In a continually volatile marketplace that we experience today, Agile Supply Chain is not an option but a necessity for the success of a company. What is supply chain agility then and how do companies organize themselves to have such an agility in their supply chains? Supply chain agility broadly represents, how fast a supply chain responds to the changes in environment, customer preferences, competitive forces etc. and still deliver high quality products/services as desired by the customers at a competitive cost. It doesn’t talk about random variations in executing day-to-day supply chain operations but rather specifies how a company’s supply chain responds to changes once business is aware of external changes which can negatively or positively impact the business in achieving its objectives.

An agile supply chain comes with a cost and sometimes this cost can be significant enough to adversely impact profitability in the short run. Companies must then decide as to how much agile the business needs to be, where in the value chain they need agility, and whether it fits well with overall strategy of the company. Sensing the change much in advance gives a lot of room for companies to respond to changes in the business environment. That said leveraging this knowledge to proactively respond to the change with the right velocity, differentiates winners from laggards.

Companies aspiring to be agile must build a flexible organization with flexible processes. Organizational structure must encourage collaboration among various departments in the supply chain ecosystem. Companies must understand that the need for quick response to changing customer preferences may mean that conventional wisdom of organizing for success will be inadequate, if not obsolete.

There are four pillars that every organization must focus on to achieve agility in their supply chain –

1. • Accessibility
   • Flexibility
   • Agile structure
   • Decisiveness

Accessibility is the ability to quickly access relevant data and information. Agile companies have invested significant resources in improving data accessibility within their supply chains. Procter & Gamble (P&G) for example, uses a technology platform to achieve real-time visibility into inventory flows across its global supply chain. To make sure of the single source of truth of the data, all supply chain partners are connected to the same cloud-based platform and get access to a common real-time data set that includes status of orders, inventory, shipments, documents, and payments etc. P&G uses this information to quickly make decisions to reduce inventories or move products as per customer needs. General Electric (GE) is another example. With more than 500,000 suppliers in over 100 countries; GE understands the importance of accessibility. To increase its ability to collaborate quickly with suppliers, GE phased out its homegrown global supplier library and replaced it with the easier-to-use Supplier Information Management software-as-a-service (SaaS) solution. GE’s objective was to achieve one common view of its huge supplier base and related data by uniting its sourcing empire within a central information repository with multilingual capabilities. The solution also has self-service functionality that allows each supplier to manage its own data. This has allowed GE to experience superior levels of supply chain agility because every entity in its supply chain can quickly coordinate its actions with those of other members.

Flexibility, within a supply chain context can be described as a company’s ability to modify its range of tactics and operations to the extent needed to implement its strategy. A 2012 New York Times article described how Apple’s supply chain agility allowed it to redesign the iPhone just weeks before the device was scheduled to be released. A little over one month before the iPhone was due on store shelves, Steve Jobs demanded that it include a new screen made of scratch-proof glass. The challenge was to redesign that element of the phone and manufacture it quickly and cost effectively while maintaining the highest quality. To accomplish this feat, Apple capitalized on its suppliers’ flexible operations, particularly that of the contract electronics manufacturer Foxconn. The Taiwanese multinational as we all know, has massive and extremely flexible operations in Shenzhen, China. According to a former worldwide supply chain manager with Apple, Foxconn could hire 3,000 people overnight when needed. Thus, Apple was able to revamp the iPhone at the last minute with stunning agility because of its flexible Asian factories, which could quickly scale up and down as needed.

Agile structure are the design characteristics and features in an organization that support integration across the supply chain as per expected future growth. Design features that promote internal and external integration and are expected to show increased usage include:

1. • Formal value analysis/engineering groups
   • New product teams that include suppliers
   • A virtual procurement organizational design linked through IT systems
   • On-site suppliers to perform inventory management activities
   • A formal cross-functional group responsible for demand and supply planning
   • An organization designed around procurement and supply processes
   • A shared services model to coordinate common activities across BUs/locations
   • Formal strategy coordination and review sessions between functional groups

There is an increasing desire of most firms to evolve toward a higher level of central coordination within procurement and supply processes. Firms indicate that they expect to increase use of the following design features that promote central and cross- functional coordination within procurement and supply chain.

1. • Formal procurement & supply strategy coordination/review sessions between units.
   • Centrally coordinated commodity teams that develop and implement companywide supply strategies.
   • A corporate-level steering committee that oversees companywide procurement and supply initiatives.
   • Regular strategy/performance review presentations by the CPO to the president/CEO.

Decisiveness, the ability to make decisions resolutely using the available information, happens to be the most critical element.  In the business realm it is not enough for companies to be able to quickly detect changes (alertness) and access relevant information (accessibility) within their supply chains. They also need to foster the ability to make resolute decisions on how to respond to changes (decisiveness).

As companies get larger and their supply chain networks expand, more functions and management layers become involved in decisions, leading to a slowdown in decision making. The example of Apple Inc. is instructive. Today Apple is a much-heralded example of supply chain agility, but that was not always the case. From 1985 to 1993, under former chief executive officer (CEO) John Sculley, Apple became increasingly bureaucratic. The company had multiple committees to drive various corporate initiatives. Fiefdoms with individual budget power and sometimes competing agendas emerged. As such, it became difficult for Apple to make resolute decisions to capitalize on its ability to detect opportunities in the market. When Steve Jobs returned to Apple as CEO, he helped to reduce decision-making time by eliminating about 4,000 middle managers.

In the era of “New Competition” where markets are dynamic, agile supply chains are need of the hour and manifest through a company’s ability to quickly detect changes, opportunities, and threats; quickly access relevant data (accessibility); make resolute decisions about how to act (decisiveness); quickly implement those decisions; and modify its range of supply chain tactics and operations to the extent needed to implement its strategy (flexibility).