Agile Supply Chain: What It Is, Benefits, and Applications

Supply chains can be complex and sensitive. A company can’t survive without a supply chain because it needs everything from raw materials to the final product. 

Many companies have established an agile supply chain to manage supply better, move goods quickly, and deliver them on time. This process is fundamental to those who produce physical goods, as it can significantly affect sales and profits. 

This article explores the agile supply chain and provides tips for businesses looking to implement it.

What Is an Agile Supply Chain?

An agile supply chain is a sophisticated set of processes that enables businesses to channel resources more efficiently, enhance inventory management, and increase productivity. This process allows companies to better control the production of goods and materials for customer demand and prioritize resources for significant orders.

Organizations implement an agile supply chain to streamline and control manufacturing and distribution, and manage inventory. The process allows companies to track the status of their products, know when they’re needed, and adapt accordingly. Ideally, this avoids the waste that potential overproduction or underproduction can create.

Characteristics of an Agile Supply Chain

An agile supply chain is a tightly controlled process that can help businesses increase productivity and revenue and reduce extra costs. Here are the top characteristics of an agile supply chain:

Resiliency

Resiliency is the ability to recover from problems, such as a breakdown or failure in the entire supply chain. To manage disruptions, identify the causes, the risks involved, and the potential consequences. Once you do, you can work on mitigation procedures and contingency plans to ensure the supply chain remains robust.

Flexibility

There is a constant need to adapt, and companies must have a flexible approach to help them succeed. Agile processes formulated in clear, simple, and straightforward ways enable supply chain entities to react quickly without interruptions or delays.

Benefits of Having an Agile Supply Chain

Companies have seen tremendous benefits from having agile supply chain management. These benefits include increased productivity, reduced costs, and faster order tracking. Here are three significant benefits that companies can expect to see:

Flexibility

Agile supply chain processes allow companies to react quickly without interruptions or delays. They can move toward agile processes to adapt to new trends and customize their supply chains to their needs. 

Flexibility makes it easier for supply chain entities to make changes and better prepare for future demand in the market. It can allow companies to respond quickly to changing customer demand in the manufacturing process, ultimately leading to faster project completion.

Visibility

An agile supply chain promotes increased visibility of all relevant information for all stakeholders. When real-time data is available, it’s easier to track, plan, and make decisions.

A manufacturing company’s ability to track inventory and the status of materials and goods increases efficiency. The insights allow companies to pinpoint bottlenecks and reduce costs by addressing problems before they become serious.

Growth

Agile supply chain management allows companies to improve quality, speed delivery times, and control costs significantly. Supply chain agility results in a more efficient supply chain that can reach higher levels of growth and productivity.

Applications of Agility Throughout the Supply Chain

Similar to agile software development, companies can use an agile supply chain to improve operations. Here are five of the most useful applications:

Production and Scheduling

A company’s production and scheduling are essential to the supply chain. In this stage, a manufacturing company must produce goods at an optimal pace, with the right quality, and in the right quantities.

Production involves materials, machines, and workers. This phase is a top priority for a company because if it doesn’t produce the right amount of goods, customers face potential shortages or even a lack of supplies. Agile processes can quickly improve the overall output with better quality products.

Scheduling involves the coordination of deliveries and workers, as well as other resources in the manufacturing company. A company must be able to create and manage a production schedule that is accurate, efficient, and effective. An agile supply chain can reduce the time it takes to complete orders, minimize waste, avoid delays in delivery times, and minimize the possibility of losing revenue.

Procurement

Procurement involves acquiring raw materials and components that are key to making products. It is one of the most critical stages in the supply chain as it ensures the optimal materials and supplies based on production, forecasting, and delivery requirements. 

An agile approach helps you successfully navigate procurement, allowing companies to monitor all materials’ flow and status, which minimizes the risk of material shortages. With supply chain agility and demand-driven planning, companies can make better decisions that lead to better procurement to ensure continuity and efficiency.

Storage

After producing goods, they must be stored in appropriate places to avoid damage or waste. Storage is one of the most costly stages of a supply chain. It involves warehousing, personnel, and equipment that are responsible for the storage of goods.  

Companies using agile supply chains can effectively ensure all goods are appropriately stored, reducing waste, damage, and inefficiency. Agile supply chain management minimizes extra costs, extends supply life, and enables a manufacturing company to reduce the necessary personnel. They will require less space and can make better decisions to streamline and improve logistics. 

Distribution

Distribution involves moving goods from one facility to another. It allows a company to deliver supplies and products to customers and stores. The most effective way to distribute goods is by developing an agile supply chain in which you can easily access all locations. 

With the help of an agile supply chain, companies can move products quickly, efficiently, and effectively. It helps ensure continuous operations without interruption or delays, enhancing the customer experience.

Forecasting

Companies must have accurate forecasts to have a productive supply chain. Precise forecasting allows companies to gauge the need for materials and resources accurately.

An agile supply chain allows companies to track, plan, and react to demand and pricing changes within their supply chain. 

Tips for Creating an Agile Supply Chain

Companies looking to implement an agile supply chain should be sure they understand what it is and what it can do for them before deciding to implement it. Here are five tips to consider:

Refine Processes

Before making any changes, companies must pinpoint the infrastructure and technology necessary to build it. It includes identifying a problem or challenge they must address and the necessary improvements they must make. 

With this information, companies can create an action plan and implement immediate solutions to improve supply chain performance and compete in the market.

Upgrade Technology

Companies should look at the current infrastructure and replace it with new or upgraded technology. It is critical because it will help companies better manage their supply chain. 

With modern technologies, they can streamline and automate their system to improve the overall flow of information. Cutting-edge technology allows a company to access real-time data, make decisions on the go, and respond quickly to unexpected changes.

Build a Strong Team

The next step is to create an agile team of supply chain partners with a wide range of skills and expertise. This unit includes store managers, IT professionals, engineers, planners, warehouse supervisors, and other critical positions in supply chain operations.

An agile team will be able to identify problems and solutions in the supply chain, propose new solutions, and implement them. They will also have a unified view of all operations to ensure continuity throughout the supply chain.

Lean Supply Chain vs. Agile Supply Chain

There is some confusion and overlap between lean supply chains and agile practices. Both offer a way to create value in the entire supply chain process, but the approach, strategy, and tools differ.

A lean supply chain focuses on continuous improvement by improving efficiency and saving costs. Lean supply chain management is about identifying and eliminating waste and inefficiencies in the supply chain. The goal is to develop a lean supply chain process that provides all stakeholders with the most value for their money.

On the other hand, an agile supply chain focuses on processes, technology, and information. Agile supply chain management manages the agility of an organization’s operations to respond quickly to consumer demand and unexpected changes in the market.

Use an Agile Supply Chain To Streamline Your Operations

Agile supply chain practices can be effective at improving the supply of products. The key to this process is incorporating an overall system into a supply chain that can provide real-time information, improve efficiency and continuity, and increase productivity.

This process requires supply chain planners who understand the industry they are working in and the current operations and know how to create a plan that will effectively address any challenges.