Martin Christopher

The Agile Supply Chain : Competing in Volatile Markets

Abstract Turbulent and volatile markets are becoming the norm as life cycles shorten and global economic and competitive forces create additional uncertainty. The risk attached to lengthy and slow-moving logistics “pipelines” has become unsustainable, forcing organizations to look again at how their supply chains are structured and managed. This paper suggests that the key to survival in these changed conditions is through “agility,” in particular by the creation of responsive supply chains. A distinction is drawn between the philosophies of “leanness” and “agility,” and the appropriate application of these ideas is discussed.

BUILDING THE RESILIENT SUPPLY CHAIN

In todays uncertain and turbulent markets, supply chain vulnerability has become an issue of significance for many companies. As supply chains become more complex as a result of global sourcing and the continued trend to “leaning‐down”, supply chain risk increases. The challenge to business today is to manage and mitigate that risk through creating more resilient supply chains.

An integrated model for the design of agile supply chains

The latter part of the twentieth century saw the lean production paradigm positively impact many market sectors ranging from automotive through to construction. In particular there is much evidence to suggest that level scheduling combined with the elimination of muda has successfully delivered a wide range of products to those markets where cost is the primary order winning criteria. However, there are many other markets where the order winner is availability. This has led to the emergence of the agile paradigm typified by “quick response” and similar initiatives. Nevertheless, “lean” and “agile” are not mutually exclusive paradigms and may be married to advantage in a number of different ways. This paper explores ways in which hybrid strategies can be developed to create cost‐effective supply chains and proposes an integrated manufacture/logistics model for enabling the essential infrastructure.

Mitigating supply chain risk through improved confidence

Todays marketplace is characterised by turbulence and uncertainty. Market turbulence has tended to increase for a number of reasons. Demand in almost every industrial sector seems to be more volatile than was the case in the past. Product and technology life‐cycles have shortened significantly and competitive product introductions make life‐cycle demand difficult to predict. At the same time the vulnerability of supply chains to disturbance or disruption has increased. It is not only the effect of external events such as wars, strikes or terrorist attacks, but also the impact of changes in business strategy. Many companies have experienced a change in their supply chain risk profile as a result of changes in their business models, for example the adoption of “lean” practices, the move to outsourcing and a general tendency to reduce the size of the supplier base. This paper suggests that one key element in any strategy designed to mitigate supply chain risk is improved “end‐to‐end” visibility. It is argued that supply chain “confidence” will increase in proportion to the quality of supply chain information.

Supply chain migration from lean and functional to agile and customised

Shows how the lean and agile paradigms may be selected according to marketplace requirements. These are distinctly different, since in the first case the market winner is cost, whereas in the second case the market winner is availability. Agile supply chains are required to be market sensitive and hence nimble. This means that the definition of waste is different from that appropriate to lean supply. The proper location of decoupling points for material flow and information flow enable a hybrid supply chain to be engineered. This encourages lean (efficient) supply upstream and agile (effective) supply downstream, thus bringing together the best of both paradigms. The paper concludes by proposing a cyclic migratory model which describes the PC supply chain attributes during its evolution from traditional to its present customised “leagile” operation.

Creating agile supply chains in the fashion industry.

Fashion markets are synonymous with rapid change and, as a result, commercial success or failure is largely determined by the organisations flexibility and responsiveness. Responsiveness is characterised by short time‐to‐market, the ability to scale up (or down) quickly and the rapid incorporation of consumer preferences into the design process. In this paper it is argued that conventional organisational structures and forecast‐driven supply chains are not adequate to meet the challenges of volatile and turbulent demand which typify fashion markets. Instead, the requirement is for the creation of an agile organisation embedded within an agile supply chain.

A taxonomy for selecting global supply chain strategies

Purpose – The purpose of this paper is to address the increasingly important question of supply chain design for global operations. With the rise of off-shore sourcing and the simultaneous need for improved responsiveness to customer demand, the choice of supply chain strategy is critical. Design/methodology/approach – The paper draws its conclusions from case-based research supported by survey data. Findings – The paper provides evidence that the choice of supply chain strategy should be based upon a careful analysis of the demand/supply characteristics of the various product/markets served by a company. It presents the basis for a taxonomy of appropriate supply chain strategies. Research limitations/implications – The case studies and empirical research reported in this paper are specific to the clothing manufacturing and fashion industries and there would be benefit in extending the research into other sectors. Practical implications – Given the increasing trend to out-sourcing and off-shore sourcing, the choice of supply chain strategy is of some significance and clearly impacts competitive performance. Originality/value – Whilst there is a growing recognition of the need to match the supply chain to the market, there is still limited research into what criteria should be utilised to aid the choice of supply chain strategy. This paper attempts to extend our understanding of the issues.

Developing Market Specific Supply Chain Strategies

The issues underlying the appropriate matching of pipelines to marketplace needs under conditions of demand volatility and price pressure are examined. The authors describe a scenario where the philosophy of “one size fits all” does not apply to pipeline design, implementation, and control. Research conducted by the authors and others is used to show how appropriate global supply chain strategies can be developed contingent upon market characteristics and which seek simultaneously to achieve higher levels of customer responsiveness at less total cost to the supply chain as a whole. The selection of the right strategy within a supply chain lends itself to a taxonomic approach. We find that three dimensions (leading to eight possible configurations) are adequate for this purpose. These key dimensions are product characteristics, demand characteristics and replenishment lead‐time.

Supply Chain Strategy: Its Impact on Shareholder Value

In the last few years there has emerged a strongly held view that the ultimate purpose of the firm is to maximize shareholder value, that is the long run worth of the business to its owners. Many influences clearly impact upon shareholder value, but there is a growing recognition that the supply chain strategy employed by the firm can have a significant effect. This paper examines the concept of shareholder value and the related organizational framework of Value Based Management (VBM) and explores the connections with supply chain strategy.

APPROACHES TO MANAGING GLOBAL SOURCING RISK

Purpose – Global sourcing can bring many benefits to organisations, but it can also expose them to a number of risks. The purpose of this study is to understand how managers assess global sourcing risks across the entire supply chain and what actions they take to mitigate those risks.Design/methodology/approach – A multiple case study approach was used, involving 15 cases in seven different industries. Each case consisted of interviews with managers directly involved in the global sourcing decision, supported by documentary evidence. A cross‐case analysis was conducted to analyse patterns across different industries.Findings – The study revealed that most companies do not have a structured supply chain risk management and mitigation system. Nevertheless they do use a number of informal approaches to cope with risk. The paper proposes that a multidisciplinary approach is required when dealing with global sourcing risks. It presents a classification of risks covering four categories: supply risk, process an...