April 2022 | Commentary | The Lean Supply Chain

Lean Isn't Mean and Agile Isn't Cheap

Tags: Inventory Management, Logistics I.T., Supply Chain Management, Demand Planning, Lean Logistics

Paul A. Myerson, Instructor, Management and Decision Sciences, Monmouth University and author of books on Lean and the Supply Chain for McGraw-Hill, Pearson, and Productivity Press, 732-441-3879

Back in 2014, I wrote a column extolling the benefits of a lean and agile supply chain, also known as a hybrid strategy. Depending on your product or service, your supply chain may tilt more one way or the other, or it might be segmented but still exhibit characteristics of both. For example, if you sell commodities, you would focus more on efficiency. If you were in fashion, you'd tend to be more responsive.

Also, because the supply chain consists of suppliers, customers, and the producer, companies can achieve competitive advantage by aligning the entire extended supply chain to a competitive hybrid strategy.

To illustrate how important a hybrid supply chain strategy is, companies that took this approach to heart appear to have performed the best through the pandemic.

The fact is, many companies that I have visited over the years have misinterpreted the idea of Lean entirely. They thought they were already lean because they laid off a significant part of the workforce, had minimal levels of inventory, or had single-sourced suppliers.

This kind of thinking missed the point, dangerously as it turned out. Having a Lean philosophy means getting to the root cause of your variabilities first and then lowering inventory levels.

Low-cost thinking made sense through the early 2000s when the focus was mainly on cost reduction (which helped to rein in inflation for 30+ years). However, since around 2010, there has been a shift in thinking from an emphasis on an efficient supply chain to a more responsive one requiring flexibility.

Furthermore, being Lean means that you are flexible and agile to some degree anyway. A primary example of this is the conceptual idea of one-piece flow, where batch size reductions are enabled through quicker changeovers in manufacturing. As most activities in a factory, warehouse, or office involve batching and changeovers of some kind, it is really a universal concept.

Lean and Agile Success

To be truly successful in a lean and agile endeavor, not only do your processes need to have these characteristics, but so do your people. You also need the technologies to support the strategy.

Agility is all about customer responsiveness, flexibility, people, and available information, collaboration within and between firms, and readying a company for change.

Your supply chain needs to take a hybrid approach structurally, as well as organizationally, which refers to the way decisions are made about how to schedule and utilize supply chain resources. This requires capabilities such as team alignment, end-to-end visibility, and cross-training.

Strategically, the hybrid supply chain professional of the future needs:

  • To generate and manage large volumes of data, and have the ability to analyze and model it to support more frequent decision-making.
  • A deep understanding of complex supply chain dynamics and how to plan or react.
  • A better understanding of business objectives and how any daily individual decision or action can impact those objectives.
  • The ability to communicate, often remotely, clearly and concisely with partners, other functions, senior management, and stakeholders.
  • The ability to bring together dispersed and diverse teams through technology to solve problems.
  • Up-to-date communication skills using new collaboration technologies.

What are you waiting for? If you delay adopting a hybrid supply chain strategy, it may be too late.






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