Supply chain management is essential to the success of many businesses. This feature is particularly essential in production and manufacturing organizations since it can affect lead times and the company's response to consumers' needs. Fortunately, a supply chain can be adapted to the demands of a firm, making production more efficient and facilitating the resolution of certain challenges. Regarding the form and administration of the supply chain, the companies in the two described scenarios have diverse demands and expectations. A competent supply chain management plan could aid both firms in raising output, hence boosting their market success.
Agile and Lean Supply Chains
This assignment focuses on two key supply chain types: lean and agile. Lean supply chains concentrate on avoiding waste and improving production to ensure short lead times and superior product quality (Bhamu & Sangwan 2014). This entails minimizing or removing manufacturing process operations that do not provide value (Carvalho, Azevedo & Cruz-Machado 2014). For instance, lean supply chains focus on creating a fixed number of product options from a restricted amount of raw materials (Jasti & Kodali 2015). This is advantageous for producers because it allows them to eliminate the need for variance in production while maintaining product quality. Lean supply chains also permit the application of standardized quality assessment procedures, which contributes to the final product's quality (Roh, Hong & Min 2014). On the basis of this summary, lean supply chains are more efficient, but only suitable for businesses with little product variety, such as Company B. They also aid in reducing waste and lead time, which are the most pressing concerns facing the firm.
Agile supply chains are frequently contrasted with lean structures due to their divergent focus, objectives, and outputs. According to Crandall, Crandall, and Chen (2014), agile supply chains prioritize the delivery dependability and product variability requirements of the client. This enables flexible supply chains to respond to client needs more effectively while reducing lead times and increasing production capacity (Gligor, Esmark & Holcomb 2015). Agile supply networks are more flexible than lean supply chains, which permits product customisation and the production of made-to-order products. Purvis, Golsa, and Naim (2014) also remark that agile supply networks increase product and volume flexibility. Consequently, a flexible supply chain will be able to provide varying product volumes with variable attributes in order to meet consumer expectations.
Given that at least fifty percent of the items manufactured by Company A require partial or complete modification, an agile supply chain would work best for this business. It would also enable Company A to fulfill orders quickly because agile supply chains can reduce the amount of time needed for customization by establishing a flexible network of raw material suppliers (Ciccullo et al., 2018). Consequently, the company would be able to address its primary production concerns and become more efficient if it chose this choice.
Researchers add that organizations can also mix agile and lean supply chain characteristics to enhance performance gains. According to Purvis, Gosling, and Naim (2014), this method entails either maintaining a flexible network of suppliers with fixed production levels or employing a fixed number of vendors with variable production volumes. This supply chain model was motivated by current supply chain management advancements highlighted by Christopher and Ryals (2014). The authors notice a growing trend toward modeling supply networks based on demand, which necessitates both adaptability and waste reduction. Consequently, demand chains are developed, which serve the same functions as supply chains but with greater structural and functional diversity (Christopher & Ryals 2014). Company A may benefit from the combination of lean and agile frameworks employed in demand chains, as the company still produces a considerable proportion of typical, high-volume products. However, the implementation challenges associated with mixed supply chains or demand chains indicate that it would be more advantageous to transition to an agile supply chain.
Benefits and Pitfalls
Lean Distribution Channels
Due to its focus and characteristics, lean supply chains provide businesses with several benefits. First, lean supply chains help manufacturers and other organizations reduce costs by ensuring that the amount of raw materials provided is minimum different from product demand (Martnez-Jurado & Moyano-Fuenmayor, 2014). This implies that manufacturers generate less waste during their operations, resulting in cost savings and higher productivity.
Secondly, research indicates that lean supply chains have a high correlation with sustainability. According to Martnez-Jurado and Moyano-Fuentes (2014), better production efficiency and decreased waste have a positive impact on the environment. In addition, the enhanced focus on product quality and bigger production volumes reduce the requirement for additional production capacity to be devoted to error correction. This results in the production process becoming more efficient and requiring less resources, hence contributing to sustainability. For instance, Zara's supply chain contains the lean supply chain attribute of reduced waste (Myerson 2014). This allows the company to profit from economies of scale while remaining sustainable, given its high production volume.
