Supple chains in transitions

Introduction - Module Two

This part of the paper talks about ‘Leagility’, which is a combination of two types of systems of functioning in a manufacturing organization specifically – Lean and Agile.

What is meant by the term `Leagility` in reference to supply chain design?

A ‘leagile’ supply chain approach talks about adopting a mid-way in agility and lean production in supply chain. Lean supply chain refers to pulling the goods based on demand constraints and purely demand characteristics. It reacts to demand signals only, irrespective of how much capacity there exists on the production facility and manufacturing unit etc. (Supply Chain Digest, n.d.) Lean production is more popularly known as a supply chain approach that has more broadness and has a more enterprise wide or holistic approach.

Agile is another approach to supply chain that is based on the entre supply chain system being very flexible and therefore is more popularly known as MTO or made to order process. It is more like a sense and respond or wait and see approach to demand signals. The supply chain design for agile systems hence is very flexible, that caters to lot of changes that can be made to the units, and is built around consumer specifications to the orders that he or she places. (Margaret Bruce, Lucy Daly, Neil Towers, 2004)

A hybrid system or approach to supply chain revolves around being ‘leagile’, a mixture of the two approaches discussed above. The supply chain design for this uses make to stock and lean strategies aiming for high volumes, a consistent demand pattern and yet being agile or MTO for rest of the things. (Margaret Bruce, Lucy Daly, Neil Towers, 2004) Another feature of such an approach is that there is a lot of flexibility in the capacity there exists in production thereby it has the ability to meet unexpected surge in demand as well. Another feature is that customization takes place in the final stages before which a standardized product is made. (Supply Chain Digest, n.d.)

Why is information and transportation technology critical in supporting a leagile supply chain design?

The supply chain design for a leagile system uses make to stock and lean strategies aiming for high volumes, a consistent demand pattern and yet being agile or MTO for rest of the things. Another feature of such an approach is that there is a lot of flexibility in the capacity there exists in production thereby it has the ability to meet unexpected surge in demand as well. The reason why information and transportation technology is highly important for this type of supply chain is that there are usually very fast moving products involved in this. (Margaret Bruce, Lucy Daly, Neil Towers, 2004)

It could also be the case that there is a ratio shared between the two systems – Lean and Agile. The design is such that efficient processing can be done very quickly, with very frequent and even unexpected changeover of material and machinery both.

Therefore, it is highly essential that correct information is there which is then checked and monitored in real-time. Also, technology pertaining to transportation is also very important since customized goods based purely on consumer demand is there and therefore a production set like this needs to be delivered as soon as it gets out of the factory and dispatched off as a finished good. If time is wasted there could be loss in demand and satisfaction levels thereby affecting the factory and the company as well, very negatively. (Goldsby, T., 2006)

Does the globalization of supply chains favor a leagility solution to a supply chain design? There is no fixed answer for this at all. This is more like a question that needs to be answered differently keeping in mind the different business cases that can be linked to leagile systems, or otherwise.

Research also has proven that there is no proper, one approach that is one up than the others. Rather, it says that the approach differs from the different nature of products that are employed. It could hence even be the case that a company uses two different methods or approaches for instance agile in thirty percent of its operations and in the remaining seventy percent, it uses leagile.

Therefore, there is no hard and fast rule at all. Usually though, lean approach is said to be linked to minimum wastage of cost, time and material. On the other hand, an agile approach boasts of a customized yet speedy approach to supply chain management. Research says that as the variables changed (type of product etc.); the methods differed in their respective advantages and disadvantages. (Supply Chain Digest, n.d.)

References

Bacheldor, B. (2004) Never too Lean. Retrieved August 1rst, 2009, from InformationWeek, from http://www.informationweek.com/story/showArticle.jhtml?articleID=18901848

Goldsby, T. (2006) Modeling lean, agile and leagile supply chain strategies. Retrieved August 2nd, 2009, from http://www.allbusiness.com/professional-scientific/management-consulting/4089028-1.html

Margaret Bruce, Lucy Daly, Neil Towers (2004) Lean or agile: A solution for supply chain management in the textiles and clothing industry, International Journal of Operations & Production Management, Bradford: Vol. 24, Iss. 1/2; pg. 151

Supply Chain Digest. (n.d.) How do we lean, agile and leagile? Retrieved August 2nd, 2009, from http://www.scdigest.com/assets/NewsViews/06-08-31-2.cfm?cid=804&ctype=content