We live in interesting times. Powerful forces are re-shaping the global business
scene : financial and economic upheaval in the Far East, Latin America and Russia
is creating a tidal-wave of change in the competitive environment. Organisations
that once felt insulated from overseas low-priced competitors now find that they
too must not only continue to constantly create new value for customers, but
must do so at a lower price.
To meet the challenge of simultaneously reducing cost and enhancing customer
value, requires a radically different approach to the way the business responds to
marketplace demand. One of the keys to success is the creation of an agile
supply chain on a worldwide scale.
The agile supply chain
There is now widespread recognition of the role that supply chain management
can play in enabling organisations to compete in volatile markets. However,
experience suggests that there are significant barriers both within the company
and between its upstream and downstream partners in achieving the required level
of responsiveness across the chain as a whole. Continuous change is a
phenomenon with which the supply chains have had to cope for some time. But
the rate, scale and unpredictability of change is today’s turbulent business
environment is seriously challenging supply chains based on 1990s best practice.
The logistics environment of the new millennium will have to contend with:-
· turbulent markets that change rapidly and unpredictably
· highly fragmented ‘niche’ markets instead of mass markets
· ever greater rates of technological innovation in products and processes
· shorter product life-cycles
· growing demand for tailored products - ‘mass customisation’
· the delivery of complete ‘solutions’ to customers, comprising products and
And all of the above to be achieved at less cost!
These severe challenges mean that a new operating paradigm is needed. The key
factor is agility - rapid strategic and operational adaptation to large scale,
unpredictable changes in the business environment. Agility implies
responsiveness from one end of the supply chain to the other. It focuses upon
eliminating the barriers to quick response, be they organisational or technical.
Agility should not be confused with ‘leanness’. Lean is about doing more with
less and is often used in connection with lean manufacturing to imply a ‘just-intime’
approach to the business. Many companies that have adopted lean
manufacturing as a business practice are anything but agile in their supply chain.
It is paradoxical that many Japanese companies have exceptionally long delivery
lead-times to their customers and insist that those customers provide them with
firm orders often several months ahead of manufacture.
Yesterday’s world was one characterised by standard products, mass produced for
generally predictable market demand. Today’s world is almost the opposite with
customers demanding tailored solutions (high...