Additionally, the improved quality of final products is an important advantage of lean supply chains. By making standardized products from a predetermined range of materials, manufacturers can establish and apply a system for quality control and improvement, thereby enhancing customer satisfaction and avoiding production errors (Govindan et al., 2015). This characteristic of lean supply chain techniques is the fundamental reason why many renowned product quality manufacturers, such as Samsung, Apple, and Lenovo, employ them (Degun 2014). Therefore, the benefits of a lean supply chain are especially significant for businesses that prioritize quality, affordability, and waste reduction.
However, the fundamental disadvantage of lean supply chains is that they provide manufacturers minimal flexibility. According to Purvis, Gosling, and Naim (2014), lean supply chain solutions rely on standardized production quantities and decreased product variability to achieve optimal efficiency. These characteristics assist lean supply chains accomplish waste reduction and quality management. Nevertheless, some lean supply chains still possess some product-related flexibility. This is possible in the case of anticipated production modifications if the company's overall manufacturing capability is high (Carvalho, Azevedo, & Cruz-Machado, 2014). Therefore, this disadvantage solely affects manufacturing enterprises, such as Company A, who must produce customized items on short notice.
Lean Supply Chain
In contrast to lean supply chains, agile supply chains are primarily advantageous due to their improved production flexibility. Purvis, Gosling, and Naim (2014) demonstrate that agile supply chains enable businesses to manufacture varied products in varying quantities. This is an essential benefit for businesses that strive to meet the needs of their clients. Using agile supply chain management tactics, they can meet the client's needs in a short period of time, resulting in increased customer satisfaction with their products and services (Carvalho, Azevedo, & Cruz-Machado, 2014).
Companies utilizing this type of supply chain are also able to increase product prices and enhance their financial performance due to the increased degree of flexibility and emphasis on client needs and requirements (Gligor, Esmark & Holcomb 2015). This is mostly due to the fact that products that are customized and created on short notice bring added value to the consumer and hence cost more. Nike is one of the businesses that benefits from an agile supply chain (Pratap 2018). This decision enables the corporation to develop customised, higher-priced items, which has added to its earnings.
Another significant advantage of agile supply chains is their capacity to contribute to sustainability by minimizing the consumption of resources, such as electricity and raw materials. Ciccullo et al. (2018) emphasize that, despite the scarcity of study on agile and sustainable supply chains, the improved adaptability of this system enables resolving the excessive use of resources and minimizing waste. Therefore, flexible supply chains are especially advantageous for businesses with a high degree of product and volume customisation that seek to stay cost-effective and environmentally friendly.
An important disadvantage of agile supply chains is that they complicate particular manufacturing procedures, such as performance assessments and quality assurance. Singh Patel, Samuel, and Sharma (2017) demonstrate that a rise in the number of raw material suppliers may result in disparities in product quality, leading to consumer complaints and unhappiness. In addition, Purvis, Gosling, and Naim (2014) believe that agile supply chains necessitate a more sophisticated approach to supply chain and operations management due to the increased likelihood of production failures and operational disruptions. Therefore, management must pay greater attention to agile supply chains in order to assure the high quality of products and eliminate errors that damage consumer happiness.
A flexible supply chain would assist Company A, which should implement one in four distinct steps. Initially, the organization must assess the pricing and flexibility of its present suppliers (Webb 2017). Given the volume of orders that must be delivered quickly and with a high degree of customization, the company should analyze the delivery time and variability capabilities of its current suppliers. Eliminating providers that do not meet the specifications would aid in the development of an agile supply chain.
