• The turbulent market conditions in the 21st century have

heightened the need for more competitive strategies to be

developed for growth.

• In the current economic climate, the only constant is rapid

change. New markets are emerging, raw materials and
commodities are decreasing, customer preferences are
changing, and new technologies are appearing every day.

• As a result, businesses have to be able to react to changing

external conditions with increasing speed and flexibility.
 • Most of the strategic issues that confront business today come
from the new rules of competition, globalization down pressure
on price and the customer taking control.

• Agility has the ability to rapidly respond to changes in market and

customer demands as the bearer of competitive advantage.

• The article explores the concept of agile supply chain and

competitive advantage.

• The article also presents a framework on the linkage between agile

supply chain and competitive advantage.
• Supply-chain is a
term that describes how
organizations (suppliers, manufacturers, distributors, and
customers) are linked together
• Supply-chain management (SCM) is a total system approach to
managing the entire flow of information, materials, and services from
raw-material suppliers through factories and warehouses to the end
customer

• In our own understanding, the SCM can be defined as managing the

flow of information, money and materials from the upstream to the
downstream

• The main objective of SCM is to maximize value in the supply chain and
 competing on value, collaborating with customers and suppliers to
create a position of strength in the market place based on the value
derived from the end consumer.

• Value is not inherent in products or services but rather is perceived or

experienced by the customer.

•A
supply chain strategy is defined, relative to its competitor’s, the
set of customer needs that it seeks to satisfy through its
products and services (Chopra and Meindl, 2007).

•It involves decision relating to the selection of suppliers, the

location of facilities and the choice of distribution channels.

• Capital efficiency is at the lowest level.

• The strategies should be tailored to match the required
 “order winning criteria” in the market place and it need to be
appropriate to specific product or market condition.

• The major generic strategies in supply chain are lean and agility.
• Leanness means developing a value stream to eliminate all
waste including time, and to enable a level schedule. • Agility
means using market knowledge and a virtual corporation to
exploit profitable opportunities in a volatile market place.
• The concept of agile supply chain was introduced to transfer
and apply the winning strategy of agility to the supply chain. •
Agility is all about the customer responsiveness, people and
information, cooperation within and between firms and fitting
a company for change.
 Market sensitive
Supply chain is capable of reading
and responding to real demand
Virtual
Information-based supply chain,
rather than inventory-based.
Network based
EDI and internet enable partners
in
the supply chain to act upon the
real demand
Process integration
Collaborative working between
buyers and suppliers, joint product
development, common systems

and shared information Agile supply

chain
Demand characteristics and supply capabilities

• Selecting a strategic approach in a supply chain can be

complex.

• Intelligent supply chains throughout the world use a

combination of lean and agile strategies for their benefits.
 Demand characteristics and supply capabilities
Distinguishing Low
attributes
Long
Lean Cost
Low
supply Agile
Physical costs
supply
Long-term contrac
Commodities
Buy materials
Predictable
Highly desirable

Typical products Fashion goods Marketplace demand Volatile Product

variety High Product life cycle Short Customer drivers Availability Profit
margin High Dominant costs Marketability costs Stock out penalties
Immediate and volatile Purchasing policy Assign capacity Information
enrichment Obligatory Forecasting mechanism Algorithmic Consultative
 Comparison of characteristics of lean and agile
supply

Characteristic Lean Agile

Eliminate waste

Long-term, stable

Output measure such as

productivity and cost

Work standardization,
conformance to
standards

Logistics focus Customers and markets Partnerships Fluid clusters

Measure capabilities,
Key measure Process focus Focus on operator self management
to
maximize autonomy
and focus on customer satisfaction

Logistics planning Stable, fixed period Instantaneous response

• After selecting the supply chain strategy, the organizations need to identify
the market winners and also the market qualifiers for its products.

