Agility in Supply Chains and Business Networks

There is no single right supply chain for a company. Companies have very different needs, since product characteristics are different.Supply chains with a lot of uncertainty on the demand and supply side need to be agile. Business agility of organizations depends to a large degree on the agility of the supply chain or business network as a whole. By architecting agility into the supply chain, companies create value for their customers, their suppliers and for themselves.

To create value, companies need to be fast in "sensing" what is happening to their supply chains, and be fast in creating and executing the right response. Multitier network visibility and new information technologies such as radio-frequency identification (RFID) enable sensing. These technologies can detect unexpected events in a supply chain, such as demand surges or supply disruptions. A challenge is smart sensing, acting only on the important signals.

As for response, companies need speedy but "appropriate" responses--a speedy but wrong response could bring more harm than good. Fast responses require customization capabilities, such as a postponement strategy. It may also involve decision delegation. That is, decision rights must be delegated to the appropriate partners so they can act swiftly at the appropriate time.

Further Reading:
AAA Supply Chains: Agility, Adaptability, and Alignment (Hau Lee)
Agile supply chain capabilities: Determinants of competitive objectives (Yusuf and others)
An Integrated Model for the Design of Agile Supply Chains (Christopher & Towill)
Seven Supply Chain lessons (Hau Lee)

Business process management technology supports business process agility

Many organizations use business applications, where processes and business rules are hard coded into the technology. This makes it difficult and time consuming to make changes for pro-active or reactive response i.e. to be agile. Platforms such as Mendix and Cordys are based on BPM and model-driven applications. The best BPM approaches empower business users to build processes that can be adapted to meet their business needs. The days of writing a requirements document and then "tossing it over the wall" to IT are over. The Model has become the Application.

Further reading:
Business Process Management Wikipedia
Business Process, Business Rules and the Agile Enterprise (BPM Institute
Achieving Business Agility (Softwaremag.com)
Process Innovation and corporate agility (BP Trends)
Using BPM and SOA (BPMRoundTable)

Empowering the (business) user key to agility

Empowering (business) users means putting them in a position to direct how their systems work, how they support the business, how they change. James Taylor mentions four requirements to empower users:
- Provide information about the business (reports, dashboards and visualizations)
- Provide understanding of the systems and processes (via business process technology and business rules)
- Give control of the systems (to a certain degree)
- Offer simulation of proposed changes in a way that makes sense to the user(generate understanding what a change will do before it is implemented)

Further reading
Empowering employees is the basis for business agility (Microsoft)

Sense, Respond and Learn

Agile organizations possess three groups of dynamic capabilities for mastering change and uncertainty: sense, respond and learn capabilities. Information Systems and Technology need to support these three groups of capabilities. Sense capabilities are capabilities to anticipate or detect opportunities and threats in the business environment Respond capability is the ability of an organization in collaboration with its customers and partners in the business network, to quickly and seamlessly (re)configure combinations of capabilities to shape innovative moves with relative ease (Dove, 2001).Two interrelated practices - knowledge management and organizational learning - effectively leverage knowledge as an important capability of agile firms.

IBM used these concepts to build their sense-and-respond organizational framework, which is used in their On-Demand concept. This framework corresponds closely to early strategic thinking by the military about the distinctions between strategy, tactics and operations. The relation between sense-, respond-, and learn capabilities can be described as a virtuous cycle.

Overby et al (2006) discuss the symbiotic relationship between sensing and responding capabilities. They argue that each of these components is needed for a firm to be agile. Strong sensing capabilities are of no use, if a firm does not possess the respond capabilities to react to opportunities, which have been identified. Similarly, strong respond capabilities may not help a firm if it is unable to identify opportunities on which to act. We argue that learning capabilities can further strengthen sensing and respond capabilities and co-operate in a virtuous cycle.

Further reading:
It's time to flex - creating the organizational and cultural agility to do business on demand (IBM)
Stephan H. Haeckel on Sense-and-Respond Organizations
The Sense-and_response Enterprise concept applied to value chain optimization

Case Study:
Tranforming the military through Sense and Respond (IBM)

Service Oriented Architecture the solution for IT agility?

Many IT organizations and consultancy firms claim that service oriented architecture and service oriented computing is the solution for enterprises to enhance the agility of their IT architecture. Service-oriented architecture (SOA) is a method for systems development and integration where functionality is grouped around business processes and packaged as interoperable services. SOA also describes IT infrastructure which allows different applications to exchange data with one another as they participate in business processes.

One of the challenges for SOA is posed by the inheritance of old legacy systems. Most companies use SOA as an additional layer of code superimposed on the existing layers of the IT architecture. This means that it is possible that a process will fail at some point due to some fault in the layers below, and in order to understand and fix that problem, software engineers will need to deal with the layers of enterprise applications below the modular business processes enabled by SOA. As with ERP systems, complexity remains a challenge. As software grows more complex, reusability becomes a difficult or impossible task – also for Lego-like pieces of code from enterprise systems.

A service-oriented architecture can also be used to move much of the control of the business process to business managers and engineers (if combined with business process management tools) and empower individuals in the organization (via Web 2.0 tools). Combining these different approaches brings agility to the individual.

Further reading:
Service Oriented Architecture Wikipedia

Some opinions in the market:
Cristopher Koch blog on SOA and IT agility (CIO.COM)
Enterprise 2.0 enables business agility
SOA, Business Rule Management and Business Agility (IBM)

Case Studies:
SOA architecture for ING Card (Open Group)