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This paper aims to explain the most important concepts in the supply chain which are agile and lean. Lean supply and agile supply are supply based on a way of thinking. In order to analyze the differences and connections between them, the first description of the composition of the supply chain costs. A lean supply chain, from product design to customers to get the products, the whole process of the necessary steps partners together to respond quickly to the changing needs of customers, its core is to use as few resources as possible to meet customer demand. Furthermore, the discussion maps out the similarities and comparison between these two concepts.
Analyze the concepts of lean and agile supply chains
The concept of agility and lean can easily be confused.Â Lean concept originated in Lean Manufacturing, and was mostly used by Toyota company, its core is to reduce, eliminate waste enterprises so that enterprises get as little money as possible and as much possible gains.Â But many organisations in the implementation of lean manufacturing strategies confuses it with that of Agile "and naturally there has been a lot of problems: such as lean manufacturing system being able to enhance the production efficiency, increase production substantially, shorten production time, and at the same time corporate inventory of finished goods also high, but this does not improve the level of service, customers tend to wait for a very long time for the products they need, this contradiction between demand and supply also results in low customer satisfaction. (BASU, 2011).
"Lean" is a necessary ability of the organization, and is part of the "agility" necessarilly, but this ability does not enable an organisations rapid and accurate response to market and ever-changing customer needs. This new concept of the whole supply chain has been provided to the Company to be more agile. Supply chain agility is normally termed as an organisations power to respond to unexpected variations. Simply put, market are more volatile and less predictable. In addition, the modern supply chain must be more "Lean". This means that it should not have more shares than necessary assets that could unnecessarily slow response time and increase costs. Thus, the Lean and Agile are two essential characteristics of a modern supply chain and are able to provide the adequate level of servicing the growing demand. The relationship between Lean and Agile should be well balanced. The key to this development is the right approach to the product portfolio. Since there are different products in the portfolio, which contributes to the share of sales in different percentage, they should be treated accordingly. This can be explained by the Pareto Principle, which says that 20% of inputs are 80% share of sales. -1=As these products to high volume, low variety and predictable, the production planning and inventory should be leaner. That means no large stocks, focus on efficiency and economies of scale (MARTIN, 2008).
Organizations operate their supply chains to deliver value to customers through lean and/or agile approaches
Agile supply chain infrastructure
The network economy has changed the competitive environment faced by traditional industries, and also changed the way of competition among organisations, they must find new competitive advantages, in order to obtain a dominant position in the new economic era. The concept of agile supply chain is a new strategic thinking, it is the birth of the actuation of the network economy, and therefore an inevitable trend of the times. traditional industries bring new competitive advantage, become the inevitable choice of traditional industries in the network environment (WRIGHT, 2008).
Agile supply chain mode of operation
In order to adapt to the competitive environment, business leaders should organize development focus and step out of the organization and pay to the going ons in the external environment and the inside and outside with up to accommodate the requirements of the new agility competition while grasping the internal transformation. Agile supply chain as a support and promote this change make the technology in recent years has been widely appreciated (CORONADO, M. 2010).
Lean supply chain infrastructure
Although the production of the manufacturing sector has been the introduction of lean principles for decades, thinking about Lean supply chain management is relatively new; lean supply chain requires the joint efforts of the upstream and downstream abatement costs and waste of the entire process. Single industry in the internal implementation of lean manufacturing, lean supply chain requires upstream and downstream enterprises to work together, not the simple push on the end of the story to the supplier, such as inventory and cost. In fact, this is the result of the concerted efforts of all supply chain participants, only cooperation to create a lean supply chain (HINES, 2004).
Application of the lean supply chain
A lean supply chain, from product design to customers to get the products, the whole process of the necessary steps and partners together to respond quickly to the changing needs of customers, its core is to use as few resources as possible to meet customer demand.
Agile supply chain competitive advantage
Any of the strategic use of success depends on the ability to obtain a competitive advantage over opponents. According to Porter 's point of view, the famous American strategists , competitive advantage obtained from the enterprise is able to provide customers with a value of over competitors, opponents or is less than the price to provide customers with the same utility, or is the same price more utility. Potter-based definition, we can be described as a competitive advantage, in any dimension or feature asymmetrical or differential, it is these dimensions or characteristics enable the company to serve customers better than competitors and thus create a better customer value . Porter's theory after verification of practice proved effective network economy era, the enterprises facing changes in the competitive environment, market demand uncertainty increases, to update their knowledge faster, but enterprises must follow the most basic principle of competition did not change, to be successful, you must obtain the competitive advantage of the differences. Agile supply chain is a new concept; it will break through the traditional management thinking, from the following aspects to bring new competitive advantage for the enterprise, enabling enterprises to show their glory in the future economic life (KNOLMAYER, 2008).
Where speed is the fastest way to meet consumer demand for personalized products and services that the customer needs, enterprises can provide timely, enterprise implement agile supply chain strategy is an important competitive advantage lies in speed. In the way of traditional business operations, from receiving orders to finished product delivery is a lengthy process: First, the enterprise To all orders information centrally aggregated to the planning department, task decomposition by the planning department, from the procurement of raw materials, from front to back, according to the process The process to complete the orders production , in addition to the essential operating time, in the middle will inevitably produce a lot of waiting for the phenomenon. Agile supply chain concept organization production, its unique order-driven production organization, in the agile manufacturing technical support can be the fastest speed of response to customer demand. Agile supply chain increase reflects the sensitivity of the market, through cooperative enterprise supply chain information sharing can all respond to the market conditions, and therefore reflect speed. The same time, due to various enterprises to concentrate on their core strengths, can reduce the production and logistics of time , it is possible to achieve the immediate sale of the supply chain , real-time production and supply of instant consumer orders lead to a minimum (VAN HOEK, 2006).