Company A's implementation approach should include an evaluation of the use of technology within the supply chain. Webb (2017) asserts that technologies can increase supply chain agility by facilitating communication between customers, manufacturers, and suppliers. Therefore, the organization should evaluate and implement accessible digital communication options. The third step in the implementation process would be to increase the adaptability of the current manufacturing procedures so that they can respond to alterations in supply chain agility without raising lead times. At this stage, a customizable performance evaluation system can be utilized to assess existing activities.
Company A should check the quality of raw materials and finished goods to ensure that the new supply chain has no detrimental effect on quality. Particularly, it would be advantageous for the company to choose a responsible individual who would conduct random quality checks in accordance with a specific assessment guideline that is appropriate for a variety of goods and materials (Siddhartha & Sachan 2016). This would allow the organization to increase customer satisfaction regardless of supply chain management changes.
Company B should adopt a lean supply chain with an emphasis on minimizing waste and lead times, according to the research. In order to accomplish this, the organization should conduct an analysis of its present supply chain to identify waste reduction targets (Crandall, Crandall & Chen 2014). For instance, if the company has three or four suppliers providing identical raw materials, it should evaluate their cost structures and dependability and select a single source with whom to continue working. This action would enable the organization to streamline its supply chain and remove waste, so improving its operations and supply chain management. In addition, the business would benefit from examining its contact with vendors and its use of technology to identify unnecessary stages that might be avoided.
Second, the company should minimize product and volume fluctuation whenever possible. This stage is vital since it would help to develop a quality assurance framework and reduce production waste and lead times (Jasti & Kodali 2015). In order to achieve this objective, it would be beneficial for the firm to assess its product line and minimize customisation alternatives. If clients frequently use the customisation tool to purchase products in the color burgundy, for instance, the company should consider substituting one of the less popular basic colors with it. This would make it possible to reduce the product line without affecting earnings or demand.
Implementing appropriate quality assurance and performance measurement systems is the third step in establishing a lean supply chain. According to Bhamu and Sangwan (2014), the incorporation of performance assessments and quality checks into the supply chain reduces lead times and product variance, hence facilitating the deployment of lean supply chains. Following these procedures would aid in transforming the current supply chain into a lean one, thereby assisting Company B in addressing its most pressing issues.
Successful Implementation Example
Walmart is a notable example of a firm renowned for its efficient supply chain. Wal-Mart is an American firm that serves numerous national and international markets, such as the United Kingdom, Canada, India, and Japan (Nguyen 2017). Wal-Mart sells a large variety of products, necessitating a robust supply chain to meet customer demand. The company decided to establish a flexible supply chain, allowing it to stay adaptable in terms of product diversity despite a high sales volume. Wal-Mart utilized technical advances, such as automatic distribution centers, in order to successfully implement this form of supply chain (Nguyen 2017). Additionally, the organization uses market intelligence to coordinate its supply chain by forecasting and planning demand, which is particularly important in the retail industry (Nguyen 2017).
Walmart's direct involvement with its suppliers is a crucial element of its nimble supply chain management. By removing intermediaries, the organization may assure that the required supplies and goods are supplied on time (Nguyen 2017). This facilitates the management of product quality as any faults may be communicated directly to the supplier. Inventory management is an essential component of Walmart's dynamic supply chain. Utilizing contemporary computer technologies, Walmart was able to record inventory data and share it with suppliers to facilitate rapid and effective collaboration (Nguyen 2017). These strategies may also be utilized by Company A to develop an agile supply chain.
Overall, lean and agile supply chains include both benefits and drawbacks that make them advantageous for various types of businesses. According to the findings of a study, agile supply chains are better suited for businesses that offer clients customized options and hence demand greater product and production volume flexibility. In contrast, lean supply chains restrict flexibility in order to decrease waste and boost production efficiency. In the selected scenarios, Company A would profit from an agile supply network, while Company B would be better off with a lean supply chain. Using the paper's recommendations and the supply chains of other companies as examples, both organizations can fix their challenges and develop robust supply chains.
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Web-Based Inbound Logistics
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