinion on my thoughts on Supply chain agility.