Agility deals with how responsive supply chains are to changing customer demands. The North American automotive industry is a prime example of how to synchronize the arrival of parts just-in-time basis to meet production requirements. Implement these three initiatives to create an agile supply chain.
To avoid the “bullwhip effect” in supply chains, which increase inventories at the market level due to lack of upstream visibility, it is vital to have one source point or schedule for the supply chain. Similar to the drum beat used on dragon boat races, this sets the pace for the rowers (supply chain participants) to all work together. Using Collaborative Forecasting Planning and Forecasting methods the supply chain will be able to quickly respond to changing market requirements.
Quite often organizations follow procedures that have always been there without asking the critical question “why do we do this?” In one example, Ford had 500 employees in their accounting department while Mazda had only 50. Ford is a larger organization, however the increased staff was not warranted. Upon looking at the processes, Ford’s accounting team was manually matching purchase orders with supplier invoices manually once all of the paperwork arrived. Mazda, on the other hand, empowered its manufacturing employees to authorize supplier payments upon validating the incoming shipments in the plant electronically.
Postponement is the process of delaying the final configuration of the product until the customer orders it. For example, a battery manufacturer will send generic batteries to regional distribution centers that are in close proximity to market areas. Upon receiving an order from Sears (Die Hard Battery), the manufacturer simply labels the “generic” batteries and ships them to their customer. This strategy dramatically improves customer service as the batteries are available as well as reduces inventory requirements.