In search of supply chain agility

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Operational_agility.jpgSupply chain resilience and performance is affected by the escalating complexity of demand volatility, increased competition, shorter product lifecycles, raw material scarcity, globalisation, increased risk awareness and discerning customers. The solution lies in building agility: “the ability to move quickly and easily”¹, Tech-Pro Personnel tells SmartProcurement.


Definitions of agility vary and a standard definition for supply chain agility currently does not exist: from Inderscience’s “ability of the supply chain partner organisations to adapt quickly with rapid changes in business environments”², Supply Chain Shaman’s “the design of the supply chain to have the same cost, quality and customer service given a level of demand and supply volatility”³, to PwC’s “agility can be defined as the ability to not only adjust for anticipated change, but also respond effectively to unanticipated change”.4


And while research indicates that many organisations view supply chain agility as an important goal, most are far from agile.


Internationally, a survey by Lora Cecere, founder of advisory organisation Supply Chain Insights, found that while 89% of companies rank agility as important, only 33% feel that they have “the prerequisite agility they feel they need to run the race” – and that there is “a large gap between importance and current performance”.³


Similarly, in South Africa, participants in a recent study conducted jointly by Imperial Logistics and Resolve5 ranked agility 29th overall on a list of integrated supply chain management priorities, while 68% of manufacturing role players had “barely or partially implemented best practice”.


Factors influencing supply chain agility


The lack of a specific definition. Research shows that top-performing companies clearly define agility as it applies to their own organisations.


Management commitment. “Strong executive sponsorship and participation”⁴ is cited by PwC as vital to building an agile supply chain; executives provide clear vision, encourage integration and collaboration and support implementation of strategic plans.


Organisational integration. Agility is “largely a function of the ability of disparate functions to co-operate by working as teams with common goals” - led by management promoting integration, says Dr Akhilesh Barve in ‘Impact of Supply Chains Agility on Customer Satisfaction’.


Communication and collaboration. Collaboration that is enhanced by effective communication and information sharing creates interdependence along the supply chain – and supports flexibility and responsiveness.


Customer sensitivity and satisfaction. Agile supply chains embrace technology to better understand customer needs, speeding response times and improving customer satisfaction – or the difference between “the perception of the value delivered and value offered by the competition,” says Barve.


Agility in the South African supply chain


There are many examples of South African supply chains creating agility, most notably in the Retail sector.


Truworths, historically the most vertically integrated South African retailer, has improved agility by maintaining control across its supply chain, from design and cut, make and trim to point-of-sale.7


The Foschini Group partnered with six local manufacturers to produce ‘fast fashion’ or ‘in-season’ clothing. The project, which has increased the retailer’s market share, reduced lead times and inventory, while enabling a quick response to fashion trends.8


In both instances, retailers gained a competitive edge using shorter product lead times and increased availability to improve customer satisfaction and reduce the risk inherent in pre-ordering seasons in advance from overseas suppliers.


“By adopting a supply chain that is agile and highly efficient but flexible enough to bring about changes at short notice, significant benefits can be achieved owing to better utilisation of capital, greater responsiveness to customers’ needs, the elimination of wasted time and materials, and reduced adverse impacts on the environment.” (The Foschini Group)


Is supply chain agility a strategic goal for your supply chain? What factors do you believe influence the agile supply chain? We’d like to hear your views – join our discussions on LinkedIn.


¹: Oxford English Dictionary
²: ‘Supply Chain Agility: Emerging Research Perspectives’, Inderscience Publishers, 2011
³: ‘Preparing to Run the Race: Supply Chain 2020, Lora Cecere writing for the Supply Chain Shaman blog, April 2012
4: ‘Achieving Agility Through the Sales Inventory Operations Planning Process’, PwC, October 2009
5: ‘The Strategic Role and Effective Functioning of Supply Chains’, TransportWorld Africa, July 2013
6: ‘Impact of Supply Chains Agility on Customer Satisfaction’, Dr Akhilesh Barve from a paper presented at the 2010 International Conference on E-Business, Management and Economics IPEDR vol.3 (2011)
7: ‘Clothing Retailers Supply Chains Adjusting for Fast Response Fashion’, Theresa Heath, Retail Sector Research Analyst, Stanlib
8: ‘The Investment Case – The Foschini Group Ltd’, Patrick Cairns, Moneyweb, January 2012
 

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