Supply Chain Optimisation: Part 2

Having established SCO to be a very worthwhile exercise a route map of undertaking it and achieving the associated business benefits needs to be laid out.  Before this is discussed however it is useful if we consider the ‘agile’ supply chain which can be characterised by:

• A focus on core competencies
• Small, flexible production units
• A very high speed of response
• The ability to manage unpredicted events
• Partnerships & extended enterprises
• A customer/demand driven supply chain
• A process and project based organisation
• Rapid response, re-configurable, robust business processes
• Integrated, re-configurable IT infrastructure

Supply Chain Optimisation: Moving Beyond Estimates, Expediting and Excel

Part 2: Having established SCO to be a very worthwhile exercise a route map of undertaking it and achieving the associated business benefits needs to be laid out.  Before this is discussed however it is useful if we consider the ‘agile’ supply chain which can be characterised by:

• A focus on core competencies
• Small, flexible production units
• A very high speed of response
• The ability to manage unpredicted events
• Partnerships & extended enterprises
• A customer/demand driven supply chain
• A process and project based organisation
• Rapid response, re-configurable, robust business processes
• Integrated, re-configurable IT infrastructure

As can be seen agility is customer driven:

• Puts the end customer first
  • Aligning capabilities across the supply network
  • Drivers: speed, flexibility
• Origins:
  • Western response
  • Entrepreneurship, lead in IT
• Limitations
  • Early stage in life cycle
  • Many unanswered questions

It seems difficult nowadays to read something about agile (manufacturing) without reading about lean (manufacturing) in the same article.  Not wanting to prove this observation wrong… lean is efficiency driven:

• Eliminate waste
  • Do the simple things well, gradually do them better
  • Avoid all waste
  • Drivers: productivity and quality
• Origins:
  • Final assembly process in automotive
  • Principles apply anywhere
• Limitations
  • Competitive grayness (i.e. reduced differentiation between competitors)
  • Operations effectiveness is not the same as operations strategy
  • Lean enterprise, not lean supply network

Considering lean and agile rather than as competing philosophies but more as philosophies appropriate to different environments we can explore scenarios where lean would be favoured over agile and conversely agile would be favoured over lean.  To do this we shall consider the product positioning model of Puttick which offers the dimensions of demand uncertainty and product complexity as per the matrix below:

The product positioning strategy of a business will tend to dictate the drivers of the business operationally i.e. the position the business places (finds!) itself on the spectrum of customer focus from cost & availability through to meeting the specification develops the model as depicted below:

These different perspectives by customers in different markets mean that suppliers to these markets face different key issues i.e. from substitution / obsolescence to project overrun as below: