In Search of the New Holy Grail - Supply Chain Agility

Escalating complexity, driven by demand volatility, increased competition, shorter product life cycles, raw material scarcity, globalisation, increased risk awareness and discerning customers, can affect supply chain resilience and performance.

The solution to lies in building agility – 'the ability to move quickly and easily'¹, Tech-Pro Personnel tells SmartProcurement.

There is currently no standard definition for supply chain agility.

Definitions of agility vary from Inderscience's 'ability of the supply chain partner organisations to adapt quickly with rapid changes in business environments'² to Supply Chain Shaman's 'the design of the supply chain to have the same cost, quality and customer service given level of demand and supply volatility'

And, PwC's 'agility can be defined as the ability not only to adjust for anticipated change but also to respond effectively to unanticipated change'.⁴

Research indicates that while many organisations view supply chain agility as an important goal, most are far from agile.
Internationally, a survey by Lora Cecere, founder of Supply Chain Insights, found that while 89% of companies rank 'agility' as important, only 33% feel that they have 'the prerequisite agility they feel they need to run the race' – and that there is 'a large gap between importance and current performance'. ³

Similarly, in South Africa, participants in a recent study conducted jointly by Imperial Logistics and Volition Consulting Services ranked 'agility' 29th overall on a list of integrated supply chain management priorities, while 68% of manufacturing role players had 'barely or partially implemented best practice'.⁵

Factors Influencing Supply Chain Agility

Agile supply chains are more responsive to changes in consumer demand, increased competition and continued volatility.

Factors influencing supply chain agility include:

  • Lack of Specific Definition: Research shows that top performing companies clearly define agility as it applies to their organisation.
  • Management Commitment: 'Strong executive sponsorship and participation'⁴ is cited by PwC as vital to the building of an agile supply chain as executives provide clear vision, encourage integration and collaboration and support implementation of strategic plans. 
  • Organisational Integration: Agility is 'largely a function of the ability of disparate functions to co-operate by working as teams with common goals'6 – led by management promoting integration.
  • Communication and Collaboration: Collaboration – which is enhanced by effective communication and information sharing – creates interdependence along the supply chain – and supports flexibility and responsiveness.
  • Customer Sensitivity and Satisfaction: Agile supply chains embrace technology to better understand customer needs, speeding response times and improving customer satisfaction – or the difference between 'the perception of the value delivered and value offered by the competition'.6

Agility in the South African Supply Chain

There are many examples of South African supply chains creating agility, most notably in the Retail sector.

Truworths, historically the most vertically integrated South African retailer, has improved agility by maintaining control across the supply chain, from design and cut, make, trim to point-of-sale.⁷

The Foschini Group partnered with 6 local manufacturers to produce 'fast fashion' or 'in-season' clothing. The project – which has increased the retailer's market share – reduced lead times and inventory, while enabling a quick response to fashion trends.⁸

In both instances, retailers gained a competitive edge using shorter product lead times and increased availability to improve customer satisfaction and reduce the risk inherent in pre-ordering seasons in advance from overseas suppliers.

In summary, 'by adopting a supply chain which is agile and highly efficient but flexible enough to bring about changes at short notice, significant benefits can be achieved through better utilisation of capital, greater responsiveness to customers' needs, the elimination of wastage of time and materials, and reduction of adverse impacts on the environment.' (The Foschini Group)⁷

Is supply chain agility a strategic goal for your supply chain? What factors do you believe influence the agile supply chain? We'd like to hear your views – join our discussions on LinkedIn, Twitter or GooglePlus.

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¹: Oxford English Dictionary  

²: 'Supply Chain Agility: Emerging Research Perspectives', Inderscience Publishers, 2011

³: 'Preparing to Run the Race: Supply Chain 2020, Lora Cecere writing for the Supply

     Chain Shaman blog, April 2012

⁴: 'Achieving Agility Through the Sales Inventory Operations Planning Process', PwC,

    October 2009

⁵: 'The Strategic Role and Effective Functioning of Supply Chains', TransportWorld Africa,

     July 2013

6: 'Impact of Supply Chains Agility on Customer Satisfaction', Dr Akhilesh Barve from a

    paper presented at the 2010 International Conference on E-Business, Management

    and Economics IPEDR vol.3 (2011)

⁷: 'Clothing Retailers Supply Chains Adjusting for Fast Response Fashion', Theresa

     Heath, Retail Sector Research Analyst, Stanlib

⁸: 'The Investment Case – The Foschini Group Ltd', Patrick Cairns,  Moneyweb, January

     2012