The modern supply chain management strategies and techniques are used by firms to obtain a strategic advantage by adjusting to the demands and satisfaction of all players in the supply chain. Because of the decreasing costs of changes in the chain of operations, the frequent choices made by business units grow faster and more efficient as a result of product and service diversity (Wang, Han & Beynon-Davies, 2019). As a result of the difficulties, customers are under increasing pressure to extend their product offerings, offer superior supplementary services, and alter their terms more easily, as well as to keep their prices competitive. It is indeed important to keep in mind that, along with the physical movement of products and services from suppliers to customers, there are also connections in the supply chain that involve the integration and optimization of information flow, which views itself as a distributed system for resources throughout the chain, as well as a financial flow, which takes the form of transfers of funds (De Angelis, Howard & Miemczyk, 2018). Good supply chain management, on the other hand, includes anticipating client needs, preparing ahead of time, and then ensuring that the proper product or service is manufactured and delivered to the right location at the agreed upon time. Because of this, the company’s “customer satisfaction” centred approach focuses on providing quality and timely service at a reasonable price, while being aware of market developments.
According to the various researches, the application of Lean and Agile methods has a direct correlation with an increase in operational performance. As a result, clients gain actual value from the practises and concepts of these approaches, which are designed to decrease waste of all types and increase process flexibility (Mangla et.al, 2018). Companies that build and integrate their approaches internally with external clients and suppliers are also the most effective in their endeavours to date. The following section will discuss the aspect of the success and failure of supply chains are ultimately determined in the marketplace by the end consumer focusing upon the aspect of lean and agile paradigms of suppl chain.
The customer is universally acknowledged as a critical component in any supply chain’s equation for success. Many methods exist to help companies to compete for customer utilization of their products and services. As a result, the company’s capacity to make sure that a product is provided at a reasonable price and at an acceptable time is critical. When the market and its limits are understood, strategies may be designed to satisfy both the demands of the supply chain (SC) and those of the end consumer. With this in mind the lean and agile paradigms have been established to better manage business interactions with the clients as well as suppliers. Further, the administration of the global supply chain should focus on logistics in order to ensure that items flow from the site of production to the point of consumption in an effective manner. Customers are at the centre of these trends, which emphasise teamwork and a focus on the larger picture, according to the information provided (Braziotis, Bourlakis, Rogers & Tannock,, 2013). Customer demands must be at the forefront of any supply chain planning. To put it another way, this means that supply chains exist only for the purpose of getting a product to the end customer. It also points up the realities of rivalry in the workplace. If a firm regularly satisfies the demands of its clients in a timely way, it will be successful in the long run. Uncertainty in the supply chain as well as the necessity to design a supply chain that fulfils the market’s needs (end customer) (Hearnshaw & Wilson, 2013).
Lean is described as the mechanisms of building a value stream that maintains a consistent schedule with the elimination of all waste, involving time as well as inefficient processes and activities. Womack invented the word in the late 1980s to refer to Toyota’s strategy of optimising manufacturing in order to provide greater customer value with less resources. Leanness pervades the SC’s design, innovation, thinking, and dissemination. The agile paradigm has been suggested as an alternative to the lean paradigm by certain academics. Many others have made the argument that agility, rather than leanness, should be the ultimate objective of company in today’s competitive regime This is an oversimplification of the two paradigms, as they fail to match appropriate SC design to needed structures and are unable to account for generic product categories (Seay & Narsing, 2013).
The term “agile supply chain” relates to the management of how successfully a supply chain organisation performs on a daily basis using responsiveness, competence, adaptability, and rapidity. To increase total efficiency and production, agility is used in place of lean supply chains, which rely solely on data from the past, rather than on real-time information from current operations (Wang, Han & Beynon-Davies, 2019).
Inventory overstock and possible shortages may both be avoided by increasing supply chain agility, which reduces costs. A traditional approach to lean manufacturing was to overstock inventories. Because of the lean philosophy’s emphasis on streamlining operations, several organisations in the supply chain have found themselves with excessive inventories. However, as the economy, customer demand, and the increasing customisation of items have changed, inventory has been unable or undesirable over time, resulting in wasted expenses (Tachizawa & Wong, 2014).
