How do you balance lean and agile approaches to optimize customer value in supply chain management?

Regular performance evaluations and customer feedback inform adjustments to maintain this delicate balance. For instance, employing lean principles in areas with routine operations ensures cost-effectiveness and stability, while agile strategies prove valuable in dynamic segments where rapid adjustments are essential. By integrating both approaches strategically, supply chain managers can enhance overall efficiency, minimize disruptions, and ultimately deliver superior value to customers by meeting their evolving needs with precision and speed. This nuanced blend of lean and agile methodologies enables a responsive and efficient supply chain that is finely tuned to optimize customer satisfaction.

I have been working for a healthcare provider since 2016 in hospital materials management. Our company covers chain of hospitals in Dallas-Fort Worth metroplex and delivers the best quality care to our patients. What we performs SCM in healthcare industry is different than other industries. The answer is clearly understood that we are service provider. The main philosophy to build up inventory management system is basing on JIT (Just-In-Time) which orders will be replenished on daily basis. Every supply chain professional at hospital remembers to balance demand and supply. There is no expectations on waste while the delivery lead time is reduced at its optimal level .

To balance the two approaches, it is important to consider the specific needs of your business and the industry in which you operate. For example, if you operate in a stable and predictable environment with low-variety products, a lean approach may be more appropriate. If you operate in a volatile and uncertain environment with high-variety products, an agile approach may be more appropriate. Here are some tips for balancing lean and agile approaches: 1. Identify the key areas of your supply chain where lean and agile principles can be applied. 2. Use data and analytics to identify opportunities for improvement. 3. Collaborate with your suppliers and customers. 4.Create a culture of continuous improvement.

Very simple explanation: Internal Processes needs to be lean and sustainable, Response to customer requirements needs to be agile 😇🙏.

Achieving an optimal balance between lean and agile approaches in supply chain management is crucial for maximizing customer value. The lean methodology emphasizes efficiency through streamlined processes, minimizing waste, and enhancing reliability. It suits stable, predictable aspects of the supply chain where consistency is paramount. On the other hand, agile practices prioritize flexibility and responsiveness to adapt quickly to changes in customer demands or market conditions. Striking the right equilibrium involves identifying which parts of the supply chain benefit most from each approach.

Identify areas in your supply chain where demand is highly variable or where fast response is essential. Apply agile principles to these processes to improve responsiveness. Understand your customers' expectations and preferences. Use this information to determine where lean and agile strategies should be applied to enhance customer value.

Agility has become a more critical strength to build into the nodes of processes. Enviromental conditions, inputs and labor availability all challenge the execution of the agile node. Simplifying process, procedures and practices can help create the best environment for success. Provide timely data insights to your teammates engaging the process to reduce the necessary lag or reaction time from feedback.

In today's volatile, uncertain, complex, and ambiguous world, Agile SCM empowers organizations to thrive. Embrace change, prioritize customers, foster collaboration, and continuously improve to navigate supply chain challenges with agility and resilience.

Definition: Agile Supply Chain Management (Agile SCM) emphasizes flexibility and responsiveness to customer demands, market changes, and unforeseen events. Key Principles: Quick response to changes, adaptive manufacturing, and collaboration in the supply chain.

Agile SCM emphasizes adaptability and responsiveness to dynamic market demands. For example, utilizing real-time data analytics to swiftly adjust production schedules or inventory levels ensures timely responses to changing customer needs while minimizing waste. This iterative and customer-centric approach fosters innovation and enhances supply chain resilience in today's dynamic business landscape.

As CEO of a major international supply chain operator, agile mean be ready for changing customers needs, and unexpected disruptions in your optimal supply chain. Lean Is eliminate waste / maximize inventories, in a steady state environment. Relaying 90% on optimal supply chain chain combination, will cost you more ( it’s question of time. ). It is not in time of crisis that you can turn up in time new options from a dead start. If you are using on an ongoing basis diversified « B «  lean solutions for 20-25% of your needs, those you can crank up with success when disruptions hit. And it will happen; pandemic, country specific trade sanctions, labor disruptions, natural disasters disabling transport, etc. Be ready to expect the unexpected.

