An agile supply chain is needed to survive
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To continue to exist, enterprises today must incorporate the new kind of management is emerging: the age of “Agile.” Are you willing to take on the mastery it implies to transform your company supply chain (SC)?
The term Agile is misunderstood. It is not just to provide for the customer at any cost! It would be „fake agility.” If it is your company approach, your better change it because it could take you to go out of business.
To be Agile emphasises searching out opportunities, finding solutions through rapid experimentation, and achieving Agility through determination. By pulling out the full capacities of those doing the work, firms generating constant new value for customers, thus creating a virtuous circle of value creation, always driven by the Agile mindset, as Steve Denning, Senior Contributor, Forbes 2018 describes it.
Surveys by Deloitte and McKinsey bring about that a vast majority of companies heads are looking to be Agile, or they are eager to offer customers to become Agile; the reality tells otherwise as only a few managed to be Agile. These misconceptions have triggered confusion, so changes have to be done all through your company to see the benefits.
Increase agility with a disciplined approach
Enterprises need a high degree of Agility, Flexibility and capability to attune fast to deal with the transformation happening in our marketplace driven by the customer.
The SC flexibility is defined as “the speed in which it responds to changes in demand and the business environment, to either create or preserve a competitive advantage.”
The features of an excellent SC are a well-operational start off with suitable individuals who fit the team culture and leaders who help them to mature. This employee needs to work on the maximisation of strategies, visibility, time-lines, stability and the lowest cost possible. SCs will require two types of Flexibility:
- Dynamic Flexibility– the capability to act in response to changes in demand, typified by the efficient-lean Agile reactions.
- Organisational Flexibility– the capability to deeply adapt or transform the SC scheme to adjust to worldwide-supply or demand approaches.
It will lead to a structural change of direction on how we approach global SC policy and management. But, whatever strategy you decide, keep in mind that successful corporations are all operating by the core of Agile and Flexibility, such as to focus on working out in small teams in short cycles, networked-administrative arrangements, and providing value for customers.
Flexible and Agile businesses are designing a world in which people, perceptions, and money intermingle fast, simple, and inexpensively, linking everyone, everything, all over, and at all times, whilst providing for immediate, personal, seamless value on a significant measure.
SC flexibility and agility new approaches
- Investigate local alternatives, global sourcing, and centralised manufacturing. When the product total SC cost is considered, we see a move from global manufacture to more regional decisions.
- A shift to a more-real-option value approach through the use of finance. It calls for a SC design strategy, that might not be the lowest cost today, but balances it with the requirements for Flexibility in the future.
- Focus on the economies of scale(cost-benefit that companies gain due to their level of operation measured by the amount of output produced, with cost decreasing with increasing size.)
- Economies of scope(the more different-but-similar goods you produce, the lower the total cost to create each one.
- Set up bandwidth-resource sharing and expertise in the manufacturing process to help all the firms sourcing from them.
- Take on a real option value choice line towards SC decision making.
Final question: How does your SC processes could change? Embrace Agility and Flexibility SC approach to be ready for 2020 shifts.
David Food is the Strategy Director of Prophetic Technology. He brings a significant breadth of skill, innovation and capability in the use of software and technology to improve supply chains, develop marketing and unlock business potential, whether globally or locally, with collaborative or enterprise-wide solutions
Photo: Sheltie Boy/ Flickr