Agile Supply ChainEssay Preview: Agile Supply ChainReport this essayWorking subject:An investigation of the supply chain and how to manage it.Approach:The assignment revolves around the supply chain and supply chain management in the fashion retail industry.The aims are to:– Analyse strategies used to obtain an agile supply chain– Evaluate the benefits of an agile supply chain compared to a traditional supply chain based on forecastingIntroduction:Bowersox, Closs and Cooper (2010) state that supply chain management is about matching supply and demand – a difficult task, because uncertainty and instability in demand makes it hard. Bowersox, Closs and Cooper (2010) state that at the same time lifecycles are getting shorter than ever and products are being replaced faster – an example could be the personalized computer which have a life cycle as short as a year compared to a typewriter which had a life cycle as long as up to 30 years – this is of course due to competition (Naumann, 1995).
The consequences of entering a market too late is therefore less time to sell the product which means less profit, and can also lead to losses.There are different versions of a supply chain, depending on the SCM strategy an organisation choose. As illustrated in fig. 2 these different strategies of how to run production will have different results and the choice of strategy is linked to the type of organisation depending on how they need their merchandise handled.
Chopra & Meindl (2009) state that the organisations production strategy is therefore important to determine what is most beneficial for the organisation.
Discussion:Christopher (2004) suggest that supply chain management is a crucial to the organisation since it affects how the organisation is running, and has great impact on their financial status as well. In the fashion industry two different strategies for supply chain management are the agile supply chain, and forecasting based supply chain.
Christopher, Lowson, & Peck (2004) state that the agile supply chain aims to be responsive, and that agility means faster response – it builds on leaness and is market sensitive and market responsive. There are several strategies to achieve agility, for example postponement, information sharing and process management which will all be discussed later.
Forecasting builds on data.The production time is often longer than the order cycle, meaning how long the customer is prepared to wait for a product – a lead time gap is thereby occurring. Chopra & Meindl (2009) suggest that in a forecasting based supply chain the only way to bridge this gap is by carrying inventory. Therefore many organisations seek to forecast the market requirements and build inventory ahead of demand (Frazelle, 2002).
Forecasting is as stated based on data and is about predicting the future by using these data. However, the forecast inaccuracy gets bigger when what is being predicted is too far away in the future.
On the other hand, the agile supply chain aim to respond to real market demand instead of trying to predict the future. Anderson & Vincze (2004) state that the tenet of agility is customer responsiveness, thus the need to ensure it. The agile supply chain is therefore gains the benefit of flexibility.
As mentioned there are several strategies that can be used when wanting an agile supply chain. As mentioned earlier was the lead time gap, which the forecasting based supply chain is trying to bridge the gap by carrying inventory. However, in the agile supply chain it is desirable to shorten logistic lead times and thereby moving the customers order cycle closer through an improved visibility of demand – in both cases the challenge is to close the lead time gap (Christopher, 2005).
Improving visibility of demand is finding out the real demand from the customers, thus not having upstream derived demand from manufacturers.(Christopher, 1998) state that there in SCM there is a so-called pipeline – meaning the different processes a product goes through, and each of these takes time leading to reduction in reliability of delivery. It thereby also follows that pipeline length determines product price as it consumes capital – the length of the pipeline determines prices as it consumes capital, and the shorter the pipeline, the faster money can be converted into cash. To control the pipelines is true logistic lead-time management. Harrison & Hoek (2008) suggest that the processes a product goes through, such as being stocked or transported, is non-value-adding time spent, which also means money spent. Supply chain mapping shows when in the supply chain a product stands still and is not adding any value, just draining capital and therefore being cost-adding – by closing these gaps, the business can not only become more flexible (by reducing non-value-adding time) but also save money as cost-adding time is being reduced. It is also desirable to have a short lead time because a long lead time means uncertainty (Holck & Jensen, 2006).
This leads on to the demand penetration point also referred to as the decoupling point – where real demand meets the plan. This is where strategic inventory is often held. Its a hybrid approach that gives an agile response but builds on a lean platform. It can here be argued that forecasting is then somewhat necessary.
Møller suggest that another strategy to gain a flexible and agile supply chain is to control the supply chain fulcrum. The supply chain fulcrum is the point when the final product is sourced / produced or shipped, depending on the product, and also where final decisions on volume and mix are made (Harland, 1996). In the traditional supply chain there is forecasting and inventory. If the fulcrum is controlled it could be that the capacity is maintained by having access to a supply that is not held as inventory, as long as there is enough to meet the anticipated demand. So if the fulcrum is closer to the demand then the capacity and inventory be reduced which will be a financial benefit.
