Lean Versus Agile Supply Chains

Should you apply lean management or agility concepts to your supply chain management? 

Prior to the events of the past year, many supply chain managers and companies strove to be the leanest and most efficient when it came to supply chain management. With the global disruptions to supply chains and materials, many companies started focusing more on agility and risk management. As the world recovers from the pandemic, what is the right approach moving forward? The answer is, it depends. Tecsys recently shared their thoughts on questions to consider on the topic summarized below. 

First, we'd like to share how the ASCM/APICS Body of Knowledge defines lean management, responsiveness, agility and efficiency when it comes to supply chains.  

Lean management is closely related to the concepts of the Toyota production system (TPS). Lean management involves the systematic identification and elimination of waste throughout the entire value stream. The key point distinguishing lean from other management concepts is the broadening of the definition of waste to time and inventory. Through this, lean production tends to evolve quickly into continuous flow, utilizing little or no work-in-process inventory, and ultimately reaching the goal of one-pice flow of the product or service. 

Responsiveness, agility, and efficiency. Responsiveness is the ability of the supply chain to meet the changing and diverse needs of customers. Agility refers to the ability of a firm to manufacture and deliver a broad range of high-quality products and services with short lead times and varying volumes to provide enhanced value to customers. Efficiency refers to the ability to do this at a low cost. 

Tecsy suggests supply chain managers can incorporate elements from both lean and agile supply chain strategies based on the needs of their business as follows, "It’s best to apply parts of lean principles to specific areas of your supply chain while also applying parts of agile principles in other areas. This hybrid approach has the potential to become the new reality in supply chain. Some questions to consider when thinking through your lean vs. agile supply chain strategy:

1. Are there any products and services that have always been difficult to plan and forecast? In this instance, you might consider taking a more agile supply chain approach for these products and services.
2. Are there any products and services that are very consistent and predictable in their demand? In this instance, you should definitely treat these products and services with a lean supply chain approach.
3. Can you eliminate risks from your supply chain for selected products or services by shortening or simplifying the supply chain without adding excessive costs? These ‘key or critical’ products are your highest risk or most likely to disrupt that will most affect your supply chain if they run short.

Considering which elements of lean versus agility to apply to your supply chain is a complex issue and will likely continue to evolve as new challenges surface. At ASCM Wisconsin we are committed to providing the supply chain community with education and information to maintain competitiveness in ever-changing environments. 

Looking for more information on Lean? ASCM Wisconsin Chapter is offering a professional development meeting on the role of leadership in establishing and maintaining a lean culture on May 19th. See below for more information.