Lean and Agile supply chain
13
Lean and agile supply chain Introduction
With the real-time access to the Internet and search engines like Google and with the increased global competition, customers have more power than ever before. They demand innovative product features, greater speed, more product variety, dependable performance and quality at a best in class and at a competitive price. Furthermore, today’s discerning consumers expect fulfilment of demand almost instantly. The risk attached to traditional forecast driven lengthy supply line has become untenable for consumer products. In this chapter, we discuss how to take up this challenge through a lean and/or agile supply chain.
As we discussed in Chapter 3 (see Figure 3.6), a distinction is often drawn between the philosophy of leanness and agility. Like the perennial business phrase ‘quality’ both ‘leanness’ and ‘agility’, there appears to be differing opinions as to what is meant or intended.
In their ‘pure’ form three models of supply chain can be identified being traditional, lean and agile.
•
•
•
Traditional – Known for:
– Protection of market, aims for leadership
– Forecast driven
– Higher emphasis on customer service than cost
– Inventory held to buffer fluctuations in demand and lead times
Lean – Characteristics are:
– Integration upstream with suppliers
– Integration downstream with customers
– High emphasis on efficiency
– Aims for minimum stock holding
Agile – Noted for flexibility and speed in coping with innovative products and unpredictable demand.
Although many supply chains will be a hybrid of models, it is important to understand the differences and the application of each model and application whether pure or hybrid. The traditional supply chain model has been covered
200 Total Supply Chain Management in various chapters of this book, this chapter will primarily cover lean and agile models. The organization of this chapter is:
•
•
•
•
•
The origin of lean
Lean and agile supply chain Introduction
With the real-time access to the Internet and search engines like Google and with the increased global competition, customers have more power than ever before. They demand innovative product features, greater speed, more product variety, dependable performance and quality at a best in class and at a competitive price. Furthermore, today’s discerning consumers expect fulfilment of demand almost instantly. The risk attached to traditional forecast driven lengthy supply line has become untenable for consumer products. In this chapter, we discuss how to take up this challenge through a lean and/or agile supply chain.
As we discussed in Chapter 3 (see Figure 3.6), a distinction is often drawn between the philosophy of leanness and agility. Like the perennial business phrase ‘quality’ both ‘leanness’ and ‘agility’, there appears to be differing opinions as to what is meant or intended.
In their ‘pure’ form three models of supply chain can be identified being traditional, lean and agile.
•
•
•
Traditional – Known for:
– Protection of market, aims for leadership
– Forecast driven
– Higher emphasis on customer service than cost
– Inventory held to buffer fluctuations in demand and lead times
Lean – Characteristics are:
– Integration upstream with suppliers
– Integration downstream with customers
– High emphasis on efficiency
– Aims for minimum stock holding
Agile – Noted for flexibility and speed in coping with innovative products and unpredictable demand.
Although many supply chains will be a hybrid of models, it is important to understand the differences and the application of each model and application whether pure or hybrid. The traditional supply chain model has been covered
200 Total Supply Chain Management in various chapters of this book, this chapter will primarily cover lean and agile models. The organization of this chapter is:
•
•
•
•
•
The origin of lean