Logistics: Leagility in Supply Chain Design

Leagility in reference to supply chain design

Leagility in reference to supply chain design is a combination of agile and lean paradigms for optimal supply chain management (Bruce and Daly, 2004). The term “leagility” was first launched to do away with inflexibility and excesses in the supply chain; it aimed at creating a lean and agile supply chain design. It was meant to minimize wastes and to put into place measures to counteract uncertainties and changes in product demand. Lean supply chains are meant to get rid of wastes and to make them efficient and effective while agile supply lines were to ensure that the correct amount of a product is supplied to the correct place to meet the demand s of the marketplace. They are both geared towards minimizing costs, providing excellent customer services, and having an upper hand in competitive advantage. These are demonstrated in the lean paradigm of eliminating all activities that use resources with no equivalent value being generated and the agility paradigm which concentrates on flexible, accurate, and appropriate actions in reaction to the swift changing demand environments. The combination of these two creates the decoupling point (DC) in which the process upstream from this decoupling point focusing on leanness while the process downstream from the decoupling point focusing on agility (Jack, 2001).

Information and Transport Technology in leagile supply chain design

Information and transport technology is very important in supporting a leagile supply chain design. In order to understand the role information and transport technology plays in the leagile supply design, the article by Van der Vorst et al (2001) titled “Supply chain design in the food industry will be used to show how information and transport technology is critical in supporting a leagile supply chain design. In their article, the authors look at the poultry supply chain with a specific interest in the Wings and Legs poultry processor (p. 78). They appreciate the fact that poultry products have low-profit margins with market qualifiers being quality, lead time, and service level. They confirm that the supply chain is characterized by very short required lead times, frequent deliveries, and increased product variety. An effective and efficient transport system has, therefore, to be in place to offer these services. They reported that the poultry processor has to comply with minimal delivery reliability of 99 %. Information technology is very vital in leagile supply chain design in terms of information acquisition, processing, and utilization. This allows an organization to capture data of any product at any stage of the supply chain and at the same time availing this information to all stakeholders. Information technology, therefore, supports leagile supply chain design in three ways; data capture which involves continuous capturing of important information concerning all products and supply chain system components in real-time, data visibility which means availing information to all stakeholders at a single point of contact so that the information can be easily accessible, and lastly data analysis which ensures that the information is actionable. These three aspects of IT ensure that information is shared freely so that customer demands are met at least cost. One of the advantages of IT in leagile supply chain design is the use of Collaborative Planning Forecasting and replenishment Systems (CPFR) which is a software that allows retailers and manufacturers to share information freely. The globalization of industries in leagile supply chain design means that transportation and information technology are very important in ensuring that there is effective and efficient communication and exchange of information to ensure that the movement of goods and other products between manufacturers and suppliers and vice visa is monitored at all times. The advances that have been made in information and transportation technology ensures that leagile supply chain design is complete, effective, and efficient in ensuring that markets demands are met at a low cost.

Globalization of supply chains and leagility solution to supply chain

Bruce and Daly (2004) in their study titled “Lean or agile: A solution for supply chain management in the textile and clothing industry demonstrated that globalization of supply chains favors a leagility solution to a supply. They acknowledged the fact that globalization is a key factor in the textile industry (p. 151) and that the industry is facing several challenges in recent past years ranging from job loss to price cuts in already produced garments. This called for changes in the management of logistics and supply chains for textiles and apparel.

According to Bruce and Davy (p. 155), there is an intensification of the globalization of the textile industry in that many companies sourcing for components from overseas or shifting their manufacturing bases to countries with lower labor costs. They studied three companies that had links with other countries for purposes of improving the management of the supply chain design with companies having to produce their products at an increased level to meet their orders. The company produces its products overseas where the cost of production is low and at the same can meet short lead times with a UK-based production facility. This enables the company to get premium service from supplies to meet the changing demand of the UK retail markets. This demonstrates a leagile approach to supply chain design. Company 3, which designs and supplies accessories developed a mixed supply base approach in which it effectively and efficiently makes use of overseas supplies and short lead time UK manufacturers able to supply products to meet market demand. On the contrary, company 2 deals with long lead times and large products; lean supply chain design. To counteract the ever-changing market demand and intensification, the company adopts the agile approach. The fourth company has also built relationships and links with overseas manufactures and suppliers so that they can meet the dynamic market demands. The company deals with very high-quality fashion products with small batch quantities and therefore has achieved leagility in the supply chain. These have demonstrated that these companies use the leagile paradigm in the supply chain due to low margins and volatility of demand. From the above, it is evident that globalization of supply chains favors and has a great influence on leagility solution to supply chain.

References

Bruce, M., and Daly, L. (2004). Lean or agile: A solution for supply chain management in the textiles and clothing industry. International Journal of Operations & Production Management, (24):1/2, pp. 151-170.

Van der Vorst., et al (2001). Supply chain design in the food industry. International Journal of Logistics Management, (12):2, pp. 73-85.

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