Supply Chain Management

Lean vs. Agile Supply Chain Management

When looking at which kind of supply chain is best, it really comes down to a matter of priority. What is more important to the organization: more inventory or more information? 

Lean Supply Chain

In a lean supply chain there is focus on removing unecessary processes that incur additional costs. This leads to better value for users’ money. Lean supply chains focus on single goods or services.

Lean supply chains rely heavily on analysis because there needs to be a thorough understanding of the numbers before it is determined what a company should and should not stock or eliminate.

Much of lean manufacturing is focused on reduction. Ultimately, supply chain managers want to avoid shipping items unnecessarily, hoarding unsold inventory, moving items during production, overproduction, lengthy processing times, and defective or inadequate products. 

Agile Supply Chain

Agile supply chains are, as their name suggests, flexible. The focus here is on giving customers exactly what they want with a lessened focus on shaving costs. 

This is highly dependent on not only the manufacturer, but also its suppliers being just as flexible. Manufacturers will need precise components at the right time and delivered in the right order.

There is also a reliance on understanding customer demand before completing a finished product. Coordination among all of the moving parts becomes critical.

This is a strategy for organizations that need to adapt to evolving situations and circumstances such as economy, technology, and customer demand.

An agile supply system bases its actions on market demand before finishing production. It relies on short-term forecasts is most beneficial in industries that produce fast-changing and customizable items

This strategy may produce shorter lead times and is better equipped to deal with the unexpected. 

Hybrid Approach

It can be argued that to be most efficient, organizations need to implement a combination of both agile and lean strategies. Why not keep your supply chain flexible while cutting costs? 

A hybrid strategy may leverage lean strategies for higher volume, stable demand product and make-to-order, but rely on agile strategies for everything else. Alternatively, a hybrid strategy may simply incorporate a flexible production capacity to meet heightened demands and unexpected requirements. It may also implement postponement strategies in which final assembly of certain products waits until final customer order.