17 AGILE SUPPLY CHAINS Essay

SCM 460 GLOBAL SUPPLY CHAIN STRATEGY
Dr. Alex Rodrigues
Agile Supply Chains

The Modern Supply Chain

The Modern Supply Chain
• Increased Acceleration
– The trend towards logistics acceleration and increasing time-sensitivity can be discerned in numerous industry sectors. The associated logistics concepts are called timebased strategies.
– This trend is further exemplified by the emergence of logistics strategies called time-based management, lean manufacturing, high-speed management, cycle-time compression, fast cycle-time, agile manufacturing, etc.
– Often encountered operational examples of time-based strategies include just-in-time (JIT) production techniques and efficient consumer response (ECR) distribution.

The Modern Supply Chain
• Increased Globalization / Internationalization / Outsourcing /
Offshoring:
– The world has been observing an increase in international trade and worldwide sourcing volumes. In fact, global business transactions grew during the 1990s at a rate at least three times as great as typical domestic economies. According to the World Trade Organization, for example, 55 percent of all raw materials for American manufacturing are sourced outside the United States.
– As world trade began to grow, many companies began to consider globally distributed suppliers and production/distribution facilities.
– Business environmental characteristics such as the ever-increasing pressure of competition among companies, the move towards consolidation of global production and the improvements in communication and transportation systems, emphasize the development of supply sources and the search for new markets around the world.

The Modern Supply Chain

• Increased Complexity and Uncertainty:
– Global Supply Chain Management must accommodate operations in a variety of different national, political, and economic setting while also dealing with increased uncertainties associated with the distance, demand, diversity, and documentation of international commerce. – Increased complexity causes international logistics performance cycles to be longer, less consistent, and less flexible than is typical in domestic operations

The Triple-A Supply Chain; Hau L. Lee;
Harvard Business Review; October 2004; p. 2-11
• Building a strong supply chain is essential for business success. But when it comes to improving their supply chains, few companies take the right approach.
• Many businesses work to make their chains faster or more cost-effective, assuming that those steps are the keys to competitive advantage. To the contrary: Supply chains that focus on speed and costs tend to deteriorate over time.
• Only companies that build supply chains that are agile, adaptable, and aligned get ahead of their rivals. All 3 components are essential; without any one of them, supply chains break down.
• Great companies create supply chains that respond to abrupt changes in markets. Great companies also adapt their supply networks when markets or strategies change. Finally, great companies align the interests of the partners in their supply chains with their own.

The Triple-A Supply Chain; Hau L. Lee;
Harvard Business Review; October 2004; p. 2-11

Topics
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Topic 1:
–

•

Understand tradeoffs between Lean, Agile and Leagile supply chain approaches

Topic 2:
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Understand the manufacturing challenges in a fastchanging world

Reading 1: Integrated Model for the Design of Agile SCs
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