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Understanding Lean and Agile Supply Chain Strategies

Supply Chain Management is a big subject with many strategies involved to make a company run more efficiently. A supply chain is an ecosystem that defines a process that includes sourcing, manufacturing, movement, and product delivery to the end customer. It takes into account all processes in between, including management of vehicles, personnel, inventory, customers etc. Depending on the company’s specific needs, these strategies can vary. The two most common types of strategies are Lean Supply Chain and Agile Supply Chain.

Lean Supply Chain

A lean supply chain is a strategy that is fixated on creating a process that develops maximum value while eliminating all waste of products, material, and even time. This strategy makes sure that the supply chain is as productive and profitable as possible, with nothing unnecessary weighing it down. This enables a rigid and leveled schedule.

This strategy is ideal for companies that have a high volume of purchase orders. Such small waste can’t be ignored in such cases since it can add up to a lot because of the high volume of orders. This strategy is a bonus if there is low variability on top of high volume. The elimination of wastage can benefit even more such companies.

Such a strategy uses the most basic form of data communication on inventory, capacity, delivery plans, etc., within the framework of JIT (just-in-time) principles. If a business has predictable market demand, this strategy is perfect. Other factors supporting this strategy are forecasting supply, long product life cycle, and long order lead time. Such predictability makes it possible to have low production costs. But on the other hand, it is criticized for lacking human integration and having repetitive manufacturing.

Agile Supply Chain

Some businesses are subjected to constant changes that can’t possibly be in their control but heavily affect their business. These factors could be changing government policies, weather, change in customer trends, etc. This kind of strategy is useful for businesses that want to adapt to unanticipated changes in the economy and other factors. Such a strategy means that the business can quickly change its logistics, sourcing and sales strategy as the dynamics change. To be good at this, a business will need to employ market knowledge and exploit profitable opportunities in the marketplace.

This strategy requires a proactive approach towards changes. It requires the company to be in a network structure where it can respond to emerging changes and pounce on any market opportunity. The entire supply chain, including the staff, the managers, and everybody involved, must rapidly realign the entire network’s operations according to dynamically changing consumer needs.

If a business is such that it focuses on customizing user experience, it will face a lot of turbulence and reconfiguration of operations. Especially if customer specifications and high-volume manufacturing are combined, agility is a must in the supply chain. It might seem that an agile supply chain is all about fending for yourself in the light of a constantly changing market. But it is not only about playing catch-up with your market, but also about exploiting the changing market in the best ways.

Depending on what kind of business you are in, the supply chain strategy you choose will vary. Both strategies have their limitations and challenges, but with a little professional help, you can achieve the right balance for your business. ARK India is a great match for you if you are looking for such professional help for your supply chain operations! With decades of experience in the industry, ARK India is equipped to take care of almost all your supply chain needs.