Supply chains and their related industries grow increasingly complex every day. The reasons for this rapid growth are, of course, digital transformation and fundamental changes in the way we do business, including augmented reality (AR) and artificial intelligence (AI) implementations, among others. These factors are transforming how the supply chain functions. Becoming more agile means being quick to sense and respond to change. This means that an agile supply chain should be demand-driven and not forecast-driven. Incorporating agility in your supply chain is vital to successful in today’s accelerated business environment.
Agile thinking came from software developers. Agile is an iterative approach to project management and software development that helps teams deliver value to their customers faster and with fewer problems. An agile team offers work in small, but consumable, workable, increments. Plans, results and requirements are evaluated continuously. So agile teams have a natural reflex for responding to change quickly.
To agilealliance.org, agile software development is more than frameworks such as Scrum, Extreme Programming, or Feature-Driven Development (FDD). Agile software development is more than practices such as pair programming, test-driven development, stand- up planning sessions, and sprints.
Agile software development is an umbrella term for a set of frameworks and practices based on the values and principles expressed in the Manifesto for Agile Software Development and the 12 Principles behind it. When you approach software development in a particular manner, it’s generally good to live by these values and principles and use them to help figure out the right things to do, given your specific context. Collaboration and the self-organizing team are the most important keys to creating a thriving Agile software development community.
The Agile Method
The Agile Method is an alternative project management technique that designs a process that is inherently more aligned to customer needs. If it is desired to create an agile supply chain ecosystem, this system will require a higher level of integration between internal operational processes, such as sales, forecasting, production planning, sourcing, and delivery. The logic behind is straight forward. When a sales operation team sees any change in market trends, then it will trigger a responsive reaction or corrective changes with many other operations in the supply chain. How fast the supply chain can react to the market change is dependent on the speed of changes in many other internal processes. So, it makes sense that the internal processes must be integrated and perform as if they are one entity.
For example, in the automotive industry, there are some typical challenges faced today by OEM’s. These challenges are not only related to the automotive sector but in most other industries. Some of them are:
- Increased complexity to deliver the latest technology
- Decreasing of the product life cycle
- The pressure to find an innovation
- Responding to customer needs quickly
The challenges that are written above will live forever. If customer needs or the human population increases rapidly, this situation stays like this. The faster any company or organization presents something to the market, then more it manages the market. Today, many significant challenges in diﬀerent markets or industries are related to technology and digitalization. So, every market player must be agile to deliver or manufacture something to market or another market player.
It’s no surprise that with supply chains becoming increasingly complex with each passing day, that an Agile Supply Chain is quickly growing in popularity. The agile supply chain includes and integrates the use of responsiveness, competency, flexibility, and quickness in daily operations. The agile supply chain uses real-time data and updated information to leverage current activities. The use of real-time data against a demand forecast helps to improve the overall efficiency and productivity of the supply chain for a given entity.
In summary, the agile concept started in software development as an iterative method requiring collaboration to create an end product. A company that embraces agile supply chain principles are better at sensing demand and supply changes and responding quickly and accurately.
A supply chain should have the following characteristics to be an agile supply chain:
- Virtual Integration (Sharing the right information with all chain entities)
- Acute market (customer) sensitivity
- Relationship Management – Network Based
- Process Maturity and Alignment
- Flexible Technology Infrastructure
To learn more about adopting Agile practices in your supply chain, read the white paper, Agile Supply Chain Software Implementation.