To meet customer demand for personalized advantage
Rely on agile manufacturing technology, support dynamic organizational structure and flexible management technology, agile supply chain to solve the assembly line production of varieties of a single problem difficult to solve, multi-product, small-batch production of personalized to meet customer personalization demand, as much as possible to expand the market. The nature and characteristics of agile supply chain have already had a lot of expressions, but these concepts into the enterprise supply chain system to really need to meet the mode of operation of these guidelines. Virtual team is. Its nature is characterized by: the team members showed a goal-oriented; members is in the geographical distribution of the dispersed state; members is more collaborative work in a different geographic location; team members work together to complete a common goal through computer support network; members of their own parallel implementation of the related activities in time; members together is responsible for the team's goals; team members with problem-solving and decision-making; teams only exist for a goal in the short term, the few team will continue to exist. Virtual team is responsible to eliminate the physical integration on the team, so that manufacturers can break the geographical restrictions and rapid and sustained collaboration with worldwide suppliers. Virtual team's potential is enormous, and it can go beyond the contractual relationship or other short-term immediate trading ways to reduce the volatility of the supply chain. As for the virtual team it can provide agility to the supply chain, its performance: Members who have agreed to perform the agile strategy, team building determines changes based on. Virtual teams any unstable factors as a collective problem. Changes, differences or other outside circumstances cannot be identified as a single member of the error (GATTORNA, 2010).
The team members have found new ways to solve the problem; this new approach in single individual enterprises cannot be found. Between the team members fully sustained confidence in the relationship between individual members will be given more priority of mutual collaboration, when members of several jobs at the same time during the good partnership primarily concerned with virtual team members will make it collaboration. Control trust replaces organizational level and between the upper and lower levels. Members rarely organic met face communication, simple virtual team structure and team building technical approach allows team members to establish and maintain this trust relationship, and without fear of each funded intervention (CORONADO M., 2010).
The basis of demand and fluctuations in demand for separation
A successful combination of strategies based on the demand model is divided into two requirements on the basis of demand and fluctuations in demand. In general, basic consumption is relatively stable, such as customer demand for functional products and consumer; fluctuations in consumer products and innovation linked. We can use historical data to predict the basic consumption, use of lean production to achieve economies of scale , to meet customer fixed relative to consumer demand ; fluctuations in consumer generally cannot be predicted, with a great deal of flexibility, the need for higher processing costs and logistics operation. We can see that, by controlling the production of basic production, conversion, smooth the progress of the whole process of production. General can be space such as the separation of the production line or time such as in the off-season production of basic inventory) separation to deal with the basic needs and fluctuations in demand, and contact the entire supply chain strategy to achieve the composite end customer demand (WRIGHT, 2008).
Similarities between two concepts
Combination of lean and agile application analysis
As already pointed out, there are many common elements between the lean the supply and agile supply. If we can fully understand and apply the concept of lean and agile, able to make the coexistence of lean enterprise and agile enterprise, improve the competitive edge in the market. Lean supply and agile supply significant comparison of the properties we found: Agile Supply and lean supply requires a high level of product quality; the need to issue purchase orders to receive the goods interval lead time minimization, but their motivation is not the same. Lean production lead time minimization requirements because of the resource-saving concept of lean thinking, the idea that consumption time is wasted, and the desire to eliminate all waste; agile supply lead time is minimized in order as quickly as possible meet the changing needs of customers and open up new market opportunities. Facing these dynamic markets, agile supply chain in order to provide a high level of service to meet the needs of the customer is necessary; lean thinking driving force is to minimize the cost, so it is based on the market price of the competition. Lean the supply and agile supply the essential difference is that the entire value orientation provided to customers, improve service levels is key agile supply and reduce costs is the core of the lean supply. The same time, we can understand the concept of two different supplies and winning standard from the late 20th century, the transformation of the PC supply chain (MARTIN, 2008).
Characteristics of Lean supply and agile supply
Lean supply and agile supply are based supply a way of thinking. In order to analyze the differences and connections between them, the first description of the composition of the supply chain costs. Many of the logistic experts think it is too large, relative to production and sales of the product obsolete in the modern supply chain management risk and shortage cost and proposed cost of the supply chain: The cost of the whole supply chain = product delivery costs (PDP) + Cost of sales where: Product Delivery costs = production cost + cost of sales + storage costs Cost of sales = products discarded cost + shortage cost.
The first cost of product delivery costs are the major cost in lean supply, while the cost of sales is dominant in agile supply. Customer requirements products at the same time to have sex at any time the availability and the ability to purchase products for modern agile enterprise, in addition to respond quickly to market to meet the availability requirements of the customer, there is a need by the lean supply chain wins standard to run, reduce supply chain costs, and meet the customer's ability to purchase requirements (BASU, 2011).
All the lines of approach lead to the conclusion that agile and lean are very important concept of in the supply chain. Agile Supply and lean supply requires a high level of product quality; the need to issue purchase orders to receive the goods interval lead time minimization, but their motivation is not the same. Lean production lead time minimization requirements because of the resource-saving concept of lean thinking, the idea that consumption time is wasted, and the desire to eliminate all waste; agile supply lead time is minimized in order as quickly as possible meet the changing needs of customers and open up new market opportunities. Hence, it can be safely concluded that there both of the concepts carries immense importance in the field of supply chain and gives ultra support to the process of supply chain.