Shedding Light on Agile Supply Chains
Supply chains make the world go around. Unfortunately, this also means a disruption in one corner of the world can create setbacks for another. It’s a lesson we learned all too well during the COVID-19 pandemic. Now, post-pandemic, there’s an emphasis on insulating supply chains to safeguard them from singular disruptions with the potential to take down the entire supply chain. For many companies, the answer comes in the form of agility.
The role of agile supply chains in the post-pandemic era
Agile supply chains make today’s producers more efficient and flexible. As opposed to traditional supply chains, agile ones are strategic and adjustable to help organizations and their employees respond quickly and seamlessly to meet sudden, unexpected needs.
The global pandemic is an extreme example of what can go wrong with traditional supply chains. As emergency health and safety protocols sent the economy into hibernation, even amid sharply fluctuating demand, shortages and supply chain disruptions affected businesses in all industries.
Now, manufacturers understand the importance of taking an agile, adaptive approach to supply chain management so they can rapidly adjust to unexpected situations and protect their bottom lines.
Agile is better
Today’s manufacturers must prioritize agility in their operations to navigate the increasingly volatile and unforgiving global market. It starts by examining supply chains and stress-testing them to determine where changes can make them more flexible. Should you diversify suppliers? Change procurement processes? Consider different shipping lanes? Agility comes from understanding the field and hedging against uncertainties.
Not only do agile supply chains allow producers to protect their bottom lines — they also enable higher levels of service. According to research by McKinsey, agile companies hold inventory 23 days on average less than their less agile peers, resulting in less cash trapped in saleable goods. They also had better performance in terms of on-time, in-full (OTIF) deliveries, which means more reliable revenue through the door. It’s clear how broadly adopting an agile supply chain can provide significant improvements extending across manufacturing operations.
Agility centers around flexibility
Maintaining a flexible supply chain revolves around the idea of “bend but not break,” or the ability to pivot in case of unforeseen events. As you evaluate your supply chain, consider implementing these agile strategies to bend better:
- Leverage data. Manufacturers must collect and understand their data. Legacy systems and processes simply can’t keep up. Organize and leverage both in-house and supplier data so you can drive outcomes more effectively.
- Go digital. Moving physical goods through the supply chain requires an efficient system. Go digital with your supply chain in terms of goods, processes, and logistics. By switching from manual processes to digital ones, you enable a better understanding of your data and can automate demand planning while reducing human error with the possibility to harm your bottom line.
- Align with suppliers. Manufacturers who embrace digital transformation can better align with suppliers. Digital systems provide real-time information. When you realize your organization needs certain items, your supplier can know it too through data sharing. When you keep all parties in the loop with changes and updates, you can pivot on demand.
Embrace the need for agility. While it might mean abandoning long-held supply chain truths, the shift from a traditional supply chain to an agile one is a process requiring total buy-in to work effectively.
