What is an agile supply chain?
An agile supply chain is a supply chain management technique that allows businesses to be more flexible, responsive, and adaptive when it comes to meeting customer needs and demands.
The eCommerce industry in particular is a dynamic environment, with consumer trends changing all the time. While traditional supply chains were designed to be cost-effective and efficient, they’re fairly inflexible machines that take a lot of time to change course.
As such, using a traditional supply chain model makes it difficult to meet the ever-changing demands of customers around the world.
In today’s article, we’re going to take a look at the benefits of an agile supply chain, how to implement more agility into your supply chain strategy, and more.
What’s the difference between an agile and a lean supply chain?
As we’ve alluded to already, an agile supply chain is all about building a flexible supply chain that can swiftly and easily pivot to meet demand. There’s a large focus on collaboration between partners and suppliers in order to keep lines of communication open, with the aim of being as flexible and responsive as possible.
Ultimately, the agile supply chain model is about putting the customers first, with less focus on efficiency and costs.
A lean supply chain, on the other hand, is all about maximising efficiency, productivity and cost, ensuring that the flow of goods and services remains steady at all times. A lean supply chain is extremely reliable, but takes time and money to diversify and change.
Lean supply chains are ideal for businesses who have a static business model, and want to continuously improve their operations. However, a lean supply chain is generally unsuitable for businesses that want to continuously change with the times – at a moment’s notice.
What defines an agile supply chain?
Every supply chain is different, even ones that are characterized as agile. That said, there are some characteristics that most agile supply chains share.
Collaboration and Partnership
In order for a supply chain to be agile, there needs to be close collaboration between all stakeholders in the supply chain network, both internal and external. Open channels of communication are essential to quick decision making and rapid responses, which in turn allows businesses to be as flexible as possible.
Additionally, employees in all areas need to be empowered to make their own decisions so changes can be made as quickly as possible. For this to happen, your business needs to have a flat leadership structure and a culture that fosters a sense of autonomy, trust, and accountability.
An agile supply chain should be able to scale quickly, both upward and downward. This means that you’ll have the flexibility to ramp up resources when demand is high, and easily cut resources when demand is lower.
They have the ability to quickly adapt to customer requirements in a variety of ways, such as increasing production capacity, stock levels, and carrier capacity in busy periods, and scaling them back down when your business isn’t as busy.
A major goal of an agile supply chain is to respond to any curve balls thrown its way. Naturally, this involves a lot of risk management to ensure a Plan B, Plan C, Plan D, and so on, regardless of the circumstances that arise.
Logistics planning should include exhaustive contingency plans for alternative product sourcing, backup suppliers, carrier alternatives, and other forms of possible disruption. No supply chain is resistant to everything the world might throw at it, but agile supply chains are the best equipped to deal with complications and challenges.
To react to demand on the fly, you’ll need to incorporate highly accurate, real-time data into your supply chain. Supply chain technology has come a long way, with innovations such as the Internet of Things (IOT), cloud-based inventory analysis, and enhanced business intelligence allowing you to make business decisions based on the most up-to-date information available.
Key advantages of an agile supply chain
Agile supply chains have numerous advantages over traditional supply chains, especially in the modern world. Customer expectations will be met more often, which naturally leads to a more successful, more profitable business.
Find the major benefits of an agile supply chain below.
Better customer experience
With a strong agile supply chain in place, customers will feel the benefit both directly and indirectly. Most of the time, customers will be highly satisfied because they should always be able to purchase products from you, without worrying about stock outs or backorders.
They’ll also enjoy a quick delivery time thanks to your well-stocked warehouse, and up-to-date tracking thanks to your real-time data visibility. Constant availability of goods combined with fantastic customer service creates a foundation for repeat customers and remarkable brand loyalty.
In contrast to a lean supply chain, an agile supply chain uses flexibility and responsiveness as key drivers of efficiency. As we mentioned earlier, agile supply chain management involves allocating the right resources at the right time, not only to meet customer demand, but also to optimize costs and productivity.
Furthermore, due to the agile supply chain relying so heavily on accurate data, you can also use the data to implement processes for continuous improvement. Large amounts of real-time data make it much easier to measure KPIs, identify and eliminate bottlenecks, better forecast demand, and more, all of which improves operational efficiency over time.
A strong agile supply chain can create avenues to achieve a significant competitive advantage over your competitors. Having the flexibility to meet new demands at very short notice can win you new customers more easily, and even the most loyal customers away from your competitors.
How to implement agility into your supply chain
Logistics planning and supply chain management are no easy tasks. That said, if you’ve already put in a lot of work to establish a reliable supply chain, it’s easier to implement agile techniques compared with building a new supply chain from the ground up.
Here’s a step-by-step process to introduce agility into your supply chain:
- Perform a comprehensive audit of your current supply chain, and look for areas that would benefit most from the agility principles we’ve mentioned today. Key areas include production, supply, transport, and fulfillment.
- Set up targets, objectives, and KPIs to better identify what you want to achieve, and to help track progress on your way to achieving it.
- Work with internal and external stakeholders, including colleagues, suppliers, and partners, to ensure that you’re all on the same page.
- If you haven’t already, invest in cloud-based data analytics software so you can collect accurate data in real-time and unlock the ability to make good decisions based on up-to-date information.
- Learn and deploy agile supply chain techniques such as demand sensing, dynamic inventory management, and responsive production planning such as JIT inventory.
- Create time each week to review and evaluate performance against objectives and KPIs, making improvements as necessary.
- Keep new agile principles at front of mind throughout every area of the supply chain, and continuously work to ensure stakeholders are onboard.
Improve supply chain agility by outsourcing your fulfillment
Here at James and James, we’ve been helping eCommerce brands breathe agility into their supply chains since 2010. Our fulfillment service is hugely flexible, meaning that you’ll only ever pay for the storage you use, and the orders you process.
It’s a perfect model for businesses who have intense seasonal fluctuations, or are struggling to meet demand in a cost-effective way. We can help you fine tune your inventory management with powerful demand planning tools, an international network of fulfillment centres, and much more.
You’ll also save tonnes of time every day, which can be spent on improving other areas of your supply chain, or on other business activities such as marketing, product development, and networking.