What does "Leagility" mean in reference to supply chain design?

1088 Words Feb 1st, 2005 5 Pages
Today's fast paced business performance requires constant attention and effort; the process is a never-ending production and movement of goods from production to the customer. In the past, large economies ruled the manufacturing world and everybody knew that mass production and full utilization of plant capacity was the way to make money. This style of manufacturing resulted in inflexible plants that could not be easily reconfigured, and were associated with swollen amounts of raw materials, work-in-process and finished goods inventories.

The term "Leagility" was introduced in the supply chain design to avoid or minimize inflexibility and overage in the supply chain by making it lean and agile. This will keep production cost down and
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The decoupling point also represents the natural stockholding point to account for variability. It is critical to note, however, that agility and leanness cannot be employed at the same point in a value chain design.

Surprisingly there are many similar characteristics of leanness and agility. Table 1 shows these characteristics and how each relates to each paradigm.

Table 1

The importance of different characteristics of leanness and agility ii

Characteristic Lean Agile

Use of market knowledge Essential Essential

Virtual corporation/Value stream/Integrated supply chain Essential Essential

Lead time compression Essential Essential

Eliminate waste Essential Desirable

Rapid reconfiguration Desirable Essential

Robustness Arbitrary Essential

Smooth demand/Level schedule Essential Arbitrary

It is noticeable that the characteristics are remarkably similar with the exception of robustness and smooth demand. To be responsive, an agile manufacture must be robust, in that it must be able to respond to the changing demands of the end-user. However, a lean supply chain is only efficient under relatively smooth demand. The concept of a decoupling point in the supply chain design can make these two mutually exclusive characteristics compatible. iii

Under a networked supply chain, each participant must determine which strategy to pursue based on its customer's requirements, where its customer is the next link in the supply chain.

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