The Agile Supply Chain Management: What is it and why should you care!
The concept of agility was given by (Goldman et al.1995). It means “readiness to change”, from business perspective, agility is defined as a strategy that is more responsive in a volatile market place, where this strategy is totally demand driven. As consumers buying patterns are changing on a very rapid pace, so does the whole supply chain management changes. The fundamental drivers of agile supply chain are Speed, Cost and Efficiency. Agile supply chains are based on the sensitivity to consumers demand. Here, sensitivity refers to the ultimate consumers demand, in terms of volatility of demand.
Agile supply chain framework is based on four major constituents that are as follows:
Virtual Integration: in virtual integration information is shared among concerned departments for the real demand from market or end consumers. As demand information is gathered than it is collaborative planning among the various concerned departments that how to cater the demand from this particular market, and every department responds according to their capability and capacity to fulfill the demand. Virtually being integrated would result in end to end visibility, this is how this would be easy to identify the bottlenecks in the network and any other problem that creates hindrance in the network.
Process Alignment: In process alignment, three things are mainly concerned, that are Co-managed inventory, in present time mostly chains are managed through the VMI (vendor managed inventory) this is one of the best solution, as a co-managed inventory. Collaborative product design by the concerned departments, this is how the team works to shape the consumer need or want. The ultimate result is synchronous supply chain.
Network Based: Every individual actor in the chain has to put their efforts to make it the success of the chain. This will reduce the burden on individual actors and the task is divided among the actors as per their core competencies where they are best at. All actors in the chain are orchestrators of the chain, therefore, they equally own the chain and their performance level matters from each end.
Market Sensitive: Today’s chains are market sensitive where demand is sensed from the market. The demand forecasting is based on the daily Point of Sale (P.O.S), sensing demand from past trends is an obsolete way to predict the demand in such a volatile markets. Therefore, daily feedback from market or sales terminal feedback is taken to meet the future demand. In present time companies are focusing on future, therefore, their efforts are to make it from today, by executing best practices to capture the emerging trends. The one of the best practice would be to listen your customer. It is said that success of supply chain is based on the end consumer’s feedback. therefore, voice of consumer is the actual demand that drives the supply chain.
Significance of Agile supply chain management in a volatile market place:
Agile supply chain is not the option available in market but a necessity for the success of the company. Agile supply chain is the solution to the many problems that exist in today’s supply chain management networks. This concept has been recognized, as a solution to increase the responsiveness of a supply chain in a more changing environment. Today’s supply chain compete on various strategies, but the most commonly used one is agile strategy. Because this strategy anticipates demand fluctuations in a volatile market demand patterns. Also this solution has facilitated the suppliers to manage their own data through self-service functionality.
Key Parameters of Agile Supply Chain Management:
This strategy become the priority, mostly preferred strategy in present era. It focuses on the inventory management. Excess inventory and potential shortages are eliminated by using this strategy. In present era, various software’s have been introduced in the market to manage the inventory. Agile supply chains are best at, getting more accurate and up to date demand. In simple words it is the reaction time how quickly respond to market demand and satisfy their end customer. To make it possible one should have a network based on electronically connected to retailers and all other drivers of the chain, this is how end to end visibility is achieved. To make it robust chain, it would be vital to use state of the art, planning applications, that supports the working teams in decision making and sometimes with what if scenario capability, usually companies go for backup plans that costs considered to be extra, than such applications make it more responsive and cost efficient.
Lastly, According to Christopher (2000), We are now entering the era of “New Competition” where markets are dynamic, and prices will go to organizations that can better build structures, and do more integration. This solution of agile supply chain management is more information-centric rather than inventory centric. Therefore, agile supply chains are need of the hour. Since market and demand patterns are changing on a very rapid pace, than the ultimate strategy would be to opt for agile supply chain management. Through this strategy one can retain the market and also compete with the market.