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Download the insight Recovery and resilience: Safeguarding and strengthening the supply chain to thrive through uncertainty for practical strategies to help future-proof your supply chain.

What is an agile supply chain?

At its core, an agile supply chain is flexible and able to respond quickly and smoothly to changes in market dynamics and supply and demand.

An agile supply chain will also have the following attributes:
  • Collaboration: All supply chain partners, including suppliers, manufacturers and distributors are working together to respond to market demands
  • Lean principles: Agile supply chain strategies often use lean principles, like just-in-time inventory management, to eliminate waste and reduce costs
  • Information availability: Accurate, real-time data is used to identify potential bottlenecks and quickly respond to supply and demand fluctuations
  • Continuous improvement: Embracing a culture of continuous improvement is key to creating supply chain agility as it fosters a mindset of learning, adaptation and innovation, enabling an organization to evolve and remain competitive
  • Risk management: Agile supply chains are proactive in identifying and mitigating risks

What are the benefits of an agile supply chain?

An agile supply chain has many potential benefits, all contributing to increased competitiveness.

Key benefits include:
  • Improved responsiveness to customer demands leading to greater customer satisfaction
  • Enhanced supply chain visibility, enabling better decision-making and faster problem solving
  • Reduced lead times due to streamlined processes, which enables faster order fulfillment
  • Stronger stakeholder relationships, which enhances coordination, information sharing and problem-solving, leading to an efficient supply chain
  • Improved inventory management resulting in reduced inventory holding costs, minimized stockouts, and improved overall inventory management efficiency
  • Increased innovation as improved agility enables the organization to respond faster to market trends
  • Lower costs due to reduced waste and improved process efficiency
  • Mitigation of disruptions due to increased flexibility and active risk mitigating strategies

It’s easy to see why creating an agile supply chain is one of the best ways to deal with current challenges and remain competitive in future. However, many manufacturers don’t know where to start.

The most pragmatic advice (discussed in more detail below) we can offer is this:

  • Focus on creating supply chain flexibility to respond effectively to demand fluctuations
  • Identify and implement improvements, but focus on sustaining these improvements to build both incremental and rapid change results

How to create a flexible supply chain

To create a truly flexible supply chain you need to focus on the following three elements:

  1. Promoting interconnectivity

To create an interconnected supply chain, you need to enable collaboration and seamless communication amongst all departments, from procurement to planning, through to manufacturing and distribution.

Effective collaboration enables quick decision-making, efficient problem-solving and better alignment of activities across the supply chain – contributing to supply chain agility.

Focus on setting up clear channels and mechanisms for information sharing and encourage collaborative planning processes that involve key stakeholders. Setting up cross-functional teams is another effective way to promote interconnectivity and more effectively brainstorm and deal with challenges.

The state of your supplier relationships will also directly impact your supply chain flexibility – so don’t forget about them when building interconnectivity into your supply chain. Supplier development programs are a great way to build a stronger relationship with your suppliers and align them with your company’s goals.

  1. Establishing demand triggers with optimized buffers

An agile supply chain will feature optimized demand triggers to ensure raw materials are bought in the right quantities, at the right time.

To establish these triggers, consider the metrics that are most relevant to your operation’s customer demand patterns. Then analyze historical data related to these metrics to understand demand patterns and identify any trends or events that impacted demand.

Use this data to define your demand trigger points that indicate a need for action. Demand triggers can be related to metrics like order volume or lead-time changes, but aspects such as seasonal demand fluctuations, market trends and world events also need to be considered.

Once your triggers are established, decide on appropriate buffer levels for each based on your operation’s desired service level, risk tolerance and production capabilities. Optimizing your organization’s buffers might mean increasing inventory levels to enable you to respond to a sudden increase in demand, or having extra staff on standby in case you need to rapidly increase your production capacity.

  1. Creating an agile production line

An agile production line is modular and flexible, allowing for easy reconfiguration or scaling.

To achieve this, set up standardized workstations and equipment that can easily be adapted to various products, and train your staff across different workstations and processes to create a versatile and adaptable workforce. Standardized work procedures are another key component of an agile production line as it promotes consistency and quality, even when your workforce moves around.

Another way to improve the agility of your production line is to implement real-time production monitoring and analytics tools to enable your team to identify bottlenecks before they occur.

How to identify, implement and sustain improvements

Creating an agile supply chain is easier said than done – even if you follow the steps listed above. The reality is that when demand outstrips supply (or worse, the alternative), improvement suffers, and it’s often not clear where and why things are going wrong or how to optimize.

The best way to identify inefficiencies in your business is to take a top-down approach beginning with a well-constructed loss and waste analysis – a focused improvement activity that identifies and quantifies waste wherever it occurs.

However, simply knowing what to focus on is not enough. You also need to know how to focus your resources on eliminating key losses and, most importantly, how to sustain these improvements to create a truly agile and responsive supply chain.

The following approach has proven successful:

Structure your improvements by aligning people, processes and technology:
For your improvement initiative to stand any chance of success, your employees must become stakeholders in the project. This means that you need to involve your employees in the decision-making process, seek their input and address their concerns. You also need to ensure your improvement project has clearly defined objectives, roles and deliverables.
Empower your team with problem-solving skills:

Simply including your employees in the decision-making process is not enough. For a truly successful improvement initiative you need to empower your team to solve problems themselves, in real time on the shop floor. To achieve this, develop problem-solving and analytical skills within your teams, encourage questions that aim to find the root causes of issues and create a safe environment where anyone can suggest solutions without criticism.

Create governance structures to guide the process:
To ensure the success of your improvement project, set up the necessary governance structures to support the process. This can include aspects such as a governance forum for project managers to check in, assess developments and ask for help, or using your daily management system (DMS) to guide the project plan.An effective DMS will provide your factory floor project owners and their teams with the necessary tools and metrics to guide their improvement efforts day-by-day. A daily operations review (DOR) is another useful tool for leaders to stay on top of their teams’ improvement targets while ensuring everyone receives the guidance they need to achieve their individual goals.

Sustainable success

Creating an agile supply chain will enable manufacturers to deal with current challenges and remain competitive in future, withstanding market pressures and demand fluctuations.

By promoting interconnectivity, establishing optimized demand triggers and improving the agility of their production lines, manufacturers can create a flexible supply chain in a relatively short period of time. However, a continuous improvement approach to identifying efficiencies and sustaining results is critical to achieve long-term competitiveness and sustainable success.

Contact us to find out how we can help you build an agile supply chain through incremental, sustainable improvements.

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