What is an agile supply chain strategy?

An agile supply chain strategy is, at its core, an actionable solution to complex logistical challenges in our modern, interconnected world. While agile supply chain strategies will look different for each unique organization, the most effective agile supply chain strategies share the common aim of ensuring flexible, responsiveness protocols to enable quick adaptation to: 

1. Fluctuating market conditions
2. Evolving customer demands
3. Expected (and unexpected) supply chain disruptions

Throughout this post, we’ll discuss:

• Why supply chain agility is vital for modern organizations
• The benefits of an agile supply chain vs. traditional approaches
• The core challenges that businesses can expect to face
• Proposed strategies for overcoming these challenges

Why is this supply chain agility so important?

Irrespective of what we believe at Fresh, more than 50% of business leaders communicate that their supply chain needs to improve. The same report confirms that 60% of these businesses believe underperforming technology is a key culprit leading to inefficiency, and the greater adaptability and resilience in this area are vital.

Industries across the spectrum are experiencing evolution because of the availability of emerging technology. Disruptive events—from geopolitical tensions to adverse weather conditions that impact transportation management, aging transportation fleets, or any number of other obstacles that businesses face—present a unique opportunity to consider fresh approaches to historical challenges. 

Agility—flexibility, responsiveness, and quick adaptation—is vital. Becoming more agile in their supply chain is a key element of improvement business leaders should pursue; additionally, updating infrastructure with new technology integration can move the needle in a truly impactful way.

Remaining nimble is critical, and logistics platform tools that yield data-driven insights to real-time supply chain monitoring, automation, and cloud-based infrastructure are readily available to help businesses bridge any gaps they have. As the historical foundations of supply chain management continue to change and present new challenges and opportunities, the Employing agile supply chain strategies will put businesses in the best position to gain a competitive advantage now and in the future.

Critical supply chain challenges and agile supply chain benefits

Investopedia’s “supply chain” definition serves as a great starting point in understanding the core challenges today’s manufacturers and distributors face:

“[A supply chain is] a network between a company and its suppliers to produce and distribute a specific product to the final buyer [ . . . ] it includes different activities, people, entities, information, and resources.”

The specifics are worth unpacking, especially in light of traditional notions of a supply chain versus modern realities. 

Traditional supply chains operated, to some extent, based on static forecasts, fixed schedules, and historical data that was reasonably consistent. At a certain scale, the approach worked. But as our world has become increasingly intermodal (a transportation fleet operating through innovative port systems by road, rail, ocean, and air to get a product from Point A to Point B), the old way of doing things is no longer feasible.

Fortunately, numerous technology integrations are available to close the distance between a company and its more advanced competitors quickly. Some companies still operate a pen-and-paper ledger; modern ERPs (enterprise resource planning systems) can provide an immediate upgrade. Companies can more readily overcome common challenges including limited visibility because of a lack of real-time supply chain insights, inventory challenges (overstocking and understocking), rigid systems that require manually addressing disruptions, and a lack of cost effectiveness in light of changing customer demands. 

Supply chain definitions and differentiators 

Inchainge offers a great set of definitions to understand modern supply chain strategies:

• Lean supply chain: “Lean supply chain management is about eliminating waste, and as a result reducing cost. The lean approach is focused on efficient, streamlined operations and eliminating anything in the process that does not add value to the product or service that is delivered to customers.”
  
• Resilient supply chain: “The resilient supply chain requires two critical capacities : the capacity for resistance and the capacity for recovery. The first, resistance, defines the supply chain’s ability to delay a disruption and reduce the impact once the disruption occurs. The second, recovery, defines the supply chain’s ability to recover from a disruption.”
  
• Green supply chain: “Green Supply Chain Management aims to integrate environmental thinking into supply chain management. This includes product design, material sourcing and selection, the manufacturing process, delivery of the final product to consumers, and end-of-life product management.”
  
• Agile supply chain: “Agile supply chain management prioritizes adaptability. It is designed for a highly flexible environment to react in accordance with the market changes and volatility. This makes a supply chain more responsive and able to deal with sudden changes with the required speed and flexibility.”

The different strategies aren’t necessarily at odds with each other. Each has value depending on the scenario an organization faces. The same article elaborates that “what is prevalent in most successful transformations is that the supply chain and the overall company goals are well aligned. And the opposite is also true: if they are misaligned, then business outcomes will suffer. In other words, a company’s supply chain strategy should be derived from its corporate strategy.” 

The critical aim? Optimizing customer experience end-to-end

With a modern emphasis across industries on improving customer experience via end-to-end customer experience strategy, agile makes sense. It’s a flexible and proactive approach to market fluctuations or unforeseen supply chain disruptions, scaling operations up or down quickly to meet fluctuating customer demands.

With the continued evolution of Industry 4.0, adherents of agile can pivot in response to new technologies, regulatory changes, or shifting consumer demands, maintaining a competitive edge with:

• Enhanced Responsiveness and Optimization: Responding swiftly to unexpected changes in demand or supply and enabling nimble, data-driven decisions.
  
