Eight Ways to Boost Supply Chain Agility

This is an excerpt of the original article. It was written for the January-February 2010 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2010

As the search for news forms of energy intensifies, supply chain professionals are presented with an unprecedented challenge and opportunity: To apply their managerial and analytical skills in delivering this energy to the end consumers. How effectively they respond may ultimately determine whether—and when—the promise of green energy finally gets fulfilled.

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As the recent global recession deepened, some industries saw sales decline by 40 percent or more. Cash-strapped companies struggled with order cancellations, inventory pile-ups, and underused assets. The business headlines showed that many organizations were unable to survive those pressures.

Yet many have survived, and are on course to do well as the global economy picks up. The survivors were almost always better able to change course more quickly that their more sluggish peers, minimize losses, and generate much-needed cash. On the whole, they benefitted from more responsive, more agile supply chains, allowing them to quickly cut back on manufacturing shifts, change batch sizes, stop an start entire productions lines, close plants, sell assets,  and sharply reduce inventory coming through the pipeline.

Although global recessions are rare, uncertainty and unpredictability are facts of life in today’s business environment. Nobody can truly predict the future, no matter how complex or accurate a company’s forecasting model is. And as supply chains become longer—reaching into low-cost countries for sourcing or manufacturing—it becomes increasingly clear that greater flexibility and the ability to reach to rapidly to changing market conditions are at least as important as forecasting skills when it comes to optimizing end-to-end operations.

These days, the prices of fuel and other commodities can shift overnight, customers demand increasing speed and customization, and port and road congestion add unwelcome variables to the supply chain. Other variability is self-inflicted—the result of needless complexity in products, portfolios, and processes. This blend of complexity and unpredictability exacts a high cost. That’s why it’s critical for companies to create an agile, flexible, supply chain that can react quickly to changes in conditions or demand and minimize the negative impact of uncertainty.

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