09 Creating The Agile Supply Chain Essay

Creating the
Agile Supply Chain
Operations
strategy

Operations in context

Global network operations
Direct

Creating the agile supply chain

Steering operations

Design

Develop

Shaping products, services and systems

Improving the operation’s capabilities Deliver
Product/service design

Operations planning
& control

Creating the Agile Supply Chain– Slide 1

Planning and controlling ongoing operations

Managing the supply base

Creating the lean supply chain

Supplier relations
& selection

Key Topics


Agility and Agile Operations



Creating the Agile Supply Chain



Agile or/and Lean?

Creating the Agile Supply Chain– Slide 2

Agility
An operations system is agile if it efficiently changes operating states in response to uncertain and changing demands placed upon it.
-Narasimhan, et al. 2006. Disentangling leanness and agility: An empirical investigation.
Journal of Operations Management, 24(5), 440-457.

Agile operations emphasize performance improvement in the areas of
 responsiveness
 product customization
 shortened new product development lead time
 reduced system changeover time and cost, and
 efficient scaling up and down of operations.
Creating the Agile Supply Chain– Slide 3

Foundations for Agility

Four foundations for agility in a fashion business
(Christopher, et al. 2004)

Creating the Agile Supply Chain– Slide 4

Agile Supply Chains
Agile Supply Chains:
Agility in SCM refers to rapid strategic and operational adaption to large-scale, unpredictable changes in the business environment.
 It is a business-wide capability that embraces organizational structures, information systems, logistics processes and, in particular, mindset.
 Key characteristics of an agile supply chain are flexibility and responsiveness.


Martin Christopher, 2000. the agile supply chain: competing in volatile markets,
Industrial marketing management, 29(1), 37-44.

Creating the Agile Supply Chain– Slide 5

Creating the Agile Supply Chain:

Time Compression
Market responsive supply chains are created by reducing the time it takes for the supply chain to satisfy customer demand.

Physical Costs
•Production costs

But why is TIME COMPRESSION so important in supply chains that deliver INNOVATIVE products?

 Innovative products have a short life-cycle so offer the firm a short window of opportunity to make their sales.
 The innovative nature of the products mean that during this window there is little competition – profits are high.
 When supply chains are said to possess significant market responsiveness they are said to be AGILE.
 Time to market is all important!
Creating the Agile Supply Chain– Slide 6

• Distribution costs
•Storage costs

Marketability
Costs
•Obsolescence costs •Stock-out costs

Why is Timing Critical?

Creating the Agile Supply Chain– Slide 7

Creating the Agile Supply Chain:

Managing Uncertainty






An agile supply chain will respond to uncertainty in customer demand without creating costly excess inventory Negative effects of uncertainty include lateness and incomplete orders
Managers often use inventory as insurance against supply chain uncertainty.

Creating the Agile Supply Chain– Slide 8

Factors that contribute to uncertainty 







inaccurate demand forecasting long variable lead times late deliveries incomplete shipments product changes batch ordering price fluctuations and discounts inflated orders

The Bullwhip Effect
The bullwhip effect occurs when slight demand variability is magnified as information moves back upstream

Creating the Agile Supply Chain– Slide 9

Accepting Uncertainty
 The first step in creating an agile supply chain is to accept that uncertainty for ‘innovative’ products is inevitable. For many firms (e.g. IBM in the 1980s moving from functional to innovative goods) this has been a difficult change in mindset.
 Having accepted this fact, the firm can then respond. To Marshall Fisher this response should be based upon three coordinated strategies:

Show More

Managerial Process Essay

Managing Information Technology (7th Edition) Essay

09 Creating The Agile Supply Chain Essay

Related Documents: 09 Creating The Agile Supply Chain Essay

Managerial Process Essay

Managing Information Technology (7th Edition) Essay