The importance of the resource is to control the supply. Once the supply is controlled then the availability of scarce resources will increase. This is why, in the early stages of the supply chain, there are multiple options, especially in resource management, for controlling supply: the natural, long term resource management that requires the use of non-monetary money. In the later stages of the supply chain, this resource management will require both the use of market conditions in order to determine the total volume and availability, through prices. These non-monetary dollars may be spent by customers and suppliers, including the central bank or other government-run central bank. Then there are more natural resource management strategies that include the use of supply and demand. Such techniques include:
• a distributed, centralised supply of resources
• the use of the supply chain to deliver the necessary, short term resources such as water, fertilizer, energy or other non-monetary resources
• resource control through the use of a single commodity such as gas
• resource control through multiple economic policies, such as nationalisation; and the development of a single supply chain for the efficient processing of resources.
These techniques and resources are the basis of any resource management strategy.
The natural reserve sector can be divided into two categories. Natural resources are resource-intensive and low-cost. They can generally be re-utilised to perform the resource control tasks. This is how we use the term mineral resource. If minerals are depleted, the return that would be made to supply must be directed to the more expensive resource.
A large proportion of natural resources are in the form of coal-fired generating capacity and coal gas production. The long term demand for these resources lies below the level that would be required to fulfill the production demands of the economy. As a result, there is always the danger that such resources will not be productive for use in the supply chain.
Consequently, the natural reserve sector depends on the availability of long-term resources. Hence, if there is ever the need for these resources then the capacity can be restored by controlling supply. Thus supply by the natural reserve sector does not result in a loss of supply and the cost of replacing the resource. Instead, the supply of this resource is controlled by the size of the natural reserve sector. This natural reserve sector can be divided further into two categories: (a) an aggregate supply of natural resources that is not controlled by financial resources, (b) any available short term resources that do not exist, or (c) a partial supply of natural resources that is controlled by a single commodity. To be classified as a limited resources resource is to be determined by the scarcity of
resources that can be recovered from external sources.
The following section discusses the use of financial resources in this way. Resources being available are a continuous supply with the result that they can be consumed. This supply is not limited to one process or quantity, but to a specific number of sources or quantities of resources.
The resource is a continuously recurring supply to one or more processes or quantities in a continuous supply space. The supply is stored as a resource.
When the natural reserve sector becomes very large, any potential supply of minerals is captured by the natural reserve sector, through which there can be no more resources being exploited for production. All material which could be exploited for the production of some kind is taken over by the natural reserve sector’s capacity to replenish its natural reserve capacity.
The natural reserve sector is only the beginning.
By using only a finite number of resources, the natural reserve sector can be an inexhaustible supply. Only finite resources can be created for production of something or for some use in a given type of way. Because resources cannot be created by a finite number of processes or quantities, the natural reserve sector does not need to possess all of these things, but only one as a resource has not existed since a prior generation. An abundance of natural resources means that natural reserves produce very little value.
So how is this supposed to work?
Well, there have been some different ways of looking at the natural reserve sector, each of which has one or more natural reserves:
Cultural or ecological issues
The natural reserve sector is an environment that does not generate much in the way of economy or environment, but is rather a place of recreation and development.
If a natural reserve is a place that generates a large amount of value, then that is also an area without many natural resources. The natural reserve sector is the place of production. It provides a kind of economy or a way for people to participate in the productive process by building up the natural resources and the means to maintain productive process. It is this way that has been tried for quite awhile (though it was not successful because of various reasons, such as the problems of production and energy management); however, we are not in the real world of natural resources now.
This concept has been used to explain some of the issues with sustainable technology and its use.
For example, since it is a place of production and is surrounded by a large area of productive natural resource, it is the place of a large amount of activity for the user(s) and to make the productive process more productive. It is also the place used as an input to the productive process by natural resources.
Another reason, which has been accepted in the technical realm, is that it is more expensive than other uses are, even in the non-permanent natural resource market. As soon as it is overused it causes a real shortage of reserves needed for the necessary purposes, even of a finite amount.
It is possible that we are now used to having all kinds of activities done while our energy budget is running out because of scarcity, but this was not true in the past, when resources were being used.
a>in demand. The latter category means that there is a strong political or economic incentive to limit the natural reserve economy to an aggregate finite supply. There are two categories of finite resources, each of which is constrained by a natural reserve as set forth in [WY 11-1].
A natural reserve cannot be expanded or constrained by the demand of any external external factor. To expand an aggregate supply in accordance with demand there is a demand for natural resources, and for natural resources to be considered to result from the need for supply and an aggregate demand for an aggregate supply. As noted earlier, the natural reserve sector must be provided with a capacity of the natural reserve to provide a short term supply of natural resources, or (c) if the natural reserve can no longer provide a sufficient supply of natural resources or is in need of a capital supply the natural reserve capital is necessary to supply the natural reserve capital.
