Agility is defined as ‘the ability to move quickly and easily’. And over the last few years, agile methodology has been applied to everything from project management to software development.
But agility can also apply to supply chains as well. With its power to minimize complexity, agile supply chain methodology has already started to take the front seat in optimization efforts. In an agile supply chain, factors such as faster response, flexibility, and speed of decision-making can be leveraged to manage day-to-day supply issues in real-time against demand forecasts. However, the arrival of COVID-19 has driven this imperative even further as companies look to recover from its impact.
Building an Agile Supply Chain
To build agility into the supply chain, companies must be open to software solutions in order to fully capture real-time data. This will increase speed, response, and flexibility. In doing so, they need to tailor their software solutions to address three key drivers of agile supply chains – visibility, collaboration, and discipline.
- Visibility: Without complete visibility over their supply chains, companies will leave too much to chance in an uncertain environment. This includes visibility over all areas within the chain that includes sourcing, manufacturing, logistics, freight movement, and delivery. By understanding the full picture, inventory can be properly managed, orders are properly tracked and decisions can be rendered based on real-time data. One way to envision the level of visibility required to consider the supply chain is as a “glass pipeline” that contains the following elements:
- Direct Management of Raw Materials – By having visibility over raw materials, companies can negotiate better terms. This allows for changes to raw material structures for new products and innovation while reducing the cycle time to market for new offerings.
- Tight Monitoring of Factory Production – Understanding the impact of actual production on the supply chain can help identify missed events that can impact downstream performance.
- Proactive Regulatory Compliance – Too many companies fall victim to reactionary compliance on regulations that hold up delivery and impact the overall chain. Building compliance issues such as customs releases, tariff restrictions,, and other cross-border issues will smooth out the supply chain and avoid delays.
- Collaboration: Supply chains have stretched further and further across the globe in recent years, yet many companies continued to rely on spreadsheets, email, and fax machines to communicate information. To mitigate disruption and give everyone a chance to respond proactively as issues arise, collaboration is essential among all stakeholders. This collaboration requires:
- Sharing Information in Real-Time –When everyone has real-time access to information, companies can be proactive in response to evolving supply demands. This leads to benefits such as reduced excess inventory costs and lower stockouts.
- Establishing an Expectation of Collaboration – Instead of sending and receiving updates, collaboration involves frequent, regular, and accurate communication based on up-to-the-minute data.
- Making Use of the Data – True collaboration can drive innovation and process improvement because supply chain issues are no longer based on delivery dates alone. They can include quality certifications, engineering changes based on feedback, and other product enhancing measures.
- Discipline: An agile supply chain requires discipline to develop and maintain it. This way of working must become a mindset, managed and enforced by tools such as software and automation that keep the system going. This means moving past personality- and instinct-driven “gut feeling” decisions on demand and supply as well as leaving behind spreadsheets and other disparate tools. To create a discipline that drives agility, businesses should:
- Rethink Tasks – Supply chains should be viewed as an organic system. In doing so, their design can be re-imagined to redefine work in a way that reduces individual tasks to one where staff members manage it holistically.
- Ensure Top-Level Buy-In – Since supply chains are the lifeblood of a company, top management must buy into the concept of this as a system that relies on analysis and real-time data. Having this endorsement from “above” helps set an example of the discipline required to let the system work while resisting the urge to re-introduce excessive human interaction for tasks that have been automated. This new discipline requires the ability not only to capture the data but trusting the output and analysis that comes forth.
- Use the Data to Respond and Innovate – Part of being agile means being flexible and responding to new realities. This too takes discipline. By using the data gained, new innovations may emerge that drive both new processes and product offerings. It will also allow detection of shifting or changing demand which can respond quickly to minimize disruption.
To embrace agility while heading in a new direction, companies need to do more than simply use old tools and methods. The volume of data alone and the speed at which it is transmitted is impossible to maintain with human interaction alone. An agile supply chain that is fully integrated into a company’s operations can respond to almost any disruption. And with today’s available software solutions, real-time demand data combined with accurate forecasting can help build the visibility, collaboration, and discipline required.
Empowered with advanced analytics for demand sensing and with access to “what-if” scenario building for different supply planning realities, software can create accurate forecasts while translating demand into reliable plans and schedules for manufacturing, distribution, and replenishment. Software such as DemandCaster’s Supply Chain Planning Software Suite enables the visibility, collaboration, and discipline to anticipate the unexpected and respond in an agile manner, keeping processes (and profits) on track.