6 tips to develop agile supply chain in your company

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6 tips to develop agile supply chain in your company

Also available in: Português Español

 

The current economic context, filled with quick transformations, brings a number of challenges to supply chains. Issues such as slowbalization and the effects of the covid-19 pandemic, for example, impact an entire global distribution network for products and materials.

Given this scenario, managers and teams from different areas involved in supply chains need to develop the ability to quickly respond to demands, in addition to managing the new risks and uncertainties that arise. In this sense, an interesting path for companies is the use of agile methodologies in supply chains.

But what are agile supply chains?

According to an article published by Forbes magazine, agile thinking came from software developers, and consists in an alternative project management technique that designs processes by dividing them into small parts. This way, as soon as each small fragment of a project is finalized, it can be tested, validated and even implemented.

This methodology also allows new technologies developed and launched on the market to be immediately incorporated into a project under development. Also, when the dynamic world scenario implies some change in customer behavior, it is possible to redesign the product quickly and create new, refined versions to meet these trends.

Another strong feature of this methodology is the so called iteration (repetition of an action, in this case, testing and additions to the solution), flexibility and collaboration between team members. In addition, the team has more autonomy to make decisions related to its projects, without necessarily needing approvals from people in higher positions in the organization’s hierarchy.

However, considering the reality of supply chains, according to a report produced by Gartner, there is still no consensus on the use of the agile concept.

In short, different notions are shared between academics, researchers and companies, but all argue that the focus should be on breaking traditional paradigms and developing the agile mindset to manage changes in demand and the supply of materials which are necessary for operations – such as the indirect ones.

The following aspects are considered critical to making a supply chain or any other sector agile:

  • Responsiveness: identify and respond quickly to possible changes;
  • Adaptability: adjust processes within the chain according to changes in the scenario;
  • Coordination: knowing how to organize this complex network, composed of different agents and stages;
  • Speed: being able to act quickly in various situations;
  • Flexibility: changing the format of the chain, without resulting in additional expenses or loss of inventory, to meet an unusual situation;
  • Balance: knowing how to balance supply capacities and the needs of those who need the material.

6 Tips for developing an agile supply chain

To be able to implement this change in supply chains, the company needs to be aware of a few important points:

1. Define agile according to your reality:

Being clear about what agile means for your supply chain reality is crucial. Teams must come together and articulate the concept based on the six characteristics mentioned above (responsiveness, adaptability, coordination, speed, flexibility and balance). This step  is necessary to determine the level of importance of each one of them for the company, the maturity of the existing concepts and the necessary actions to improve them.

2. Define agile according to your reality:

Based on the definition, focus on establishing a program to make the supply chain agile from end to end, defining investments, choosing what critical areas to be prioritized and actions that can be replicated, involving the areas that participate in the chain (such as the purchasing sector).

3. Focus your transformation on people:

One of the most critical aspects, which must be worked on by everyone. A change of mentality and the development of new skills need to occur in order to make the employees able to develop and adopt new processes and frameworks. The involvement of all team members is crucial for the successful implementation of the agile mindset, rewarding efficiency and tolerating mistakes during the learning process.

4. Use technology to your advantage:

Consider it as a means to achieve this method, but not the focus. That is, do not prioritize acquiring and adopting the most advanced technology on the market without first focusing on people, processes and data.

5. Sustainability is essential:

Take ownership of the concept to develop socially and environmentally responsible chains, another important trend of the new century. Sustainability has been consolidated as a relevant element of competition, a requirement for regulatory restrictions and an opportunity for the development of more sustainable communities.

Therefore, it is a challenge for everyone to think about how sustainability can assist in the improvement of agile chains. For example, for the procurement sector, there are a number of advantages to making sustainable purchases.

6. Develop contracts with agile suppliers:

Until recent years, under a supply chain perspective,  risk has always been treated as something to be avoided. Today, it is seen as part of the process, along with the strategy of having ready solutions to deal with different crisis scenarios. One of the strategies to mitigate them is the so-called  redundancy – also known as having a series of suppliers available to fulfill an order.

In the agile context, it is important to have relationships with suppliers who accept to have more flexibility to serve in a constantly changing market and also to define contracts more aligned to this reality (such as smart contracts, made entirely online, generating reliability for transactions of this type).

Talking about contracts that serve you more flexibly, learn more about the annual option offered by Soluparts.

Conclusion

According to Mark Hermans, director of PwC, issues such as geopolitical tensions, changes in trade agreements and climate change, combined with the constant drive to reduce costs and improve productivity, will promote an increase in risks, uncertainties and pressures for performance.

Under this perspective, supply chains must, more than ever, be quick to respond to these changes. Faced with a world in constant transformation, the implementation of an agile mindset for supply chains becomes essential.

Several authors and courses on the subject focus on agile methodologies, which are many, Scrum, Lean, Kanban and Smart, among others, but experts on the subject say that before adopting or adapting one of these methodologies to their specific context, it is necessary to first break the way of traditional thinking and working so that the whole team develops an agile mindset, otherwise the implementation of the methodology, no matter what it may be, may not be successful. And it is in this change of mentality and paradigm that we focus on this article.

In order to measure the success of this initiative, it is important to collect, organize, analyze and monitor data and information (learn more about how to do this) of the following aspects: concern with the time to fulfill an order, costs involved, flexibility and compliance with deliveries.

It is also necessary to be careful with: the management of the people involved, who need to adopt an agile mentality in their routine; the definition of processes, being open to possible changes when necessary; and the use of data to plan activities and improvements to be carried out, with the support of technological resources.

Follow the trends about the future of supply chains on Soluparts blog.

 

Also available in: Português Español

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