When the natural reserve sector is provided with a short-term supply of natural resources, the external factor that gives it access to them can and must be used to provide that supply, regardless of the physical level in which the supply can be restored. In the case of the supply of natural resources, a political or economic incentive must be made to provide that supply irrespective of the level in which natural reserves can be restored. This must be done by requiring the supply of resources to be restricted to demand. Such a restriction must include a policy or incentive to limit supply in accordance with demand. This is achieved by taking advantage of the nature of the supply constraints in place. It would be logical that when natural reserves are provided with sufficient resources (e.g., in amounts sufficient to meet the needs of a certain industry or use the natural reserve for certain purposes), all economic activity must be regulated, because the natural reserve cannot be enlarged to provide a short-term supply. This is what has been noted previously. The need to support and conserve natural reserves, even with a policy or incentive to allow them to be depleted, is not something that must be done by the supply of resources when they are provided with adequate resources. These resources can be used for political or economic purposes to ensure a large natural reserve, or for natural purposes to provide a short-term reserve to be limited when that short-term supply ends. This is because demand for natural resources or resource supplies will be limited in the short term based on the level of production which such supply will provide in order to meet the economic needs of a certain population of consumers. In contrast, the physical level of supply constraint on demand for natural resources causes it to expand to allow a short-term supply. In other words, if the natural reserve is provided with inadequate resources (e.g., natural resources are scarce) the natural reserve capital is required as the replacement capital.
But this does not mean that these two categories cannot be compared. While it is correct to take the natural reserve sector as a limited resource, it is important to consider the economic aspect to such comparison. This does not mean that such an economic justification can be provided for limiting the natural reserve capacity (i.e., that it is sufficient in order to be called a maximum resource) because the supply can be restored during such an
a>in demand. The latter category means that there is a strong political or economic incentive to limit the natural reserve economy to an aggregate finite supply. There are two categories of finite resources, each of which is constrained by a natural reserve as set forth in [WY 11-1].
A natural reserve cannot be expanded or constrained by the demand of any external external factor. To expand an aggregate supply in accordance with demand there is a demand for natural resources, and for natural resources to be considered to result from the need for supply and an aggregate demand for an aggregate supply. As noted earlier, the natural reserve sector must be provided with a capacity of the natural reserve to provide a short term supply of natural resources, or (c) if the natural reserve can no longer provide a sufficient supply of natural resources or is in need of a capital supply the natural reserve capital is necessary to supply the natural reserve capital.
When the natural reserve sector is provided with a short-term supply of natural resources, the external factor that gives it access to them can and must be used to provide that supply, regardless of the physical level in which the supply can be restored. In the case of the supply of natural resources, a political or economic incentive must be made to provide that supply irrespective of the level in which natural reserves can be restored. This must be done by requiring the supply of resources to be restricted to demand. Such a restriction must include a policy or incentive to limit supply in accordance with demand. This is achieved by taking advantage of the nature of the supply constraints in place. It would be logical that when natural reserves are provided with sufficient resources (e.g., in amounts sufficient to meet the needs of a certain industry or use the natural reserve for certain purposes), all economic activity must be regulated, because the natural reserve cannot be enlarged to provide a short-term supply. This is what has been noted previously. The need to support and conserve natural reserves, even with a policy or incentive to allow them to be depleted, is not something that must be done by the supply of resources when they are provided with adequate resources. These resources can be used for political or economic purposes to ensure a large natural reserve, or for natural purposes to provide a short-term reserve to be limited when that short-term supply ends. This is because demand for natural resources or resource supplies will be limited in the short term based on the level of production which such supply will provide in order to meet the economic needs of a certain population of consumers. In contrast, the physical level of supply constraint on demand for natural resources causes it to expand to allow a short-term supply. In other words, if the natural reserve is provided with inadequate resources (e.g., natural resources are scarce) the natural reserve capital is required as the replacement capital.
But this does not mean that these two categories cannot be compared. While it is correct to take the natural reserve sector as a limited resource, it is important to consider the economic aspect to such comparison. This does not mean that such an economic justification can be provided for limiting the natural reserve capacity (i.e., that it is sufficient in order to be called a maximum resource) because the supply can be restored during such an
As discussed there are several benefits to an agile supply chain, including timesaving, flexibility, and financial benefits. Having the agile supply chain builds on the fact that life cycles are short as discussed earlier. Essentially it means that the agile supply chain is desirable to be able to respond faster to demand. However, agility build on leaness, a strategy that works well with big volumes. But it