Effective Supply Chain Management through Alignment, Agility and Adaptiveness

Unfortunately the understanding and implementation of supply chain management concepts are at a crude state. Many firms view supply chain a way to achieve high speed and low cost. But supply chain is a broader concept and covers multiple business dynamics beyond high speed and low cost. Firms that focus only on speed and efficiency may lose out due to piling inventory. On the other hand companies like Amazon, Dell and Wal-Mart have cracked the codes of SCM.

Only speed and efficiency are not sufficient to provide firms competitive edge. Effective SCM also requires Alignment, Agility and Adaptability[1].

Alignment

Alignment within the supply chain requires the firms to establish incentives for the supply chain partners to improve performance of the entire chain. The roles and domains of activity of each partner have to be clarified. This will avoid conflict. The risk and rewards in the chain should be shared proportionately in the chain. Information sharing and collaborative planning and forecasting provides scopes to align the supply chain for a common goal.

Agility

Agility refers to the ability to respond to short term changes in demand dynamics quickly and effectively. It requires timely sharing of information amongst supply chain members. Agility in supply chain is agility of all the members of the chain. Collaboration with customers, supply chain partners, academicians to improve the agility of the chain provides an edge over the rivals. Precise information on customer preference is prerequisite for effective SCM. But when customer demand changes in short term, the chain should be able to achieve to deliver the customer expectations. Producing finished product only when customer preference is accurate and reliable saves obsolence cost. The response time for unpredictable change in customer demand could be minimized by keeping a balanced inventory of basic components.

Adaptability

Adaptability of a supply chain is its ability to track market changes and to adjust with the evolving market dynamics. Supply chain has to undergo a continuous organizational mutation to be adaptive. Tracking economic changes, technological breakthroughs, sensing the social-political-cultural morphism of the market helps in the process of adaptation. Supply chains need to identify their resource base, ability to use the same resource base in future needs are crucial.

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[1] Hau L Lee, The Triple A Supply Chain, Havard Business Review, Oct 2004