Critical Review on Agile Supply Chain Management
When considering about supply chain management strategies there are mainly two types of strategies in order to successfully manage supply chain for a particular organization. These are namely,
1. Lean Supply chain
2. Agile Supply chain
What is Lean Supply chain?
Lean supply chain management is all about the reduction of cost and waste as much as possible. The aim of this method is to focus on efficient, streamlined operations. In this approach, anything in the process that doesn’t add value for customers is eliminated. When implementing a lean supply chain, you’re constantly looking for ways to remove layers of waste and only take steps that add value to a product or service. One characteristic of a lean supply chain is that products are made on an as-needed basis so there’s no unnecessary inventory or overproduction. Additionally, companies with high volumes of low variability purchase orders, such as food items, benefit their efficiency greatly by utilizing the lean supply chain methodology.
Adopting Lean Supply chain
To implement lean supply chain management to a process, business or an organization, the firm should observe all the areas of the process.
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Unlike lean supply chain this system is rather new to many organizations as most of the organizations focus on minimizing waste and cost. This method is for organizations that want to quickly adapt to changing situations. This method makes it easier to adjust sourcing, logistics, and sales in response to factors including economic fluctuations, technology changes, and customer demand. This approach typically results in shorter ordering lead times. It’s also quick to respond to customers. And when something unexpected happens, such as a regular supplier not being able to fill an order, the system enables flexibility. You can also respond more quickly to new market opportunities with an agile supply
Under the lean production approaches, a number of factors are essential to the process for
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Supply-chain management consists of developing a strategy to organize, control, and motivate the resources involved in the flow of services and materials within the supply chain. A supply chain strategy, an essential aspect of supply chain management, seeks to design a firm’s supply chain to meet the competitive priorities of the firm’s operations strategy.
The Supply-Chain Council defines supply chain management as “[m]anaging supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer” (Wisner, Leong & Tan 2005).
Lean is defines the manufacturing philosophy that reduces the time between the shipping and customer demand, which based on the systematic method by eliminating waste, that means giving the customer what they want when they want it, and don 't waste whatever. Rahmana, Sharif and Esa (2013) suggested lean production is mentioned to improve the company 's performance from the philosophy in reducing waste in order. That means, lean system destination is the decrease cost by removing the non-value activities, which they are applying a category of tools and techniques for checking and eliminating defective in the production process. In the Evenort Company should emulate the five overriding principles of lean thinking in terms of implementing lean that there is guarantee the company has been driving correctly in the lean manufacturing (Cardiff 2015) as can show in table 1.
Mellat-Parast and Spillan (2014) defines supply chain management as the method of handling material and information moves from the beginning, through the organization, and to the end-user. This is a very important factor of organizational strategy.
The supply chain management basically involves processes and activities which are involved in the planning, organising, controlling and implementing the cost effective flow of goods from the point of origin to the point of consumption. The whole process will have different players like the supplier, manufacturer, distributor, retailers and the customers themselves as the end point of consumption. The supply chain has changed drastically over the years. This days they are very global in nature. Involving various complex interactions and flow of goods, data and funds between companies which are situated in different countries and continents. Even though the companies are spread across the world the manufacturing plants generally follow a similar structure which normally comprises of the suppliers, manufacturing plants, distributors, retailers, inbound and outbound logistics providers. There were a lot of challenges which arose because of the
The effectiveness of this lean method will ensure the elimination of waste while still maintaining high quality control of their product, which in return increases their profitability and
Supply chain management is a main process in all kinds of companies. That’s because an optimized supply chain results in lower costs and a faster production cycle.
Companies compete with others across global market to gain competitive advantage. Customers desire high quality products which meet their specification at reasonable price. Customers want manufacturers to meet their demands, and they switch to different brands if their needs are unmet. Thus, manufacturers are looking for ways to speed up their process and at same time achieve highest level of customer satisfaction. Lean methodology is one of the ways by which manufacturers can achieve the same.
Lean Six Sigma processes are used by many businesses without it being realized. Many companies today are adopting the Lean Six Sigma processes to aid in cost reduction and waste management. The Six Sigma program aids in eliminating the negative effects caused by variations within the supply chain. The Lean process is all about the speed, flow and elimination of waste concerning inventory. Although Lean and Six Sigma are separate programs, they complement each other. Together these two programs provide supply chains with a tool that eliminates, “unnecessary inventories through disciplined efforts to understand and reduce variation, while increasing speed and flow in the supply chain.”(Lean Logistics Understanding) Lean and Six Sigma
“Lean means creating more value for customers with less” (Krejewski, L., Ritzman, L.P., & Malhotra, M.K., 2013). Implementing this into a project can make the project very successful at a lower rate of cost and time. There are five steps in allowing the lean process to work successfully. This process is easy to remember but not always easy to achieve. Specifying the value from the customer’s point of view of the product that the customer is interested in purchasing is the first step. Identifying all the steps of value for the product the customer wants to purchase and eliminating the steps that are unnecessary is the second step. Creating a sequence of steps that flow in a consistent fashion and will flow smoothly toward the customer is the third step. Introducing the flow of the product that the customer is interested in purchasing and allowing the customer to pull value from the product is the fourth step. The fifth and final step in the lean technique process is “as value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste” (Lean Enterprises Institute, 2015).
Lean Manufacturing focuses on eliminating non-value added processes and waste and try to produce only to satisfy customer demand.
The lean supply chain helps to imrprove efforts focusing waste, improve manufacturing schedule and economically produce small quantities. It is also flexible to react to changes in the market. Hence, BMW has this facility of allowing a customer to change its order within a week of placing and still maintain the original delivery time and high quality. Similarly, agile supply chain helps in carrying a generic inventory. The best part is that it helps in reducing risk of keeping too much stock as well as being out of stock. Mass-customization can be easily pursued through an agile supply chain which offers variety at a lower total
Research also can establish the services valued by all customers versus those valued only by various segments. Then the company should apply a disciplined, cross-functional process to develop a menu of supply chain programs and develop segment-specific service packages that combine basic services for anybody with the services from the menu that will have the greatest appeal to particular segments. This does not mean tailoring for the sake of tailoring. The goal is to find the degree of segmentation and variation needed to optimize