24Agility


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Is agile always best?


Creating an agile supply chain has become the Holy Grail for businesses seeking to offset a broadening spectrum of risk. But is agility always the best option? By Nick Allen


I


n an uncertain world supply chain agility is seen as critical to retaining competitive advantage. An organisation’s ability to respond quickly to changes in demand or to mitigate


unforeseen risks can make all the difference between profit and loss. But how do you engender agility in a supply chain? And is it always the right approach? According to Richard Wilding OBE, professor of supply chain strategy at Cranfield School of Management, there are seven key steps to supply chain agility: substitute inventory for information (understand where inventory iswithin the pipeline),work smart and not harder (eliminate and reduce non-value adding activity), partner with suppliers and others to reduce inbound lead-time, seek to reduce complexity, postpone final configuration as late as possible, manage processes and not just functions, and finally, apply cross functional performance metrics (not silo based ones as they discourage agility). However, he suggests that agility


Many companies are now segmenting the supply chain dependent on volume and variability. RichardWilding


is not a panacea. “Agility, like lean, does not work everywhere,” he says. “You really need to understand segmentation. It may be as simple as volume versus variability. If you have low variability and high volumes, that’s where lean works very well. If you have low volumes but high variability, that’s where you need agility.” He outlines the problem that most


companies have a spread of products with different characteristics, some need to be managed in a lean way,


others in an agile way. “Many companies are now segmenting the supply chain dependent on volume and variability,” he says. Offering Kimberly Clark as an example, he


describes how the company created a two-box matrix and how products with high volatility and high volume required high levels of agility. “So they said, that product is promotional – we


need to collaborate with customers; in terms of forecast, we need to integrate with commercial teams, and manufacturing must have a ‘must


respond’ mentality. The brief for procurement is minimise order lead-time – you have to invest in ‘time’. Whereas on the other segments, say, low volatility, low or high volume, it’s all about quality and cost,” he says. “It’s amatter of segmenting products in a lean and


an agile way.” Wilding sees a resurgence of interest in data


analytics to support agility. The predominance of data analytics in the early 90’s gave way to an emphasis on supply chain philosophy towards the end of the decade. But he says data analytics is now back “big time”. “Companies have thousands of SKUs and


thousands of customers, and then there are all sorts of other data coming together. You can use data in a new way to identify what to respond to and how you categorise products,” he says. “We now have more information than we have ever had before, but it has to be useful information, it has to become knowledge and effectively give us wisdom.” He talks about an evolution from data, to


information, to knowledge and then to wisdom. Wilding warns: “You can’t push agile products


down a lean supply chain structure – it destroys things. You have to have tailored supply chains depending on what is going on.”


Research club He points out that Cranfield run an “Agile Supply Chain Research Club” with members that include: Hewlett Packard, MoD, O2, Unipart, P&G, and Travis Perkins. Perhaps further wisdom can be gained there. Martin Green, senior supply chain practitioner at


Unipart Expert Practices, says: “You can’t be agile unless you are lean. Excessive inventory and over- complex supply networks disguise potential risks and delay the effectiveness of any corrective action.” Green explains that in the past, “agility and lean


were viewed by many as mutually exclusive concepts. But nowadays it is generally recognised that agility is about flexibility – about being able to change suppliers or products without excessive switching costs and being able to maintain control while you are switching. “To achieve this, you need to adopt not only many


lean principles, but to have a collaborative relationship with your entire supply network.You need to be able to make these changes as you go along, as a matter of routine, not just because of economics but in response


April 2013 Supply Chain Standard


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