CREATING THE RESPONSIVE

SUPPLY CHAIN

Lesson 1: Agility

Sense and Respond

Anticipatory Fulfillment
Demand is supported by deploying inventory in anticipation of
projected sales levels and location
Anticipatory
Anticipatory
Forecast
Forecast

Order
Order
Inventory
Inventory
Deployment
Deployment

Inventory
Inventory
Replenishment
Replenishmentor
or
Reclamation
Reclamation

Actual
ActualDemand
Demand

When and How Much to Order?

Min-Max, Visual Review, Weeks of Supply
Distribution Resources Planning (DRP)

Lean Fulfillment Containing little fat

Reduce uncertainty by managing demand and order cycle time
variance
Collaborative
Collaborative
Plan
Plan

Order
Order
Small
SmallInventory
Inventory
Deployment
Deployment

Flexible,
Flexible,Rapid
RapidResponse
Response
Actual
ActualDemand
Demand

Synchronization of activities through shared information

Process reengineering
Supplier partnerships/delivery lead time and variance reduction,
quality improvement
Reduce process and network complexity
Performance cycle acceleration and postponement
Use appropriate metrics

Agile Fulfillment Nimble

Eliminate uncertainty by postponing form and/or time and
place utility until
order received and then rapidly respond when order is
received.
Collaborative
Collaborative
Plan
Plan

Capacity
Capacity

Flexible,
Flexible,Rapid
RapidResponse
Response
Actual
ActualDemand
Demand

Customer Focus vs. Product Focus

Cross-functional and cross-organizational process
integration
Leveraging relationships

High

Variety/Variabilit
y

AGILE

LEAN

Low
Low

High
Volume per variant
Source: http://www.martinchristopher.info/resources/powerpoints

High
Lean works best in
high volume, low
variety and predictable
environments.

Variety/Variabilit
y

AGILE

Agility is needed in
less predictable
environments where
the demand for variety
is high.

LEAN

Low
Low

High
Volume per variant
Source: http://www.martinchristopher.info/resources/powerpoints

Matching a Supply Chain with Products

Key Product & Demand Characteristics

Stages of the Product Life Cycle (PLC)

Introductory
Stage

Growth
Stage

Maturity
Stage

Decline
Stage

Dollars

Sales

AGILE

AGILE

LEAN
Profits

0
Time

LEAN

Sense and Respond

Without Demand
Information

Why didnt you

produce enough?

In June

Big Order!
June

With Demand
Information

In May
Sales are Up!
May

I better
get to
work since
we will
probably
have a big
order in
June

Supply Chain Visibility Types (Sensing)

Market

Customer

Supplier

Marketlevel
demand
Marketlevel supply

POS
Forecasts
Inventory
levels
Promotional
plans

Inventory
levels
Order lead
time/deliver
y
Advanced
shipment
notices
(ASNs)
Finished
goods

Source: Williams, B.D., Roh, J., Tokar, T., Swink, M. 2013. Leveraging Supply Chain Visibility for Responsiveness: The
Moderating Role of Internal Integration Journal of Operations Management 31(7-8), 543-554.

Sense

Respo
nd

Agility

Volume
Flexibili
ty

New
Product
Flexibili
ty

Respo
nd

Variety
Flexibili
ty

Customizat
ion
Flexibility

Source: Williams, B.D., Roh, J., Tokar, T., Swink, M. 2013. Leveraging Supply Chain Visibility for Responsiveness: The
Moderating Role of Internal Integration Journal of Operations Management 31(7-8), 543-554.