In my experience the key to balancing Lean and Agile is at a simplistic level remembering that a core principle of Lean is eliminating waste. This is often interpreted as removing inventory (as an example of the many ‘wastes’). If volatility of demand/supply/etc requires that inventory purposefully, then it is not a waste! The key to me is visibility and understanding of your supply chain. Separating the unnecessary from the purposeful. This allows the 2 potentially competing areas to coexist and both add value. Obviously it’s more complex than these simple statements - however starting with a challenging purposeful approach is a good start!

Lean emphasizes efficiency, cost reduction, and waste elimination. It involves streamlining processes to minimize inventory, lead times, and excess capacity. Key principles include just-in-time (JIT) inventory and continuous improvement. Agile focuses on flexibility, responsiveness, and adaptability to changes in demand and supply. It involves building resilience to disruptions, quick response to market changes, and collaborating with suppliers and partners to ensure fast adaptation.

Lean SCM: • Strengths: Cost reduction, efficiency, process optimization • Challenges: Rigidity, vulnerability to disruptions, potential for oversimplification Agile SCM: • Strengths: Flexibility, adaptability, responsiveness to market changes • Challenges: Complexity, increased risk, potential for overcomplication Balancing the Tradeoffs: • Optimize Cost Management: Emphasize lean practices, but incorporate agility to address market shifts. • Balance Flexibility and Efficiency: Leverage agile approaches to adapt, but maintain lean principles for cost control. • Foster Continuous Improvement: Continuously refine processes, incorporating both lean and agile methodologies.

Both have tradeoffs, lean is being efficient agile is being customer oriented. Both separated can be very different. I remember talking with one of the sales directors and agreeing that telling the customers what they want to hear is not necessarily what they need. People prefers to know the truth and respect honesty than something that may make them happy one day and angry the next one. I mean, If I tell my customer, don't worry your product will be shipped tomorrow I may think I'm being 100% focused but If I they receive the product 3 weeks later I'm just being stupid. Customers prefers to know your real lead times and the more educated they are, the more agile you become and the more lean you can be.

Segment your product portfolio and supply chain processes. Lean principles may apply to steady, high-volume products, while agile approaches are suited for products with unpredictable demand or short product lifecycles. Assess the demand and supply variability in your supply chain. Lean is more suitable when variability is low and predictable, while agile is necessary for high variability. Use lean principles to optimize inventory levels for low-variability products, reducing carrying costs. For high-variability items, employ agile strategies, including buffer stock to prevent stockouts.

In SCM, merging lean and agile is vital for customer value. Segment products, applying lean to stable items and agile to unpredictable ones. Collaborate with partners, use advanced tools and build flexibility into operations. Integrate tech for real-time analytics and AI. Foster a culture of continuous improvement, manage risks & establish cross-functional teams. Prioritize a customer-centric approach. This synthesis creates a resilient, responsive supply chain, maximizing customer value.

Both concepts are tied. In order to have agile SCM processes, they must be lean. If your processes are oriented to waste reduction (specially waiting time) this will lead into agile SCM, and customer satisfaction. This include your business partners as well (carriers, freight forwarders, customs brokers, WH, harbor, etc)

Segmentation: Identify products or processes suitable for lean or agile strategies based on demand predictability. Collaboration: Foster communication and collaboration between supply chain partners for a more integrated approach. Technology Integration: Utilize technology to enhance visibility and responsiveness in the supply chain.

Benchmarking has become the most effective way for a shipper to measure and optimize their logistics network within their supply chain in 2023. Benchmarking in layman's terms is comparing shipments with other like shipments. With these insights a shipper is able to increase cost savings, improve supplier performance, make better data driven decisions, improve operational efficiencies and enhance competitiveness. Data is the new oil and choosing a trusted transportation data provider is imperative to drive key actionable results.

