Agile Supply Chain Quickly Gaining Favor Over Lean Concept

It wasn’t too long ago that the lean supply chain was regarded as the best way to manage supply chains and manufacturing. However, as digitization and associated factors like artificial intelligence and augmented reality come to the fore, the agile supply chain is quickly generating a lean-like level of buzz.

Even though agility is a term most people are familiar with, some supply chain entities are struggling to gain a full command over the concept and what sets it apart from a lean supply chain.

A few components go into an agile supply chain – namely flexibility, competency, and responsiveness. One way this differs from the lean supply chain is in its use of real-time data and up-to-date information to leverage operations. Moreover, real-time data is used in conjunction with demand forecast to boost productivity and efficiency.

Less Stock, Higher Levels of Service

Agility can also help address shortages as well as overstocked inventory. Because lean supply chains tended to focus on efficiency and effectiveness, excessive stock was not unusual. A report by McKinsey & Company found that agile companies are actually able to provide higher levels of service despite having lower inventories. As many as 94 percent of firms that use the agile approach deliver on time and in full, and they manage to avoid keeping inventory for longer than 85 days on average. Meanwhile, firms that did not institute agile practices saw inventory levels stay in the warehouse for as many as 108 days while just 87 percent of their deliveries were on time.

Agile companies also performed well in other areas, such as risk management, integrated planning, inventory placement, forecasting, and labor and asset flexibility.

What makes the agile supply chain a truly useful approach in the modern era is its ability to adapt to constantly changing environments, including economic changes, consumer demands, and other trends. An immediate response to these issues can help supply chain entities stay on top of their game.

This blog post was based off an article from Cerasis. View the original here.