Supply Chain Management - Essay Example

Lean Supply Chain Management Table of Contents Table of Contents 2 Introduction 3 Role of Flexibility in Lean, Agile and ‘Leagile’ Supply Chains 3 Different Types of Flexibility Found in Each Supply Chain Type 6 Conclusion 8 References 9 Introduction Supply Chain Management is one of the most important aspects of business. Operations management looks after the supply chain operations of a business related organisation. A proper balanced supply chain can provide a company with huge competitive advantages by giving them opportunity to maintain Just-In-Time (JIT) operations. It can be done by maintaining only required inventory and ordering when the re-order level shows a need for such requirement. Supply chain management, in modern day terminology, have been integrated with Just-In-Time and Lean Manufacturing. Both these terms are the pillars of supply chain and strategic operations management. Lean Manufacturing was first implemented globally in early 1980s. The main aim of this process has been to reduce lead time present in plants through elimination of waste. Role of Flexibility in Lean, Agile and ‘Leagile’ Supply Chains Lean and agile manufacturing paradigms in total supply chain have been integrated to form leagility. Lean supply chain is developed largely by Toyota Production System (TPS). Lean supply chain is based on leanness which means developing a value driven stream for eliminating all sorts of wastes like time, and also to ensure a level schedule. In lean method, a system is followed of pulling commodities through the system supported by demand. The inherent value and value stream of a product is identified in this approach. The demand signals from forecasts and distributors are observed in this made-to-stock approach. In general, supply chain in lean method relies on finished commodities inventory. Agile term emanates from agility which tells about using market related knowledge and also a virtual corporation for exploiting profitable opportunity in an unpredictable market place. The agile system focuses on flexibility and efficiency in responding to unique demands of customers. The agile process uses a method called make-to-order method, whereas lean process uses make-to-stock system (Supply Chain Digest, 2006). Agility process employs a wait-and-see approach for the demand of products and is based on not committing to manufacturing until the demand of a product is made. Agile system uses flexibility in the supply chain methods like flexibility in lot size, manufacturing commodities based on specific orders by customers, and quick changeover method. Agile system is useful in the cases when the product life cycle is very short or erratic like electronics goods or fashion items. Dell Computers is a relevant example of such make-to-order method used in case of agile method. Fig 1 Fig 2 (Institute for working futures, n.d.). (Nova products and solutions, n.d.). ‘Leagilie’ is a combination of lean and agile method. This hybrid strategy can be of different forms like making use of make-to-stock or lean strategy in case of high quantity evenly demanded products, whereas applying make-to-order or agile approach for other scenarios. Other hybrid scenarios can be like having flexible production capability to meet rush of demand or in some cases unexpected needs, also using of postponement planning where platform product is prepared for forecasting and after that the final configuration and assembling is done based upon the final order from the customer side (Agarwal, & Et. Al., 2005). Toyota is frequent user of such hybrid strategy. The decision to develop a lean manufacturing structure or an agile capability will be dependent upon the location of the members in supply chain. This entire supply chain viewpoint is vital and companies have to be striving for `leagility’ which is tactful combination of both lean and agile paradigms. The concept of a leagile supply chain is especially relevant in the highly competitive market situation of present days as vigilant designing of the supply chain in agreement with the idea of leagility would let a firm or company to take out maximum advantage from the supply chain. Flexibility plays an extremely important role in all the above discussed supply chains. It is required because of uncertainty and vulnerability that is associated with the supply chain. To counter this scenario flexibility is of paramount importance. The other needs for flexibility are customers demand of faster response and also a wider variation of product, also flexibility in manufacturing operations provides a company greater capability in responding to customers needs, competitive market pressures, and also to get nearer to the market. Flexibility can provide a company with ability and source of competitive advantage. The transport, fleet, and vehicles employed in supply chain also need to be flexible in order to maintain smooth operations. Different Types of Flexibility Found in Each Supply Chain Type Flexibility is of massive importance for successful implementation of supply chain. The flexibility requirements include changing market demand, varying supplier lead time, information delay, product quality. All these factors amount to uncertainty and need for flexibility arises. In any supply chain, three components are vital i.e. adaptability, alignment, and agility. These components are crucial part of flexibility in supply chain. Flexibility has different aspects to it like buyer-supplier relationship, production and manufacturing aspects, demand driven and also the role of marketing. Flexibility in case of lean and agile manufacturing depends on varying demand of a product. Therefore, the different types of flexibility associated with it are mix flexibility, new product flexibility, volume flexibility, delivery time flexibility (Kopecka, n.d.). The above mentioned factors fall under the purview of external flexibility. In lean manufacturing process also a flexible buyer and supplier relationship is vital to eliminate the waste. New product flexibility is related to agile method which constitutes quick changeover. Internal flexibility includes the likes of machine, process, capacity, operation, routing and re-routing. There is also network flexibility associated with agile method. It has three sub-elements like node flexibility, link flexibility, and temporal flexibility. Transport system also needs to be flexible to tackle the varying need of raw material and also to keep up with Just-In-Time (JIT) and other lean manufacturing necessities. Conclusion Flexibility in each of the discussed supply chains is very important to respond to the changes of demand in short term. Flexibility is a combination of adaptability, agility as well as mix, new product, volume and delivery time related aspects. Flexibility can help the management of an organisation to respond to variations from the surrounds of the supply chain and also fluctuations that may exist within a supply chain. References Agarwal, A. & Et. Al., 2005. Modeling the metrics of lean, agile and leagile supply chain: An ANP-based approach. European Journal of Operational Research. [Online] Available at: http://web.iitd.ac.in/~rshankar/My%20papers/EJOR2.pdf [Accessed June 18, 2010]. Institute for working futures, No Date. Supply chain issues and the push-pull boundary. Develop and evaluate supply chain management systems. [Online] Available at: www.marcbowles.com/.../m10four_clip_image002.jpg [Accessed June 18, 2010]. Kopecka, J. & Et. Al., No Date. Flexibility in supply chain management. Industrial marketing and purchasing group. [Online] Available at: http://www.impgroup.org/uploads/papers/7315.pdf [Accessed June 18, 2010]. Nova products and solutions, No Date. What is the extended supply chain? What is Supply Chain Management (SCM)? [Online] Available at: www.novaprodsol.com/images/leanmodel.gif [Accessed June 18, 2010]. Supply Chain Digest, 2006. How do Lean, Agile, and “Leagile” Supply Chain Strategies Compare? News and Views. [Online] Available at: http://www.scdigest.com/assets/NewsViews/06-08-31-2.cfm [Accessed June 18, 2010]. Bibliography Berry, D. & Naim, M. M. Quantifying the relative improvements of redesign strategies in a P.C. supply chain. International Journal of Production Economics, 1996. Cardiff University, No Date. Flexibility in Logistics and Operations. Cardiff Business School. Cardiff University, No Date. Case study in supply chain management Personal computer. Cardiff Business School. Naylor, J. B. & Et. Al. Leagility: Integrating the lean and agile manufacturing paradigms in the total supply chain. International Journal of Production Economics, 1999. Naim, M. M. & Et. Al. The role of transport flexibility in logistics provision. Cardiff Business School, 2006. Prof. Naim, No Date. M. M. Strategic Operations Management MBA. Cardiff University. Waddington, T., 2007. Lean and agile supply chain design. Littoralis. [Online] Available at: http://www.littoralis.info/iom/secure/assets/iom_iom20031201.236634_3fe97d8a17e03.pdf [Accessed June 18, 2010]. Read More