The specific KPIs and metrics used may vary depending on your industry, business objectives, and the unique characteristics of your supply chain. It's essential to select metrics that align with your goals and regularly analyze the data to make informed decisions and improvements. Additionally, you may use a combination of lean and agile metrics to balance the dual approaches effectively.

Lean techniques work best when handling regular routes and cargo types in popular trade corridors. For example, it is critical to use lean SCM to optimize efficiency and save costs when carrying standardized commodities over regular routes. Agile approaches, on the other hand, are crucial for handling varying needs or unanticipated interruptions, such as adjusting to unexpected changes in port availability or cargo volume. The objective is to take a flexible strategy that blends lean concepts for stability and cost-effectiveness with an agile approach for quickly adapting to dynamic events while providing excellent customer service and operational efficiency.

Lead Time: Measure the time it takes to fulfill customer orders from order placement to delivery. Inventory Turnover: Evaluate how quickly inventory is used or replaced. Customer Satisfaction: Assess customer satisfaction levels with product availability and responsiveness.

Balancing lean and agile approaches in SCM is akin to conducting a symphony. Like harmonizing instruments, harmonizing these strategies involves a deep understanding of your supply chain's nuances. Tailoring the balance to your unique needs is key—leaning towards efficiency in stable environments and embracing agility in dynamic markets. Successful orchestration requires constant adaptation, where KPIs act as the conductor's baton, guiding the performance.

Apply continuous improvement principles to both lean and agile processes. Regularly review and refine processes to enhance efficiency and responsiveness. Invest in technologies like advanced analytics, real-time data sharing, and demand forecasting tools to support both lean and agile SCM initiatives. Foster collaboration and open communication between different departments, suppliers, and partners to enhance the overall supply chain responsiveness.

One example to improve can be by using predictive maintenance to optimize equipment performance, reduce downtime and enhance safety in the supply chain to deliver value to customers.

Continuous Improvement: Apply lean principles to identify and eliminate waste continuously. Scenario Planning: Develop contingency plans for potential disruptions, integrating agile principles. Employee Training: Train and empower employees to adapt to both lean and agile practices.

Whether it’s lean or agile approaches to optimising customer value in supply chain management, we often end up focusing on the quantum of input, outputs and lose out on the quality. When we look at supply chains today, one of the pressing concerns is climate change and how supply chains and their management need to be improved and become more transparent to effectively monitor where, what kind, and how much of emissions are associated - and thus developing ways to reduce or mitigate these emissions across supply chains. We are living in a world where customer values cannot be disjointed from climate action and thus supply chain management (via agile or lean approaches) need to be reconsidered before it’s too late.

It is very important to strike the right balance between being lean and agile. You can't go so lean that you end up breaking the operations. You need to leave some buffer capacity so when agility is required on short notice to meet customer's expectations the team is able to make it work.

Achieving a balance between lean and agile SCM involves understanding the specific characteristics of products, aligning strategies with demand profiles, and adopting a flexible and adaptable approach. Continuous monitoring, assessment, and improvement are essential to optimize customer value and overall supply chain performance. Organizations that successfully integrate lean and agile principles can enhance customer satisfaction, minimize costs, and navigate the complexities of today's dynamic business environment.

Reduce variety in materials, services, and how to produce it. If your customer need another kinds of your product, cooperate with RnD to maximize current materials and process. If it is impossible, consider that maybe it is a time to change current materials and process with new ones which more adaptable with future changing.

Market Dynamics: Regularly analyze market trends and customer demands to adjust strategies accordingly. Risk Management: Implement robust risk management strategies to handle uncertainties in the supply chain. Adaptability: Foster a culture of adaptability and continuous learning to respond effectively to changes in the business environment.