Wednesday, 29 October 2008

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)

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