If you’re in business then you want a lean and agile supply chain. However, these are two different concepts and it can be hard to merge the two properly.
The Lean Supply Chain
A lean supply chain is one that focuses on high production levels at the minimal possible cost. Of course, the demand needs to be present to ensure the products are sold quickly.
This type of supply chain is often referred to as a traditional factory chain and the emphasis is on being able to supply high-quality goods on a regular basis. It’s not usually easy to shift production and create a different product or even dramatically change the production level.
Lean supply chains need to know all the costs involved in the production and delivery process. This means understanding the exact quantity of materials needed, monitoring them moving through the factory, and minimizing delivery costs.
It’s worth noting that this doesn’t mean the cheapest possible delivery as this will lead to excessive damage. In fact, many lean supply chains will use technology like temperature monitoring to reduce the risk of damage between the factory and the delivery point.
An Agile Supply Chain
In contrast, an agile supply chain focuses solely on being adaptable. This type of chain wants to be able to react to environmental and market changes, reducing production if necessary, changing material suppliers, or even adapting to new technology.
Agile supply chains tend to do best when the product has a variable demand that can be significantly influenced by market factors. For example, the latest cell phone is a great gadget that everyone wants. However, demand ca quickly drop if the economy takes a downturn, a better phone comes out, or the price has to be increased as materials have dramatically increased in value.
You need to be able to change production levels easily to accommodate the latest demands. Interestingly, the same precautions need to be taken with deliveries in an agile chain as you do in a lean chain.
Merging The Two
Neither supply chain type is distinctively better than the other. In fact, the best ones will be a business decision based on your industry, customer demands, etc.
But, while you can completely merge the two chains you can use elements of both chains to get a unique and workable solution for your business.
You just need to consider the following:
- What are you producing, consistent sales means a lean supply chain.
- Consider the behavior of your target audience, is it predictable? If not you need an agile supply chain.
- Are economic fluctuations likely to affect demand for your product? If yes you need an agile chain.
- How easy is it to adjust your supply chain when needed?
- What do other businesses in your industry do and what do your suppliers do?
Knowing the answer to these questions will help you to build your own supply chain which will have elements of agile and lean. But, as long as these work for you and your business that’s not an issue.
