Supply Chain Methodology: Lean vs. Agile Supply Chain

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Supply Chain Methodology: Lean vs. Agile Supply Chain


As for now, the consumer’s behavior and needs change every day under the economic alteration. So, the supply chains depend not only on on-demand and delivery. Shippers have to go on with the consumer’s needs and satisfy them.

The supply chain has to work according to the hesitations on the market. There are two types of customers in the contemporary market: digital and global. It means each potential customer has the access to each product of every company under the hand. Such a situation only exaggerates the competition between the manufacturers. It forces the companies not only to innovate the products but make a faster supply chain. The pace of delivery to the markets designates whose product will be bought.

More than that, the trends quickly pop up and disappear from the market. The companies need to maintain flexibility and adapt products under the demands. In order to cater to the changes, companies have two ways to work under the hesitation of the supply chains. They are well-known as the agile supply chain and lean supply chain.

Which direction is better for your business? How to designate it? Keep an eye on the main differences to find out.

What Is Lean Supply Chain?

The lean supply chain is dedicated to decreasing prices and waste. This system is oriented to fruitful and rational operations. As a rule, cooperation is going between the supplier and the company. The work under one agreement. 

In the lean supply chain, all are accessible, which has values for the customer. The other unnecessity elements are eliminated. Working with the lean supply chain suppliers take into consideration only those steps, which make the values of the products and services a lot higher.

This type works on the predictions of the needful products as well. There are no over-made goods, which customers do not need at all. It works with toilet products, for instance. Now, get into more details about the lean supply chain for your business. 

Manufacturing 

The lean supply chain is the perfect choice to control manufacturing. This type works on the predictions, which help to understand the demand of consumers in the future. As a result, companies make such products, which the buyers need. 

The producer of sports footwear Nike has around 700 factories in 42 countries of the world. This company uses the lean supply chain to decrease the waste of materials, increase the productivity of work and make a better profit. The high productivity of workers leads to the good quality of the goods and well reputation on the world market. 

Stocking

The other advantage of the lean supply chain is the minimizing of stocking space. As a lean supply chain works on the reduction of unnecessary products, it helps companies to decrease the expenses on warehousing. The world popular company H&M uses this strategy. They work only on the needs of potential clients, but without the storage of clothes.

How To Implement The Lean Supply Chain?

Like the other supply chains, lean needs time to show the results. First of all, the adoption of the system by the company plays a big role. Often, companies include all wastes in everyday activity and it’s normal for them. With the lean supply chain, people have to eradicate this strategy and turn out into the other one. 

The results of the lean supply chain will be visible:

-A significant place in the market

-Reducing the expenses on stocking and material

-The increasing capacity

-Better customer service

-Higher productivity

What Is The Agile Supply Chain?

The concept of the agile supply chain was found in early 1995. This strategy is more compatible with the hesitative market, as it is driven by the demand. Speed, Cost, and Efficiency are the basic factors of the agile supply chain. This chain works regarding the real situation and demand on the market, but not on the forecasts. 

There are four main components, which designate the work of this chain.

Virtual Incorporation

The agile supply chain has the target to satisfy the needs of the market and end consumer. To make it, different departments collect the information about the current situation, designate the lack or overwhelming of certain products. Via the virtual incorporation, the agile supply chain gets information about different kinds of problems and finds ways to improve them.

Strong Network Connections

Every single participant of the agile supply chain has an important role to reach success. The duties are equivalent, so everyone should complete the responsibilities. Hence, the success of the agile supply chain does not rely on one participant, but on all of them.

Responsive Market

The agile supply chain works with the current situation on the market. The departments every day collect the information about the situation on the market today because the information about yesterday is the old one.

 This supply chain is relying highly on the desires and thoughts of the clients. The demand of the client today designates what would be on the market tomorrow. Regarding all that, the voice of the consumer drives the agile supply chain. 

Key Features Of The Agile Supply Chain

For your information, the considered strategy is the most popular in the modern market world. The Agile supply chain has the most impressive impact on inventory management. Excess materials and the lack of certain inventory can be overcome using this strategy. 

