An Integrated Model for the Design of Agile Supply Chains

An Integrated Model for the Design of Agile Supply Chains

2001 | Professor Martin Christopher, Professor Denis Towill
The late 20th century saw the lean production model significantly impact various industries, including automotive and construction. Lean production, characterized by level scheduling and waste elimination, has been effective in markets where cost is the primary factor. However, in markets where availability is key, the agile paradigm, emphasizing quick response, has emerged. Lean and agile are not mutually exclusive and can be combined to create cost-effective supply chains. This paper explores hybrid strategies to develop such supply chains and proposes an integrated model for agile supply chain design. The paper argues that supply chains compete, not companies, and that successful supply chains must meet customer needs effectively. Supply chain performance improvement aims to match supply with demand, reducing uncertainty to ensure predictable upstream demand. However, some products, like fashionable items, have unpredictable demand, requiring strategies that accept uncertainty while still matching supply and demand. Lean manufacturing focuses on eliminating waste, while agility emphasizes flexibility, organizational structures, and information systems. The paper defines lean as eliminating waste and agile as using market knowledge and virtual corporations to exploit opportunities in volatile markets. The paper aims to show how these paradigms can be combined to create competitive supply chains in volatile, cost-conscious environments. The paper discusses the cyclical nature of market winners and qualifiers, highlighting the transition from product-driven to customer-driven supply chains. It also compares lean and agile supply chains, noting that lean focuses on cost, while agile focuses on service and customer value. The paper proposes three hybrid strategies: the Pareto Curve Approach, the Decoupling Point Approach, and the Separation of Base and Surge Demands. These strategies allow for different management approaches based on product predictability. The paper concludes that agile supply chains require a combination of lean and agile strategies, with an integrated model that supports rapid replenishment and postponed fulfillment. It emphasizes the importance of cultural change and the need for supply chain managers to be change managers. The paper also highlights the role of virtual organizations and Fourth Party Logistics Service providers in enabling agile supply chains. The integrated model proposed in the paper provides the essential infrastructure for agile supply chain design.The late 20th century saw the lean production model significantly impact various industries, including automotive and construction. Lean production, characterized by level scheduling and waste elimination, has been effective in markets where cost is the primary factor. However, in markets where availability is key, the agile paradigm, emphasizing quick response, has emerged. Lean and agile are not mutually exclusive and can be combined to create cost-effective supply chains. This paper explores hybrid strategies to develop such supply chains and proposes an integrated model for agile supply chain design. The paper argues that supply chains compete, not companies, and that successful supply chains must meet customer needs effectively. Supply chain performance improvement aims to match supply with demand, reducing uncertainty to ensure predictable upstream demand. However, some products, like fashionable items, have unpredictable demand, requiring strategies that accept uncertainty while still matching supply and demand. Lean manufacturing focuses on eliminating waste, while agility emphasizes flexibility, organizational structures, and information systems. The paper defines lean as eliminating waste and agile as using market knowledge and virtual corporations to exploit opportunities in volatile markets. The paper aims to show how these paradigms can be combined to create competitive supply chains in volatile, cost-conscious environments. The paper discusses the cyclical nature of market winners and qualifiers, highlighting the transition from product-driven to customer-driven supply chains. It also compares lean and agile supply chains, noting that lean focuses on cost, while agile focuses on service and customer value. The paper proposes three hybrid strategies: the Pareto Curve Approach, the Decoupling Point Approach, and the Separation of Base and Surge Demands. These strategies allow for different management approaches based on product predictability. The paper concludes that agile supply chains require a combination of lean and agile strategies, with an integrated model that supports rapid replenishment and postponed fulfillment. It emphasizes the importance of cultural change and the need for supply chain managers to be change managers. The paper also highlights the role of virtual organizations and Fourth Party Logistics Service providers in enabling agile supply chains. The integrated model proposed in the paper provides the essential infrastructure for agile supply chain design.
Reach us at info@study.space
[slides] An Integrated Model for the Design of Agile Supply Chains. | StudySpace