[FR] Agile supply chain: the methodology for increasing your operational efficiency

In recent years, the world of logistics has been put to the test by successive crises: the rise of e-commerce, which is increasing competition on all markets, rising prices for many raw materials, difficulties in recruiting talent since the health crisis of 2020…

What if the answer to these problems could be summed up in three words: agile supply chain? Focus on this methodology, its benefits, and the keys to deploying it in your company.

An update on the evolution of supply chain management in recent years

As a logistics specialist, you’re well aware that the last few years have been punctuated by a number of unforeseen events, and that the market is becoming increasingly difficult to understand.

• Your environment is becoming more competitive, particularly at global level, with emerging countries standing out for their resilience, or with pure players making the digital world their own. You now need to adapt continuously, to differentiate yourself and respond to market demand.
• Customers are more volatile. Increased competition means unstable demand from customers, who are demanding ever greater responsiveness and flexibility when it comes to their orders, while keeping an eye on the price. Demands are increasing: your company needs to know how to deal with them.
• External events regularly disrupt the supply chain. These can be geopolitical or economic events, which companies have to deal with in terms of both supply and distribution.

Today’s supply chains operate in an uncertain world, where they have to take many parameters into account. As a result, it is increasingly difficult to plan operations in advance. This is where the agile supply chain comes into its own.

What is agile?

Here’s a closer look at this methodology, and how it applies to supply chain management.

A simple definition of the Agile method

The Agile method is originally a collaborative method used in software development, based on end-customer demand. The idea is to develop products in iterative stages, gradually incorporating customer feedback.

Applied to the supply chain, the Agile method involves making the supply chain more flexible and faster to respond to market movements.

There are two different types of agility:

• Structural agility, which consists of rapidly realigning purchasing, stock flows and the use of resources throughout the supply chain in the face of a disruptive event. Its aim is to enable business to be increased or reduced in line with market opportunities or needs.
• Operational agility, which refers to a set of simplified processes enabling a rapid response to unforeseen changes. Its objective: to plan logistics operations in real time to meet actual market demand.

Be careful not to confuse agility with resilience

The term “resilient supply chain” is often used. While this term may seem similar to “agile”, it is important not to confuse them.

• Resilience refers to the supply chain’s ability to react to a disruptive event and return to normal activity. It is a kind of emergency adaptation.
• Agility refers to the minimisation of risks and potential crises, by eliminating bottlenecks in a preventive manner. It is more a question of continuous adaptation, naturally integrated into the way the company operates.

4 good reasons to switch to an agile supply chain

If the logistics function is increasingly adopting the “agile supply chain” methodology, it’s because the results can be dazzling.

Thanks to this method, companies are seeing :

• Increased customer satisfaction. You’re better able to respond to changing customer and market demands, and to do so with even better delivery times. This significantly improves the customer experience.
• Improved operational efficiency. The agile supply chain involves implementing well-oiled processes and using digital technologies to increase the efficiency of the various parts of the supply chain.
• Lower costs. Optimising your operations leads to savings at every level of the supply chain (procurement, storage, transport, etc.).
• Improved eco-responsibility. By making the supply chain agile, you waste less raw materials and energy, use less floor space in the warehouse and optimise your delivery rounds. All these changes have a positive impact on the environment.

In short, an agile supply chain increases a company’s competitiveness in a world where there are many unforeseen events and potential risks.

The 3 pillars of agile supply chain success according to Gartner

In one of its recent publications, the renowned consultancy Gartner unveils the pillars of success for an agile supply chain.

There are three of them:

• Strategy. Making a supply chain agile means putting in place strategic forecasts, in particular risk forecasts, to deploy scenarios that enable it to remain resilient in the face of the complexities it has to deal with.
• Costs. Cost optimisation in agile methodology is based on a financial strategy that relies on innovations that can create a disruption in relation to the competition, as well as fine monitoring of the metrics linked to these investments. In short, you need to be able to take financial risks to stay one step ahead of the competition.
• Talent. An agile supply chain needs teams with the skills to remain flexible. According to Gartner, this also goes hand in hand with a genuine strategy for retaining employees, which helps you to remain competitive.

8 practical keys to an agile supply chain

In practical terms, what does an agile supply chain look like? Here are eight keys to starting to develop the agility of your supply chain.

Plan the supply chain by prioritising activities

Agile supply chain planning means first and foremost continuously monitoring market trends, anticipating potential demands and disruptions, and creating scenarios to establish priorities.

For example, this prioritisation strategy means prioritising order preparation (particularly in the event of a peak in activity). You prioritise the orders that add the most value to the business, so as to maximise sales and be able to reinvest your margins in more resources.

A real-time view of the entire supply chain

Agility means having a 360° view of the supply chain, so you can take quick decisions in the event of a disruption. This is where digitalization is your ally.

Set up an information system that ensures the traceability of all your operations: software for supply management, another for stock management (WMS), yet another for transport management (TMS), etc.

Establish solid collaboration between the company’s divisions

To obtain a clear, real-time view of the situation of your company and your market, you need to ensure that you work closely with all the divisions in your organisation.

So deploy processes that enable you to gather all the necessary data from your product, marketing, financial and customer relations departments.

Deploy a risk reduction strategy

When you have a clear view of the state of your supply chain at any given moment, you can analyse the risks that exist. Identify the areas of vulnerability in your supply chain, and develop strategies to increase its robustness.

For example, you could decide not to rely on a single supplier or transport provider, to limit the risk of stock-outs or delivery delays.

Streamline decision-making

Any agile supply chain relies on relevant key metrics that enable managers to take quick decisions when faced with a vulnerability. But to do this, you need to put in place an internal governance system that can quickly put these decisions into action.

In short, the supply chain director and/or logistics manager must be able to take strategic decisions without necessarily having the approval of their management, so that they can react quickly to potential disruptions.

Implementing appropriate stock management

Now that you have a real-time view of your market, your demand and your stocks, you can implement a “just-in-time” stock management method. The idea is that you only order and stock the goods you need to meet current demand. This allows you to reduce warehousing costs, avoid overstocking and maximise your profitability.

This warehousing strategy involves setting up a replenishment point (i.e. a stock level beyond which a product must be reordered), while keeping a safety stock to meet potential demand.

Using logistics technologies to streamline the supply chain

As you read earlier, logistics software is essential to ensure the agility of a supply chain. But don’t hesitate to look beyond these technologies, and study the potential benefits of other innovations.

For example, robotisation and automation can enable you to prepare orders more quickly, particularly during peak periods.

To find out more, read our article “Digitalisation of the supply chain: where do we stand? Where are we heading?

Genuine change management

Making your supply chain agile is also a question of people.

On the one hand, you need to make your top management understand the Agile methodology, and in particular the need to make decision-making more flexible in order to increase your competitiveness.

On the other, you need to mobilise and train your logistics teams in agility. They must be equipped with the skills needed to remain agile (cross-functional tasks in warehouses, ability to handle logistics technologies, autonomy in order management, etc.). What’s more, they must be ready to embark on a process of continuous improvement of logistics processes, and to question pre-established rules if necessary.

In short, making your supply chain agile requires a skilful blend of strategy, technological tools and people ready to innovate and evolve continuously. Are you ready to deploy this methodology in your warehouse?