Chicken Run - The Poultry supply chain
Question 1
How might Wings and Legs combine a lean and agile approach in its supply chain?
The lean and agile paradigms, while particularly different, can be and have been joint within effectively designed and operated total supply chains. In the Wings and Legs case, cost is an important market winner and this is reduced by leanness. In the case of agility the key point is that Wings and Legs operate in an extremely volatile marketplace. Therefore the solution is to develop a hybrid supply chain.
Combining Lean and Agile
The main concept used in regards to combining lean and agile is the decoupling point. Hoekstra and Romme (1992) define it as the "point that indicates how deeply the customer order penetrates into the goods flow". Determining the location of the decoupling point aims at finding a balance between the costs of procurement, production, distribution and storage on the one hand and the customer service to be offered on the other. According to Hoekstra and Romme there are three important aspects to the decoupling point: -
1.The order driven and forecast driven activities are separated by the decoupling point.
2.The decoupling point is the main point of inventory from which the customers are delivered.
3.The forecast driven activities can be optimised in some way, as they are not directly influenced by the irregularities of the market.
The main determinants of the decoupling point are divided into two groups.
1.Product and market characteristics such as required delivery reliability, required delivery time, predictability of demand and specificity of demand.
2.Process and stock characteristics such as lead times and costs of steps in the production process, risk of obsolescence, costs of stock holding and value added between stock points and controllability of manufacturing and procurement.
All of these factors influence the location of the decoupling point for example the shorter the required delivery time the closer the decoupling point will
How might Wings and Legs combine a lean and agile approach in its supply chain?
The lean and agile paradigms, while particularly different, can be and have been joint within effectively designed and operated total supply chains. In the Wings and Legs case, cost is an important market winner and this is reduced by leanness. In the case of agility the key point is that Wings and Legs operate in an extremely volatile marketplace. Therefore the solution is to develop a hybrid supply chain.
Combining Lean and Agile
The main concept used in regards to combining lean and agile is the decoupling point. Hoekstra and Romme (1992) define it as the "point that indicates how deeply the customer order penetrates into the goods flow". Determining the location of the decoupling point aims at finding a balance between the costs of procurement, production, distribution and storage on the one hand and the customer service to be offered on the other. According to Hoekstra and Romme there are three important aspects to the decoupling point: -
1.The order driven and forecast driven activities are separated by the decoupling point.
2.The decoupling point is the main point of inventory from which the customers are delivered.
3.The forecast driven activities can be optimised in some way, as they are not directly influenced by the irregularities of the market.
The main determinants of the decoupling point are divided into two groups.
1.Product and market characteristics such as required delivery reliability, required delivery time, predictability of demand and specificity of demand.
2.Process and stock characteristics such as lead times and costs of steps in the production process, risk of obsolescence, costs of stock holding and value added between stock points and controllability of manufacturing and procurement.
All of these factors influence the location of the decoupling point for example the shorter the required delivery time the closer the decoupling point will