Benefits Of An Effective Supply Chain Commerce Essay


The Primary objective of any Business organization is to make profit and also create value for its stakeholders and customers creating distinct competitive advantage for sustainability .In order to create value, Organizations flood the market place with products and services and compete to attain a larger market share. but one thing to be noted here is that it is not the companies that compete but the supply chain (Christopher 1992) and success and failure of the supply chain depends on the end customer in the market place (Towill 2002) .Different companies adopt a variety of supply chain strategies to remain competitive in the market place like being lean, agile or le agile and in adopting so bestows them with some amount of flexibility or limited flexibility. This essay tries to highlight the role of flexibility in the different supply chain strategies and also tries to identify the different flexibilities found in each of these supply chains based on academic research articles.

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An effective supply chain is one which is responsive, cost effective and which can cater to customer demands hence supply chain should be lean agile and flexible .For achieving this objective, flexibility is the key criteria. Flexibility is required where firms have uncertain demand and needs to be responsive to the market. Manufacturing and service firms have become more and more competitive as customers demand customers customized products with shorter lead times .It has become increasingly important for companies to be flexible in order to win orders in the market place combined with efficient supply chain strategies .The existence of flexibility in the supply chain can be source of distinct competitive advantage. The supply chain strategy of leanness, agility and flexibility cannot be viewed in isolation as they are all linked to each other. (Naim 2006) argues that flexibility should be a proactive characteristic that should be imbedded in the organizations strategy, behavior process and technology. The degree of flexibility will depend upon the customer demand, uncertainties, the internal process, supplier performance and also the supply chain itself. The level of flexibility that exists in each of the supply chains also depends upon the market knowledge and the positioning of the decoupling point. analyzing the three supply chains lean, agile and leagile .we can find that a lean supply chain is used where there is level load, agile supply strategy is used where there is constant fluctuations in customer order and volatile market while leagile uses a combination of agile and lean strategy . Lean manufacturing basically involves the elimination of waste or muda in terms of removing non value add activities and time compression while agile strategy involves ability to change rapidly to the changing demand and customer which by itself highlights the inbuilt flexibility that the organization posses by the adoption of the these strategies .In a firm using the leagile strategy combines the agile and lean concept at different levels in the supply chains. A decoupling point separates the part of the supply chain which responds to the customer directly. The position of the decoupling point depends upon the longest lead time the end customer is prepared to wait and variability of product demand dominates ( Naylor et al 1999) .In an integrated supply chain which combines the lean and agile principle , we can see that upstream from the decoupling point it is forecast driven which means it is a sort of push system but does have the flexibility in terms of the production volumes due to the leanness .downstream from the decoupling point where the agility concept is used we can find that it offers flexibility in terms of rapid change depending upon the market in terms of information and material flow ,changeover time if it is a manufacturing firm .

The level of flexibility existing in the different supply chain varies and (Slack, 1990) argues that no single measure of flexibility exists because it is ultimately a measure of the systems potential to perform rather than its actual performance (Slack, 1990).Flexibility can be measured in terms of the efficiency, robustness, ability to respond and cost (Ilyas et al 2008).Flexibility as term has been widely represented and interpreted by researchers in different ways . Flexibility in each of the supply chain varies and argument presented are more or less are based on the manufacturing side .As Oke (2005)noted that subject of flexibility can be complex and confusing as there are many variants of flexibility .But the vital point here to be looked at is flexibility from the end customers point of view and the organizations side to ensure customer satisfaction and reduced costs .A manufacturing firm having a lean supply chain would have the flexibility with respect to production and changeover flexibility which is evident from the Toyota production system where die change over time is less than 5 minutes (Shingo S 1989). A manufacturing lean supply chain also can possess process flexibility in terms of producing same parts in different ways , operations flexibility to sequence the production in particular fashion , capacity flexibility being the ability to add production capacity .A lean supply chain also has the flexibility of the information flow from suppliers and customers which also helps in JIT production .This can be due the communication and production flexibility which can enable in customized product being delivered .In case of an agile supply chain volume flexibility needs to be inherent to meet the market demand as the market is volatile .The Flexibility required in this case is Mix flexibility in terms of changing products being produced , delivery flexibility to change delivery dates , logistics flexibility in terms of delivering the product to the end customer .Considering the example of High street fashion retailers they need to be agile and be flexible in terms of range and mix to cater to the changing needs of the customer because of the low product life .Logistics flexibility is required in a agile supply chain to respond quickly to changing customer needs in inbound and outbound delivery , support and services (Zhang et al 2005). In the case of a leagile supply chain both the flexibility of agile and lean exists which includes volume, logistics, capacity, process, machine, mix depending upon position of the decoupling point .Another type of flexibility is the access flexibility which is the ability to provide wide distribution coverage facilitated by the coordination of upstream and downstream activities in the supply chain. (Naim .M et al 2006)

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Thus It can be argued that Flexibility plays an important role in the supply chain strategies even though the context of flexibility might be different for competitive advantage and order winning.