Agility.
It’s all the rage in software and web development these days.
But what does agility really mean in terms of core functions like supply chain management?
It stands for the ability to get products from the page to the customer’s door in the most efficient, cost-effective manner possible.
If you’re nimble and capable of delivering the goods while responding quickly to market shifts, consumer preferences, and the state of the competition, you’ve got supply chain management down to a science.
A prime example of this, excuse the pun, is Amazon.
This company has set the standard for door-to-door delivery platforms with amazing feats like “One-hour delivery”, and they do it without sacrificing quality or customer service.
If you’re looking to give companies like Amazon and Zara a run for their money, you have to walk the talk and back it up with action. It’s not easy, but you can come very close to these giants.
Here’s how.
The Finer Points of Supply Chain Management
Customer expectations are constantly changing, but timely delivery is something that will always be in vogue.
The old way of achieving expediency was to focus on lean supply chain management.
However, that meant companies using technology to reduce costs while fulfilling orders without implementing technology in a way that could intuitively predict future needs.
This resulted in bloated inventories and an unsustainable business model that was no match for the complexities of 21st century eCommerce.
An agile supply chain is one that incorporates a high degree of dependability, competence, and flexibility on a daily basis regardless of external circumstances.
In order to achieve true agility, you need to implement state-of-the-industry technology based on real-time data that’s accurate and reliable.
It walks a fine line between overstocking merchandise and avoiding shortages that leave customers waiting for order fulfillment.
A study conducted by McKinsey & Company found that the sweet spot for truly agile supply chain management was attained by:
- Combining supply chain management best practices with current tech solutions
- Delivering merchandise on time
- Complete order fulfillment
- Limiting the time in inventory to 85 days or less
Less agile companies far underperformed to these standards, keeping stock in inventory an average of 20 days longer and only fulfilling orders completely and on time about 87 percent of the time.
Don’t want to be part of these statistics?
Follow the tips outlined below.
Achieving Agility in the Coming Year and Beyond
The first step to true agility is to perform an analysis of your delivery process and identify the least agile components first.
In most merchandise delivery models, the supply chain moves from production or supplier to your warehouse and on to the customer.
Within that chain, you would identify elements that appear fixed or inflexible. This would typically include:
- Production facilities
- Shipping methods
- Storage
- Production lines
The next step would be to evaluate ways in which you could improve these seemingly immovable components and increase efficiency.
This is achieved by following four components of advanced supply chain management:
Virtual Integration
Virtual integration supports end-to-end visibility through every link in the supply chain.
It gathers information regarding customer demand, coordinates between relevant departments based on that information, and shapes delivery to fulfill customer expectations.
Monitoring Market Sensitivity
Market sensitivity is monitored strategically, such as from the point of sale, in order to gather data on customer behavior each day.
This information is used as the basis for identifying, predicting, and leveraging future trends.
Practicing Process Alignment
The function of process alignment is to synchronize the supply chain through co-managed or vendor-managed inventory control and collaboration through various departments. The process amends in an effort to meet consumer demand and provide daily feedback for analysis.
This allows companies to more accurately predict future demand and pivot to address shifting trends, customer requirements, and market forces.
Network Segmentation
This involves the equitable distribution of effort among individuals within the supply chain based upon their core competencies.
This assures that talents are put to best use at the right time to ensure that customer demands are met.
Using Advanced Technology to Your Advantage
Advanced technologies like distributed ledger tech, cognitive manufacturing, IoT, and machine learning all enable optimization of the supply chain in brilliant new ways.
For example, real-time GPS systems can address last-minute route changes and divert shipments immediately without losing a beat or adversely affecting delivery times.
This can all be handled remotely with just a click or two as soon as new information is received.
IoT networks can assign unique identities and digital signatures to each item connected to the network.
This can be attached to an electronic identification system that can tell supply chain managers the exact location, condition, and other information for every item in stock, in real-time and without the need for a person to physically locate and report on these factors.
Production-to-disposal tracking using unique identifiers can provide accurate information about the country of origin and verify compliance with things like organic certification requirements or safety regulations.
Visibility and security are guaranteed by using the IoT identification, storing that information in the blockchain, and managing distributed access through hardened security protocols.
Blockchain technology can also be used to create smart contracts that can be implemented and enforced automatically.
That will ensure that all conditions of the agreement are met and discharged according to the contract.
Final Thoughts
Each year, business buzzwords try to capture the spirit of innovation and put a name on it.
However, agility is as timeless as customer service and as contemporary as the most current tech.
Using it strategically levels the playing field, allowing companies with a minimal web presence to compete with more established eCommerce merchants.
This article has provided you with actionable tips that will bring your supply chain management game into the 21st century.
What you do with the information is up to you.
Are you ready to compete with the giants?