As for now, companies use modern software to regulate inventory circulation. To operate the agile supply chain successfully, the availability of modern software is a necessity. The old versions and bad quality of technologies can lead to problems with the agile supply chain.

According to the information of the world-known and lead producer McKinsey & Company, around 94% of the companies, which have implemented the agile supply chain, complete the orders on time without keeping the inventory even for 85 days. For comparison, companies, which do not use the agile strategy, keep the inventory for more than 108 days.

What Are The Benefits Of Agile Supply Chain?

All in all, an agile supply chain is not only the type of strategies to keep on supply and demand. It is a new way to solve a lot of problems and confirm success. The agile supply chain is the way to increase operative deliveries in the changing environment. This strategy is behind the competition, as companies can use this kind of supply chain without the help of others. 

Effective agile supply chain brings the company possibility to:

-Streamline inventory

-Decrease expenses

-Create the anticipatable supply chain

-Complete new demand of the customers in a short period of time

-Fast producing

-Increase profit

What Is The Difference Between Lean And Agile Supply Chain?

Under the information above, it is clear what is the difference between the considered supply chains. However, there is one specific feature about the implementation of the lean supply chain in the agile one. 

Lean concepts allow reducing the number of expenses for the companies. For instance, the usage of computers allows making the order in a few minutes, which increases productivity. Despite this, the information, which is given in the result of the lean supply chain does not give predictions about the market’s needs in the future. As a result, this supply chain has problems with visibility, which can lead to overstocking. 

On the other hand, the agile supply chain can fastly get used to the changing environment, economy, individual reasons, tendencies, and other factors. It is easier to overcome the disorders and renew the process.

Hybrid Strategy

In some cases, the lean supply chain is the best, when in others the agile chain will fit very nicely. Besides, more and more companies find the implementation of both supply chains will satisfy their needs fully. A lot of modern powerful companies faced the regarded situation and tried to mix strategies.

To make it excellent, the companies made carefully the plan of how to implement the combined supply chain. It is especially difficult to cooperate with the moving parts.

A Spanish fashion designer Zara uses the mixed supply chain. The company makes all of its own strength. The subcontractors complete only the subsequent functions. As a result, Zara has not only a supply chain with lean characteristics but agile and flexible as well.

As Zara works inside the company, other producers use the hybrid sample, but work more with the subcontractors. They complete different production processes in different locations and parts of the world. However, in this case, the combination of lean and agile supply chains has a nice result.

It seems every company can find a separate way of combining different strategies. In the modern fastly changeable world companies are interested in using both strategies.

How To Choose The Better Supply Chain For The Company?

To take the right way in the system of supply chains, try to answer the next questions:

-What do you produce? Which kind of products do you want to sell?

-Designate the audience of consumers and their conduct.

-How is the demand for the product change? What are the reasons for changing? Build the forecasts for it.

-How fast do your market audience change?

-Which impact has the economy on your product, it’s the cost on the market and consumers?

-Which supply chain do your partners use?

Answering the questions above, it will be easier to decide what is better for a certain company to stay popular and produce demanding products on the market.

Final Thoughts

To sum up, both lean and agile chain supply are perfect choices for the entities. Each of these strategies is new and well-adapted. The benefits are visible and reachable in case you choose what is better for your manufacturers. The main difference is in the flexibility of reactions to the market changes.

The lean strategy is designed on cutting costs on producing a big amount of products with bad changeability. At the same time, the agile system offers to react to the changes with the small and configurable deliveries of goods. Keep in mind that a lean supply chain is more profitable and predictable, but the agile one is more adaptable and flexible.

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Egbert Feron is a freelance content writer and blogger, currently working at csgo-bets.org. He learns his entire life with curiosity and shares his knowledge with others in a simple and understandable way. Topics Egbert covers include technology, marketing, business, and lifestyle.

The post Supply Chain Methodology: Lean vs. Agile Supply Chain appeared first on Global Trade Magazine.



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