The overall movement of materials from suppliers to customers is what supply chain management is all about. It primarily focuses on sustaining a supply chain from the manufacturer to the end-user (Kain & Verma, 2018). Managed supply chains may be seen as a way to improve customer value and gain competitive advantage by focusing on the production of products and services, sourcing, as well as working frameworks. By delivering items from suppliers, supply chain management is able to achieve consistency amongst some of the aims of advanced customer provision, inventory control including its management, and cheap unit value. In spite of this, supply chain management includes principles that may be used directly or indirectly by any firm or supply chain participant (Mangan & Lalwani, 2016).
Many trends have emerged in reaction to the shifting needs of customers and the shifting dynamics of supply networks in 21st century. Among these developments include, but are not restricted to:
Businesses are turning away from providing all of their clients with high-quality customer care. As a result, they are now offering tailored services to clients across the board based on the relationships they have built with them. Every consumer should be treated as a unique individual because it is so difficult to please everyone (Govindan, 2018). Collaboration with important clients to provide value-added services and service standards is the most recent adjustment made here, as a result.”
Supply chain collaboration is the new focus for companies, rather than competition among supply chain participants, as a means for enhancing the quality of goods provided to the end consumer.
Transformational Agile and Incremental Change
Agility is a broad phrase that refers to a company’s capacity to respond quickly within its supply chain to risks, opportunities, and shifts in the external environment. Because of this, long-term policies that are more akin to supply chain plans are becoming more common (Seay & Narsing, 2013).
Functionality and Process Streamlining
The majority of supply chain experts agree that cross-functional integration is a critical component of supply chain maturity. Many companies have shifted their focus from operational to strategic goals, and this shift has resulted in a shift from operational success to strategic success.
Businesses are no longer measuring a company’s performance based on the amount of sales, but rather on the quantity of profits from major clients. As a result, modern organisations use the perfect order metrics idea to define success in the eyes of the customer. A company’s overall supply chain performance may be summed up using these four measures.
Technology supplementing supply chain
As companies move into 2020 and beyond, new tools and technologies will be essential for the survival of supply chain teams. More precisely, within the next four to five years, more organisations are projected to adopt the usage of autonomous mobile robots (AMR). Automating and streamlining the selecting and packaging process is one of the main benefits of using this technology (Panwar, Nepal, Jain & Rathore, 2015).
IoT makes warehouse smarter
Supply chain technology is projected to grow increasingly integrated with other such tools as well as becoming more specialised. This highly integrated and specialised technology, then, will almost surely lead to a tremendous increase of productivity in the supply chain activities of those organisations who embrace it.
Using customer behaviour as a key input, supply chain rules may be improved with the help of end-casting. In this way, companies organise transactions based on past drifts that are accurate and quick responses to partners in the supply chain and customers. These improvements have distinctive qualities, such as customer attention and cooperation, and this is obvious. As a result, they are also pointing out that the whole image is important. Because this illustrates that the supply chain strategy must always begin with the customer, both today and in the future, it is clear “Customers are the final judge of the success or failure of supply chains in the marketplace (Ciampa & Nagel, 2017). In order for a company to survive, it must be able to provide a product at the right price, at the right time, and at the right place.”
A key point made here is that the whole supply chain exists to serve the end user, and this should be a top priority for all parties involved in the chain. In addition, the focus on the customer’s requirements and desires shows that competition among enterprises is based on satisfying those needs and wants. Accordingly, a company with a strong track record of delivering on client demands, wishes, and desires in a timely manner will thrive in the long run.
The distribution model inculcates the aspect of managing inventory, stock effectively by managing various models in that context whether lean or agile-
Supply chain management relies on inventory management since it accounts for 20-60% of a manufacturing company’s assets. SCM undertakes a holistic approach to SC issues. Inventory management is the process of maintaining adequate amounts of inventory in relation to the number of orders that have been received. Orders, demand, as well as inventory data are quickly transmitted back and forth between companies (Ciampa & Nagel, 2017). It is necessary to gather information at point-of-sale terminals and share it with all levels of the supply chain using electronic data interchange. The lean paradigm emphasises stock holding and inventory management since it aims to decrease waste at every supply chain (SC) node. As a result, there is a lower overall price for the customer. There are two distinct parts to the SC: one that responds immediately to customers and one that employs a strategic stock and future planning to protect against fluctuations in demand (Sharma et.al, 2021). The SC seems to be either upstream or downstream of the decoupling point, as well as the customer is responsible for any product withdrawals. According to their explanations, the client is responsible for activating five different SC categories-
In order to avoid overstocking or running out of product, managers that use this method ensure that they accurately estimate demand from consumers. Each of these solutions relies heavily on the use of information technology, which helps reduce lead times and increase shipping frequency. To put it another way, this decreases the time and cost of processing orders (Raji, Rossib& Strozzi, 2021).
