Posted at 10.27.2018
Keywords: leagile supply chain
Companies have been striving to get competitive border by lowering every form of inefficiency from source chains. Two most popular paradigms that the firms are thinking about in achieving this are: lean thinking and agile supply chain. Lean focuses on doing more with less. Lean approach works best where demand is secure, variety is low and hence can be accurately forecasted. By eliminating waste in every form, the trim systems compete based on cost as well as quality. Agility is a much wider strategy that requires participation of entire business, information systems and logistics techniques (Agarwal et al. 2006, p. 212). In the event where customers demand variety and also have fluctuating demand, the ability to react to such volatile market conditions of agile resource chain makes the organization robust. Not merely individually, companies are leveraging the advantages of both by incorporating them in their supply string known as leagile resource chain. Leagile source chains are capable of providing to a vibrant marketplace and include a decoupling point over the string where product becomes unique (Mason-Jones 2000, p. 54). Prior to the decoupling point, trim methodology is applied and products are built according to the forecast. After the point, source chains are agile serving based on the customer orders.
Flexibility in supply chains is the capability to reconfigure the system quickly and inexpensively thus satisfying the demands of the volatile market. Koste and Malhotra (1999b) emphasized that occurrence or absence of flexibility in resource chain depends on the competitive priorities (Wadhwa et al. 2003, p. 2). The successful or lean resource chain emphasize versatility in conditions of volume, as with this supply chain versatility of product changeover is low, so they need to be high on volume flexibility to push the product in the market and achieve cost efficiencies. This is triggered by the internal flexibility type, particularly capacity flexibility. The lean resource chain gets the capacity flexibility because their system of developing products is based on the forecasted data, therefore the capacity is varied in line with the forecasted requirements. Though level and delivery overall flexibility exists in both supply chain types, but lean supply chains are manufactured to support high amount of fluctuations in volume by reducing waste products and lead time. In agile supply chains, an even of extra stock is managed in order to deal with level fluctuations but this stock is bound credited to cost considerations.
On the other side, reactive or agile source chains are flexible in providing varieties i. e. , combination flexibility as these bottom part the supply on customer demand. Thus, they also support new product overall flexibility by providing chance to accommodate the development of large variety of new products. The flexibility of agile resource chains in accommodating new product changeover and combination flexibility (exterior flexibility) are based on the machine and operation internal flexibility(Naim et al. 2006, p. 299). The machine flexibility utilizes the power of the machines to produce different variety of product based on customer purchases. The operation flexibility provide the capability to sequence production in certain ways, thus making the agile resource chain capable of providing custom-made products to the customers.
Transport flexibility (including Node, Hyperlink and Temporal flexibility) is an crucial part of agile supply chains that purpose at maintaining a closer marriage with the customer by gratifying their changing needs quickly (Naim et al. 2006, p. 301). This also includes working in strong collaboration with the logistics providers as well as the rivals and complementors. This romance helps in minimizing infrastructure and operation cost. Versatility in move thus supports mixture flexibility and access flexibility. The business achieves the ability to choose from various travelling methods while covering maximum distribution area.
High amount of communication versatility is the key to the success of the agile source chains. This involves getting the market information as faster as is feasible as well as connecting the necessity to the entire group through to the suppliers (Naim. et al. 2006, pp. 307). The trim source chains have low amount of communication overall flexibility as they plan the development predicated on the forecast, nor make changes in the program.
In a vast portfolio of products and markets, there are some products whose demand is steady and predictable and some products whose demand is volatile. For such companies, leagile resource chain provides the opportunity to leverage the great things about both low fat and agile systems. Prior the decoupling point the machine has versatility of lean source chain whereas following the point versatility of agile systems is present. Although hybrid systems aren't completely cost effective and responsive like lean and agile systems respectively but supply the customers with maximum value(Christopher 2000, pp. 40).
Zara, the Spanish apparel retailer, is an outstanding example of leagile supply string strategy (Christopher 2000, pp. 40). It has established an agile source string which still includes 'low fat' characteristics. It performs with the objective of reacting quickly to the changing needs of the customers. The decoupling point lays with the assembler. The so-called 'commercial professionals' conceptualize the kind of garments and textile which are bought predicated on the forecast. The designs are ready predicated on the real-time information captured on the shop floor from the customers, from sessions to international fashion shows, competitor's stores, school campuses, clubs, etc. Thus, the final design is 'put together' on the basis of current customer demand. It attempts to eliminate waste material by not producing in large volume. Zara has outsourced all non-strategic activities while all product development and last production facilities are retained in-house. The system is flexible enough to be able to cope with sudden changes popular, though the stock is maintained a little significantly less than the demand keeping good lean way.
Whether to execute low fat, agile or leagile source chain will depend on the demand and market conditions (the need that company aspires to fulfill). In doing this, companies achieve certain versatility types, among which some are normal to both and others are achieved in higher degree in a single system than other as discussed above.