• Reduced Lead Times: Improving service levels, currently shipment efficiency, and future shipments optimization through quicker order fulfillment and delivery.
  
• Increasing Market Competitiveness: Strategic execution for adapting quicker than competitors to enhance market positioning.
  
• Strategic cost reduction: Whether via efficient inventory management or decreasing the impact of pivots because of uncontrollable circumstances, efforts to reduce spend are critical.

Agile supply chain strategies: Key focuses

Navigating supply chain complexities with an agile approach requires several key initiatives. In the next sections, we’ll discuss each one, as well as examples of how this has shown up in the work we’ve done at Fresh.

Workflow alignment: Enabling flexibility, efficiency, adaptability, and resilience

Achieving an efficient physical movement of goods while balancing cost and speed is a fundamental goal of agile supply chains. Ultimately, these efforts enhance customer service, whoever the end customer is. But aligning workflows precedes adoption of any silver bullet cloud-based logistics platform, WMS (warehouse management system), or other technology integration, because it simply doesn’t exist. Each organization’s challenges will have nuance, so some level of customization is vital to facilitate powerful data-driven decisions.

Ensuring every supply chain element (from procurement to distribution via ports and other intermodal hubs) is streamlined for optimal performance is necessary to achieve an efficient flow of goods, while balancing costs and speed. By mapping out workflows and identifying bottlenecks, businesses can implement changes that improve transportation management, improve operational efficiency, save time, and ensure that any technology adopted enhances strategic processes rather than adding additional complexity.

The Need for Effective Demand Forecasting and Optimization

For effective agile supply chain strategies, demand forecasting is critical. Accurate demand forecasting allows businesses to anticipate consumer needs and adjust their operations accordingly. This entails utilizing demand forecasting software powered by predictive analytics, AI, and robust statistical methodologies. By leveraging advanced modeling techniques and utilizing various data sets, organizations and intermodal distributors can predict future product demand with higher precision, as well as improve outbound and inbound freight coordination, depending on where they lie in the supply chain.

Key components include:

• Inventory Management: Accurate forecasts lead to optimal inventory levels, reducing excess stock and stockouts that make it difficult to enhance customer service. Utilizing demand planning software can streamline this process via greater visibility, ensuring that inventory is aligned with consumer demands and that manufacturing resources are efficiently utilized. Adopting tools for warehouse management and streamlined order fulfillment—often enabled via robust WMS (warehouse management system)
  —are key considerations for businesses.
  
• Synchronized Production and Scheduling: Effective demand forecasting informs production scheduling, ensuring that the manufacturing process meets anticipated demand. This synchronization is vital, as it helps to balance capacity requirements across machinery, labor, and raw material lead times.
  
• Minimizing Downtime and Waste: By aligning workflows, companies can minimize machine downtime, waste, and delays. Implementing strategic production and scheduling techniques allows manufacturers to deliver finished goods promptly and reduce cost. Businesses can achieve this by developing accurate production schedules that reflect labor resources, machine availability, and material readiness. These efforts, related to effective warehouse management, are also critical in ensuring accurate order fulfillment and timely product shipments.

The Role of Technology: A Harbor Hub Case Study

Integrating technology into demand forecasting enhances the precision of predictions. Advanced algorithms and AI systems can analyze historical data patterns, market trends, and seasonal variations, allowing companies to generate accurate forecasts and other valuable insights. This proactive approach to forecasting empowers organizations to:

• Adjust Inventory Levels: Knowing expected demand helps businesses maintain optimal inventory levels, ensuring that they can meet customer orders without carrying excessive stock, effectively managing outbound and inbound freight coordination.
  
• Manage Manufacturing Resources: Accurate forecasts allow production teams to allocate machinery and labor efficiently, while also planning for raw material procurement based on predicted needs.

Fresh delivered a project for Harbor Wholesale, the largest independent distributor in the Northwest. As one of the most innovative wholesalers in the industry, they came to us because they define the leading edge and develop organizational strategies to compete with larger national brands. Our job was to think through how to leverage and unify their existing systems and workflows while creating a tool for more seamless inventory management.  

Key focuses of the Harbor Hub project included:

1. Conducting field research with Harbor’s clientele to establish an authentic, consistent user experience across all customer touchpoints
   
2. Completing extensive technical planning, including API research and  proposing an architectural stack
   
3. Diagramming their various technological systems to account for future integrations and scalability

Delivering results

When workflows are aligned through effective demand forecasting, organizations can achieve a seamless flow of operations. The end result is a supply chain that operates efficiently, with reduced costs and enhanced speed in delivering products to customers. By focusing on demand-driven decisions, businesses can not only improve their responsiveness but also strengthen their competitive position in the marketplace.

Aligning supply chain workflows is not just about operational efficiency; it is about creating a cohesive system where demand forecasting informs all aspects of the supply chain. By investing in technology integrations and adopting practices that enhance forecasting accuracy, companies can optimize their operations and better meet the challenges of a rapidly changing global environment.