Manufacturing, purchasing, transportation, and distribution are all included in this category of activities. It then integrates suppliers and carriers in a continuous process that encompasses all of the nodes (Raji, Rossi & Strozzi, 2021). Warehouse and inventory management or incoming or outgoing transportation are examples of SC operations.
The supply chain which is both lean and agile is essential in today’s fast-paced global economy. A hybrid approach to supply chain management refers to one that incorporates both lean and agile principles. In order to become a “mass customizer,” a corporation may choose to use a hybrid supply chain approach, which involves creating smaller and smaller batches to meet the sometimes-unique demands of individual clients. When it came to trash, Henry Ford shook things up in the decade after his company’s founding. In his book, “My Life and Work,” he described the act of a farmer bringing water up a ladder rather than installing water pipes as “waste motion,” and he demonstrated that making improvements was not a waste of time and money but rather a means of improving productivity and reducing waste (Christopher, Harrison & Hoek, 2016). In the early 1990s, the U.S. began to brand products as they were perceived by customers, rather than manufacturers, the emergence of value pricing, perpetual inventory replenishment, using electronic data interchange, novel approaches of performance evaluation, and change management, as observed in the efficient consumer response.
Toyota has become one of the world’s top three automotive companies because to its ‘Lean’ philosophy, which is now being adopted throughout the world. TPS (Toyota Production System), a unified socio-technical system that includes Toyota’s management philosophy and practices, has a major influence on the lean manufacturing concept. It is an approach to complicated organisational design that takes into account the interplay among people as well as technology in the workplace. Amazon, for example, employs these approaches to modify pricing and inventory levels in real time, among several other things, in reaction to competitors’ actions (Ciccullo et.al, 2018).
Focusing on delivering value to consumers while eliminating waste—anything that does not provide that value—is the primary goal of a Lean supply chain. When it comes to the supply chain, being efficient and responsive means that it can manage a steady influx of new, creative items with speed and flexibility. Zara, a Spanish apparel designer and retailer, is an instance of a firm that uses a hybrid strategy in its supply chain. Most of Zara’s products are made in-house, including cutting, dyeing, labelling, and packing. This allows Zara to enjoy economies of scale. Dedicated subcontractors conduct various finishing activities that cannot be accomplished in-house (Ahmed & Huma, 2021). For this reason and others, ZARA’s distribution network is nimble, adaptable, and built on a foundation of lean principles. Flexible production and distribution models are used by several semiconductor manufacturers. Various manufacturing processes are carried out by sub – contractor in physically separate places (Botha, Grobler & Yadavalli, 2017). Zara’s in-house process-shifting strategy is in many respects the antithesis of this hybrid approach’s reliance on an online network of manufacturing partners and its requirement for responsive, flexible, and data-driven operations in sourcing, production, and distribution Hybrid supply chains are a viable option for a large number of businesses. When it comes to today’s turbulent and competitive global market, a company’s greatest interest may be served by a supply chain which is both lean and agile (Chalotra, 2013).
Conclusion
It is widely accepted that market circumstances have a significant role in the selection of a paradigm. In circumstances where consumers’ demand is consistent and predictable, the lean paradigm is the ideal choice. When it comes to agile paradigms, the requirement for variation and volatility are best suited to these situations. As a result, each of these paradigms has an effect upon the capacity of business to swiftly address the demands of the consumer. To take use of the best of both paradigms, some researchers have constructed models termed agility that blend the two paradigms. Managers will still look for ways to cut costs across the board, whether it’s in the production process, inventory, or distribution. To guarantee that the proper product or service is provided on time and within budget, a variety of strategies will be utilised. Any way you look at SCM, many people would agree that a company’s performance will be damaged if consumers do not use or demand for a product is low. Decisions must be taken to determine why the client or market isn’t interested in a product or service. A model or paradigm is needed in this circumstance to guarantee that a firm does not store excessive stock when demand is low or inventory is insufficient when demand is strong. Consequently, the elimination of waste as well as excess processes in a SC is vital to better serving clients in accordance with market pressures. The new “lean” business model has far-reaching effects on how companies operate.
References
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