7 Ways to Create Perfect Agile Supply Chain Machine

In this article, we will explain how agile supply chain theories were developed and 7 actionable ways you can use to create agility in your organization.

Agile Supply Chain

Agile Supply Chain is based on the concept of "Agility" which was developed at Lehigh University in the United States. The primary focus was to make a manufacturing system became more flexible and could adapt to changes. The common definition of agile supply chain is "ability of the supply chain to anticipate and adapt to the changing business situation quickly through product, process and people".

Agile supply chain consists of 4 main elements, namely, Responsiveness, Competency, Flexibility and Quickness. More details can be found as below,

- Responsiveness refers to the ability to identify and respond to change quickly
- Competency is important because the coordination with internal/external parties to achieve goal is desired
- Flexibility means a company can implement product/process change quickly
- Quickness makes a company deliver product and service quickly

In practice, people use the word "agile" interchangeably with "responsive", "flexible", "quick" or even "adaptive".


In 1999, Naylor and team published the article entitled "Leagility: Integrating the lean and agile manufacturing paradigms in the total supply chain" to describe how agility and lean concept are related. In short, you can be more responsive if you trim wastes from your current operations and become "Lean". 

Triple-A Supply Chain

In 2004, Professor Hau Lee of Stanford University published the article titled "The Triple-A Supply Chain" in Harvard Business Review. According to his extensive experience in helping companies cut costs and improve speed, he found patterns that successful companies have in 3 areas, namely, Agility, Adaptability and Alignment.

- Agility focuses on how to respond to a short term change in the demand/supply imbalance quickly
- Adaptability is a medium term strategy to cope with the changes in the market
- Alignment is a strategic long term plan to improve partnership in supply chain

Since there is no uniformed methodology and metrics to help with the implementation of agile supply chain concept, we believe Triple-A concept is the ideal candidate to help you create agility with more details as below,

Agile Supply Chain

7 Ways to Create Agile Supply Chain Machine

1. Evaluate Needs of Final Customers
In high-tech industry, semi-conductor manufacturers were used to responding to their immediate customers only and the result was a constant product shortage. Then, they tracked down the demand of chip-based final products and found that there were some demand gaps between each member of supply chain. The findings helped them to become more responsive to final customer's demand and they could reduce the inventory without product shortage

2. Use Flexible Product Design
According to Lee, product designers should be well aware of the market of raw materials, product commonality and product standardization. Choosing the right components can help company to respond to engineering changes more quickly

3. Adopt Postponement Strategy
Postponement concept can be a bit confusing but the simplest explanation is to produce or keep stock of semi-products and assemble them into final products quickly when demand is known

4. Monitor World Economy
The change in supply market can have the influence on customer's preference. Monitoring world economy and try to identify new supply bases and market will ensure that company is one step ahead of its competition

5. Develop Collaborative Relationship
Lee suggested that company that provide suppliers and customers with proprietary tools and market information will cope with changes more quickly and accurately

6. Specify Roles And Responsibilities
Companies that implement lean manufacturing concept are familiar with this principle very well. Because roles and responsibilities are clearly defined at staff level up to company level so people know how and with whom to communicate a particular issue. This helps cutting down on a delay in response, especially during supply chain disruptions

7. Develop Contingency Plan
A classic case study of a contingency plan is a case of fire of Philips facility in New Mexico in March 2000. Nokia who had a contingency plan managed to locate 2 new suppliers and the new lead-time was only 5 days. Meanwhile, Ericsson who didn't have a contingency plan suffered from months of raw material shortage.

In your opinion, what's else we should do to create a perfect Agile Supply Chain Machine?