This is the first in a series of blog posts based on the applied research report, “Meeting the Challenge of Supply Chain Agility,” by the research team of Bruce Behn, Pradeep Charath, Paul Ditmann, and Dan Pellathy. Download the white paper.
Supply chain agility is not a new concept. Leading companies have pursued agile strategies for years, investing in digital, process, and physical capabilities that enable a rapid response to environmental change.
Although no company has fully mastered the agile supply chain, investments in agility have already demonstrated their value.
Benefits include:
- Reducing operating costs through more flexible management of volume and product variability
- Improving customer satisfaction through higher levels of on-time product availability
- Enhancing risk mitigation and recovery time through greater supply chain visibility
- Avoiding costly demand-supply mismatches through fast, proactive planning cycles
Perhaps most importantly, supply chain agility creates a culture of calculated risk-taking and innovation that can transform how companies recognize and capture opportunities as they arise in the market.
Take IBM, for example. Through investments in geo-mapping, the company has generated visibility into supply, production, fulfillment, and deliveries across its global network. Geo-mapping technology enables managers to see or simulate when a multi-tier supplier cannot ship materials and quickly assess the impact. When the pandemic struck, IBM reaped the benefits of these agility investments. Armed with advanced visibility, managers quickly found workarounds as competitors scrambled to understand where their supply chains were breaking down. Ultimately, IBM was able to meet most customer demand despite disruptions at various points in its network.
Unfortunately, supply chain agility remains poorly understood and rarely realized in most companies.
Only in the face of extraordinary disruptions have executives outside the supply chain seen agility as a vital feature of company success. At the Global Supply Chain Institute, we hope that company executives can implement agility strategies to prevent similar disruptions in the future.
Three Challenge Areas
In our discussions with dozens of supply chain leaders, we found that managers face challenges in three broad areas:
Thinking About Supply Chain Agility
- Combating jargon fatigue with clear definitions
- Distinguishing agility from traditional risk management and resilience
- Countering a short-term orientation
- Creating an agility mindset
Making the Business Case for Agility to Internal Stakeholders
- Building top leadership support for agility initiatives
- Prioritizing agility-related initiatives
- Overcoming the lack of incentives for agility work
- Focusing on lead time compression and SKU reduction
- Developing approaches for testing a market and then scaling up
- Expanding the tool kit for valuing agility investments
Developing Agile Relationships with External Stakeholders
- Building top leadership support for relationships that promote agility
- Developing a collaborative framework for working on agility
- Aligning partner incentives toward agility work
- Promoting a shared culture of agility
Our research team with the Advanced Supply Chain Collaborative (ASCC) developed a practical guide for overcoming these challenges. In our white paper, you will find examples of companies that have successfully implemented supply chain agility initiatives as well as broadly applicable approaches to defining and valuing supply chain agility projects. Finally, you receive a fast-start checklist and detailed self-assessment tool that can guide managers’ discussions on their level of supply chain agility and help identify target areas for investment.
Too often, top leadership seeks specific responses to short-term problems. But this approach almost guarantees that a company will continue to react to disasters that have occurred instead of preparing for opportunities that lie ahead. Supply chain agility flips the script on how companies operate in a dynamic environment.
By focusing on a company’s ability to prepare for and adjust to opportunities and threats, supply chain agility moves the concern from predicting a particular risk event to recalibrating supply chains to better incorporate change.
In the face of extraordinary disruptions, executives outside the supply chain see agility as a vital feature of company success. Supply chain leaders need to capitalize on this recognition by pushing for projects that will create more flexible, responsive networks.
Agility enhancements are within reach. Supply chain leaders should be clear-eyed about the challenges. But as our report illustrates, concrete evidence, supported by examples, exists for how to meet these challenges head-on.
Over the following weeks, GSCI will publish blog posts focusing on each of the three supply chain agility challenge areas the research team identified in the white paper. To learn more about how your company can partner with us to explore advanced concepts in supply chain management, visit ASCC.
Download the white paper by filling out the form below to read more about meeting the challenge of supply chain agility.