• Order qualifiers – minimum criteria that a company must meet in order to be

considered as a possible supplier

• Order winner – criteria that wins the orders

 Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile supply chain

• Understanding the particular characteristics of the product

type, market place requirements and managing challenges
will help an organizations to design the correct supply chain
strategy that will ensure optimal performance and gain
competitive advantage.

• According to Fisher, a supply chain may need to be lean for

part of the time and agile for the rest of the time.

• Leagility – the combination of the lean and agile paradigm

within a total supply chain strategy positioning the decoupling
point, so as to best suit the need for responding to a volatile
 demand downstream yet providing level scheduling upstream
from the decoupling point.

• Exists when a firm has a product or service that is perceived by its

target market customers as better than its competitor’s products.

• It is gained by offering consumers greater value either by means of lower

prices or by providing greater benefits and service that justifies for
higher price.

• Within an organization, customer value is created through collaboration

and cooperation to improve efficiency (lower cost) or market
effectiveness (added benefits) in ways that are most valuable to key
customers.

• By satisfying customers and achieving competitive advantage, firm in a

supply chain influence customers to make choices and behave in ways
that improve the financial performance of the supply chain and the
 firms within it.
• An organization’s competitive advantage is built upon a well
planned and executed SCM strategy that is sustainable.

• It belongs to those supply chains that can activate concurrent

business processes and core competences that merge
infrastructures, share risks, and gain and anticipate new vistas
for competitive leadership.

• A supply chain is a part of competitive advantage for an

organizations. Therefore, if any part of the chain is weak, than
the whole business model becomes weak.

• Competitive advantages can be achieved by aligning the supply

chain strategy to the competitive strategy.

• A firm’s
relative position within an industry is given by its choices of
competitive advantage and its choice of competitive scope.

• Competitive scope distinguishes between firms targeting broad

industry segments and firms focusing on a narrow segment.

• Porter (1995) claims that achieving competitive advantage

requires a firm to make a choice about the type and scope of its
competitive advantage.

• Therefore, organizations can create competitive advantage

through cost leadership, differentiation and focus.
 • The
best supply chain strategy to use to meet customer expectation
when demand is uncertain is agile supply chain.

• Competitive advantage is achieved when the organizations

determine the drivers of change, be flexible, adaptive and
 responsive through agile supply chain strategy and align the
supply chain strategy to the overall business strategy.
• Drivers of change – the main driving force for agility. It is changes or
pressure in a business environment that forces a company to search for
new ways of running its business in order to maintain their competitive
advantage.

• The changes may involve changes in market place, customer

requirements, competition criteria, technology and social factors.
• Agile supply chain is a winning strategy for growth, and lean supply

chain is a
pre-requisite for the creation of an agile supply chain, it is proved that
it is a strategy for competitive advantage.

• Agile supply chain is triggered by the change which is constant in the

business environment and agility is considered as a vital factor for
business success in complex industrial landscapes as it enables rival
firms to efficiently perform under time-to-market pressure.

• Lean is needed to built agility and therefore, agile supply chain

become the pre-requisite for business success in the market.

• The key to success of an organization is to align agile supply chain

strategy to the differentiation strategy to meet the overall objective
for competitive performance, hence competitive advantage.
• Therefore, to sustain and maintain supply chain agility, an organization should:
a) Commit to flexibility and adaptability in regards to the supply chain. b)
Identify the factors involved in past problems with the company’s supply chain.
c) Implement simple solutions to these problems
d) Design programs for solutions that are not solved simply. Prioritize problems
on the basis of which are most likely. Systematically move through the
problems.
e) Address flexibility and adaptability while moving through the later stages of
disaster-proofing the production. Begin by asking input from all levels of
production till manager levels.
f) Centralize responsibility for reviewing plans for change. Those with
responsibility should have a broad base of knowledge. Involve consulting
firms if needed.
g) Integrate the newer theories of agile supply chain, specifically those that
allow for greater coordination between customers and suppliers, where
appropriate.