Today's supply chain problems require tomorrow's technology. Learn what an agile supply chain requires.
Today's supply chain problems require tomorrow's technology. Learn what an agile supply chain requires.
According to Gartner, 89% of CSCOs believe uncertainty is here to stay and will only intensify. McKinsey says companies can expect supply chain disruptions every 3.7 years, lasting a month or longer.
Businesses with supply chain agility can adapt and respond to unpredictable disruptions and fulfill logistics flexibly. However, most companies continue to rely on traditional operating models, which makes them vulnerable to uncertainty and results in supply chain damage.
Supply chain agility provides risk management and the ability to seek new opportunities from uncertainties, enhance logistics, keep pace with customers’ demands, and build a financially healthy business.
Here are the strategies and benefits of building a flexible and responsive supply chain by adopting an agile supply chain approach.
What is supply chain agility?
An agile supply chain refers to the ability of supply chain operations to adapt and respond to shifting market dynamics by anticipating and mitigating supplier continuity risks.
Supply chain agility is designed to cope with external and internal shocks such as:
- Labor or raw material shortages
- Fluctuating consumer demand
- Extreme weather conditions or pandemic
- Logistics failure
- Geopolitical risks
In today’s dynamic and volatile landscape, agile operations deliver a better competitive advantage than lean supply chain methodologies, which operate with calculated risks and gain only what is predicted.
Lean vs. agile supply chain
The lean supply chain is inventory-driven. It aims to reduce waste and manufacture predictable products only. The lean approach prioritizes cost efficiency over resilience and growth. Unfortunately, this concept is not scalable and dynamic if demand suddenly spikes. Ultimately, it can lead to a loss of business opportunities.
An agile supply chain, on the other hand, prepares you to achieve resilience and flexibility in uncertainty, react to unexpected changes, and survive. Built on data-driven strategies and advanced tech innovations, agile supply chain strategies ensure you can efficiently allocate and reallocate inventory wherever needed and meet customer demand.
This supply chain approach is effective for unpredictable situations like COVID-19, the pandemic, or other disruptions.
Surprisingly, as per Gartner, the anti-fragile supply chain is a leap forward that constantly embraces uncertainty and volatility to learn, adapt, and evolve to thrive better. In that sense, only an anti-fragile supply chain can be resilient.
The agile supply chain is critical to becoming an anti-fragile supply chain that responds and reacts to the same components, such as volatility, uncertainty, and complexity.
Why is an agile supply chain so important?
Supply chain agility is critical because it helps businesses like yours adapt to changing supply chain trends and customer demand and continue logistics operations. Along the course, the agile approach fosters strong relationships with suppliers, carriers, logistics, and other partners for business growth.
Agile ways improve customer experiences, reduce costs, and increase profitability by:
- Meeting customer demand by nurturing agile logistics
- Sourcing on-spot freight as demand increases
- Reducing order cancelation
- Optimizing logistics routes
- Maintaining warehouse capacity, etc.
Agile is the way to build a more responsive and flexible supply chain. Let’s explore the best strategies for building it.
Best strategies: How to build agility into your supply chain?
Supply chain leaders or CSCOs can build supply chain agility in many ways by applying some valuable strategies.
✔️ Highly efficient demand forecasting
Demand forecasting is critical to building an adaptive supply chain. Use predictive analytics to produce more accurate forecasts, prepare to satisfy customer expectations, and avoid inventory waste.
✔️ Procurement to supply: Real-time end-to-end visibility
90% of procurement leaders say they are unaware of supplier disruption in all tiers within 48 hours of its occurrence. To avoid supplier risks and minimize them, ensure end-to-end visibility across procurement to supply, encompassing warehouse, logistics, fulfillment, and distribution.
✔️ Predictive analytics for supply chain risk management
Prioritize predictive risk analytics for detecting supply chain risks for logistics in transit or at rest. IoT connectivity can help. It pulls threat data and shares it with stakeholders for real-time decision-making and better impact mitigation through crisis response.
✔️ Automation for supply chain efficiency
Supply chain agility is all about increased adaptability. Automation can help when your shipment needs to scale during a sudden spike in demand. Leverage warehouse automation to process orders automatically. Ensure you have automated tender and book freight workflows to help with spot procurement for bulk shipment. With that, 3D load consolidation and automated freight execution are useful to help you ship at a more incredible speed and elevate revenue opportunities.
✔️ Data-driven decisions through stakeholder collaborations
A unified supply chain portal is a powerful capability to enhance stakeholder collaborations. It provides a single source of truth with a granular view of operations and harnesses real-time communications for improved data-driven decisions. Incorporate this capability for a more responsive supply chain to address logistics errors and minimize shipping delays.
✔️ Real-time SKU-level access for inventory replenishment
Effective inventory management significantly helps you build supply chain resilience. To achieve this phenomenon, you must implement end-to-end visibility into SKU-level access. You can optimize inventory, prevent stockouts, facilitate multi-modal shipment, and improve order accuracy.
✔️ Investment in SCM technologies
You must shore up an AI/ML-powered supply chain fulfillment tool, multi-modal TMS software, and autonomous freight procurement tool, including tools like predictive analytics to ensure end-to-end supply chain visibility and optimize your operations for supply chain agility.
Advantages of supply chain agility
Aside from driving cost efficiency and creating new revenue opportunities, an adaptive supply chain unlocks immense benefits for your business.
🔺 Protection against supply chain risks
Data-driven predictive analytics provides early threat detection capabilities. With a better contingency plan, you can achieve greater resilience to risks across supply chain goods, carriers, logistics, and supplier management to minimize them before they occur.
🔺 Improved operational efficiency
Adopting tools like Gen AI-powered AI copilot or automation helps automate and streamline manual workflows and cut down redundancy to efficiently keep pace with changing market dynamics and drive agility in the supply chain.
🔺 Improved customer experience
Supply chain resilience adapts to fluctuations in customer demand. It efficiently fosters shipment amid disruptions of raw material shortages or shipment failure by reallocating necessary resources wherever needed using predictive analytics and demand forecasting.
🔺 Increased cost savings
An agile supply chain improves the end-to-end optimization of resources across every touchpoint through transport management, warehouse management, and inventory management. This helps you better negotiate rates with carrier networks and maintain an optimal inventory level, translating into cost savings.
🔺 Reduced inventory wastes
Supply chains can quickly adapt to a sudden demand for agility by embracing just-in-case inventory. With safety stocks on hand, companies can continue to ship goods even if raw material shortages occur or suppliers go out of order, reducing inventory waste and enhancing cost efficiency.
🔺 Enhanced supply chain visibility and collaboration
A single source of truth for all suppliers makes it easy to track supply chain activities. This eventually helps to minimize unavoidable risks to goods acquisition, shipment, and cargo utility and build long-term business relationships with suppliers, logistics partners, and shipping carriers.
The agile advantage: Driving supply chain excellence by all means
COVID is the big learning lesson for businesses that refuse to transform. Supply chain agility allows you to adapt and react to evolving marketing scenarios and align with customer objectives. It improves responsiveness and flexibility across every value chain and helps you survive in the market.
If you're looking to build agility in your logistics and are currently evaluating technology that is proven in the market, schedule a demo with our experts.
