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Supply Chain Industry Updates

You Want to Be More ‘Agile.’ Great, But How Will You Do It?

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Supply chain professionals are overwhelmingly interested in making their supply chains more “agile” (we know because 89% said so in a recent survey) and “resilient” (87%) in the next two years.

Of course, that’s a little like someone resolving to become more “healthy” or “mindful.” Those are wonderful adjectives, but what exactly is meant and how will it be achieved?

“Sixty percent admit that their supply chains have not been designed for resilience, but cost efficiency,” said Geraint John, vice president/analyst with the Gartner Supply Chain practice. “The challenge will be to create an operating model for supply chains that combines the best of both worlds and also delivers supreme customer service.”

Gartner defines “resilience” as “the ability to adapt to structural changes by modifying supply chain strategies, products and technologies. “Agility,” meanwhile, is “the ability to sense and respond to unanticipated changes in demand or supply quickly and reliably, without sacrificing cost or quality.” The first sounds more proactive than the latter, but both are easier said than done.

How do organizations meet either goal? “In practice, the concrete investments [required] will likely be a series of activities ranging from incremental projects in small firms to transformative capital investments by global industry leaders,” John explained. “We see that many organizations are investing in diversifying their supply base and redesigning products to mitigate risk. More collaborative relationships with key customers and suppliers is also a priority for almost all respondents.” Automation is another tool at their disposal.

Of course, like the person who resolved to be more healthy but is continually tempted by unhealthy snacks and sedentary habits, supply chain professionals are swimming against strong crosscurrents. These can take the form of customers, whose demand for low prices might make it tricky to follow through on the organization’s goal of reshoring certain manufacturing operations.

“Forty-five percent of survey respondents think that their customers favor low pricing over domestic sourcing and production — particularly in industries with ferocious price competition, such as retail and fashion,” Gartner explained in a statement. “Cost differentials and cost-efficiency will remain key considerations for these supply chains — as for others — when evaluating any redesign of their operational networks. Almost half of survey respondents see lean methodologies, just-in-time systems and low-cost country sourcing as relevant to future strategies.”

Of course, continuous improvement is in the DNA of most organizations (and people), and we wish you success on your journey. Gartner offers downloadable advice here, as well as in its report: Future of Supply Chain — Crisis Shapes the Profession.”

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