1. Chapter 7 The agile supply chain

2. Content
The concept of agility 1.
Agile practices 2.

3. The concept of Agility Key issue 1
What are the dimensions of the agile supply chain?

4. The concept of Agility Market sensitive Virtual
Supply chain is capable of reading and responding to real demand
Virtual
Information-based supply chain, rather than inventory-based.
Agile supply chain

5. The concept of Agility Network based Process integration
EDI and internet enable partners in the supply chain to act upon the real demand
Process integration
Collaborative working between buyers and suppliers, joint product development, common systems and shared information
Agile supply chain

6. The concept of Agility Demand characteristics and supply capabilities
end-customers become more knowledgeable about product
Lean supply chain
Agile supply chain
1980’s
1990’s
Efficiency, cost
Responsiveness
Focus

7. Distinguishing attributes
The concept of Agility
Demand characteristics and supply capabilities
Distinguishing attributes
Lean supply
Agile supply
Typical products
Commodities
Fashion goods
Marketplace demand
Predictable
Volatile
Product variety
Low
High
Product life cycle
Long
Short
Customer drivers
Cost
Availability
Profit margin
Dominant costs
Physical costs
Marketability costs
Stockout penalties
Long-term contractual
Immediate and volatile
Purchasing policy
Buy materials
Assign capacity
Information enrichment
Highly desirable
Obligatory
Forecasting mechanism
Algorithmic(基于算法)
Consultative(基于咨询)

8. Comparison of characteristics of lean and agile supply
The concept of Agility
Comparison of characteristics of lean and agile supply
Characteristic
Lean
Agile
Logistics focus
Eliminate waste
Customers and markets
Partnerships
Long-term, stable
Fluid clusters
Key measure
Output measure such as productivity and cost
Measure capabilities, and focus on customer satisfaction
Process focus
Work standardization, conformance to standards
Focus on operator self-management to maximize autonomy
Logistics planning
Stable, fixed period
Instantaneous response

9. The concept of Agility
Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile supply chain

10. The concept of Agility Supply characteristics
Long lead time
Short lead time
Supply characteristics
Demand characteristics
Predictable market
Unpredictable markets
Plan and control
JIT: pull scheduling
React and execute: agile capabilities
Hold inventory: hedge and deploy

11. The concept of Agility
Application of leagility: separation of ‘base’ and ‘surge’ demands

12. Application of leagility: the Pareto curve approach
Source: Martin, Christopher and Denis Towill, An integrated model for the design of agile supply chains

13. Application of leagility: the de-coupling point approach

14. The concept of Agility Preconditions for successful agile practice
Enterprise-level reality check
Cost of complexity sanity check
Lowering the cost of complexity: avoiding overly expensive agility
Forecasting: reduce the need for last minutes crises
External: demand forecast
Internal: financial forecast, asset forecast

15. Content
The concept of agility 1.
Agile practices 2.

16. Agile practices Key issue 1
How can we use agile practices to benefit from turbulence in the marketplace?

17. Agile practices
Three characteristics of supply chain operations related to agile
Mastering and benefiting from variation in demand;
Very fast response to market opportunities;
Unique or low volume response.

18. Agile practices Benefiting from variance
Three sources of demand uncertainty
Seasonality
Product life cycles
End-customer demand
Demand variance
Time

19. Agile capability is needed
Agile practices
Benefiting from variance
Three sources of demand uncertainty
Seasonality
Product life cycles
End-customer demand
variety
Volume
Start up
Micro-markets
Organize
Adjust
Agile capability is needed

20. Agile practices Benefiting from short time windows
Decreased D-time requires different levels of agility (VMI & QR)
Speed of replenishment
Upstream time sensitivity
Information dissemination and alignment

21. Agile practices Benefiting from small volume
Small volume is a result of micro-markets, customization and rapid responsiveness.
Three approaches of agile strategy related to small volume
Changeover flexibility
Modularity at the network level
Service-based and information-based solutions

22. Modular supply network
Agile practices
Benefiting from small volume
Variety decrease
Volume decrease
Mass production
Flexibility
Modular supply network
Craft production

23. An integrated model for enabling the Agile supply chain