Supply chains constantly change and evolve because of an endless range of factors outside the control of transportation management specialists. As globalization, digitization, and rapidly fluctuating supply and demand continue to impact the industry, there is a growing need for more sophisticated, built-in risk management procedures to help keep supply chains nimble and agile. In 2022 and beyond, shippers are moving away from the concept of a lean supply chain to prioritize agility. Unfortunately, many supply chain entities don’t understand or fail to grasp the full scope and concept of agility and how it functions in relation and contrast to a lean supply chain.
This blog looks at how the agile supply chain management paradigm has shifted in 2022 and how you can adapt to the changes.
What is Agile Supply Chain Management?
Agile supply chain management refers to fast, highly flexible, and responsive methods of managing daily supply chain entity operations. Unlike the lean supply chain, agile supply chain management incorporates real-time data and updated information to leverage against demand forecast, improving that service provider’s overall efficiency and productivity.
Agile vs. Lean
A supply chain built around agility has an edge in avoiding potential shortages and eliminating overstocked inventory – a typical response to a lean philosophy. With a focus on the leanest processes and operations possible, many supply chain entities ended up with massive overstocks of products that led to lost costs as inventory became unwanted or expired.
The biggest issue with a lean supply chain concept is that supply chain analytics isn’t used in a predictive, quantitative manner with a big-picture look at the future. As a result, lean supply chains cannot deliver the visibility needed to avoid overstocking issues in the modern climate. Agile supply chains can much more easily adapt to rapidly changing environments and outside economic and governmental factors, customization, trends, and demand, just to name a few. By empowering your supply chain to respond to issues immediately, supply chain managers are better poised to navigate any challenges that arise.
Agile supply chains are those that can respond rapidly to unexpected changes and events while maintaining consistent customer service levels, service level agreements, liquidity, and costs. In a McKinsey & Company Report, up to 94 percent of companies using agile supply chain practices can deliver on time and in full, without keeping inventory over 85 days. Companies that didn’t implement agile solutions often held inventory in excess of 108 days and achieved only an 87 percent on-time delivery rate. These statistics don’t even account for the number of unfulfilled deliveries, shipping process errors, customization, or picking errors.
The Characteristics of an Agile Supply Chain
Agile supply chains are dynamic and market-sensitive. They efficiently respond to real-time demand and equip enterprises with the resilience needed to read and respond to demand fluctuations and supplier disruptions by allocating and reallocating inventory where and when required. The ability to swiftly react to and mitigate supplier continuity risks (e.g., global pandemics, extreme weather, fires, labor strikes, and geopolitical, market, and financial issues) is key to achieving supply chain agility and relies on three main factors:
Real visibility means you have a holistic, real-time, end-to-end view of your supply chain. This transparency allows for cohesive planning across all processes rather than individual business units or silos. Visibility is key to catching potential issues and delays while there’s still plenty of time to develop alternate solutions. In addition to the benefits of transparency into the product lifecycle, vendor network visibility is also highly beneficial. When businesses can easily rate and compare service providers, they can quickly shift between partners without interruption.
In many supply chains, not everyone receives updates on processes, schedules, and organizational changes simultaneously. When all supply chain participants are part of a cohesive global carrier network, like that of CLX Logistics, all network updates can be shared in real-time with the right people. This means there are no surprises regarding demand and all changes are immediately apparent to everyone who is a part of that connected network.
Collaboration means always keeping all stakeholders in the loop to meet critical metrics and achieve business goals as a cohesive unit. A unified environment such as CLX TMS allows for advanced transportation models to be analyzed, evaluated, and selected without endless back-and-forth emails and texts that can make accurate recordkeeping impossible.
Building an Agile Supply Chain in 2022
Agility in the supply chain is rapidly changing how supply chain entities operate. No longer is the reliance on a lean supply chain methodology capable of keeping up with an endless range of capacity shortages, service interruptions, and other challenges the industry faces. Proven tools like CLX TMS provide advanced visibility and control over your day-to-day transportation operations with interactive dashboards and real-time metrics that allow shippers to identify outliers and trouble spots that need attention and react 24/7/365. CLX TMS’s fully integrated global carrier network brings real-time communication and collaboration into your entire global and domestic supply chain. Supported by CLX Logistics’ unmatched expertise, adaptability, and flexibility, you get the absolute best planning and execution capabilities across your network.
Contact us to talk about your chemical logistics needs and start using CLX TMS right away.Back to Resources