Leagility Supply Chain Design and Term Paper
- Length: 5 pages
- Subject: Business
- Type: Term Paper
- Paper: #31932399
Excerpt from Term Paper :
Leagility with regard to the supply chain is simply a combination of techniques designed both to exploit a volatile marketplace but also to take advantage of a lean one where profit margins are relatively low but demand is relatively high.
In the article analyzed, food markets in particularly are examined with regard to supply chain design. There are according to the authors, a number of food products that "can be characterized as functional products with volatile and unpredictable demand" (Beach, et. al, 2001). Thus demand uncertainty may allow for production flexibility. However, food products by nature are not very "innovative." As the author points out, because by nature the products are generally functional in nature and the food supply chain is relatively inflexible and uses perishable goods, the usefulness of a concept such as leagility is somewhat limited. There is not period in which demand will be certain. This is beneficial and would suggest that leagility is possible in the industry.
However, production options are limited with regard to food products that are perishable (Beach, et. al, 2003). The profit margins of these items generally tend to stay low, because of their functionality. Investments that a supplier might make into innovative techniques may or may not be paid back (Beach, et. al, 2001) thus one may assume that a supplier has more at stake and less to gain in this type of environment.
A key characteristic of an 'agile' organization according to the article is one that allows great flexibility. Thus the supply chain would demonstrate characteristics including being market sensitive, using information technology "to share data between buyers and suppliers," use process integration and collaborative working between suppliers and buyers and be networked based (Beach, et. al, 2001).
A lean company would might have zero inventories and capitalize on a JIT approach to supply and demand (Beach, et. al, 2001). Customer responsiveness of course is the goal of both of these principles.
Leagility is thus a balance of lean and agile supply chain management processes. In an environment that is highly volatile and where demand is flexible, this concept may be applied almost universally. However there are some environments where establishing a supply chain design based on the foundations of the "leagility" principle may not be appropriate, as is the case with the perishable food industry.
One of the problems with the concept of leagility with regard to the article examined specifically and the poultry industry for example is that typically over production of poultry products is inevitable, because of the very nature of the product itself. As the article points out a demand for chicken wings does not necessarily indicate a demand for breasts or legs, but to produce wings the supplier must also produce breasts and legs, thus there is limited possibility for full fulfillment of the demand because of the costs associated with perishable losses particular to perishable food items.
The supply chain in the case of food production is not flexible in nature. In general most food suppliers are required to maintain lean operations to reduce waste, though waste occurs nonetheless due to the perishable nature of goods. However, the market under which a poultry supplier operates may also be agile, as the demand for products is often changing. Does this mean that leagility is applicable?
By nature the use of leagility in the supply chain demands a flexible environment with intense collaboration between strategic partners. The goal is a worthy one, optimal customer service. When used correctly customer needs are satisfied in a timely fashion and in a profitable one. For leagility to be implemented correctly, as demonstrated by the reading, lean strategies would have to be developed up to a decoupling point, and agile strategies beyond that. For the most part the poultry supply chain design is one that would rely more on lean strategies than agile ones, though both could be used at some point in time during the production process.
Beach, P.V., Van Der Vost, a.J., Van Dijk, S.J. & Beulens, J.M. (2001). "Supply chain design in the food industry." International Journal of Logistics Management.
Jones, R.M. (2004). "Engineering in the leagile supply chain." Logistics Systems Dynamics Group. 2, December, 2004:
Naylor, J.B., Naim, M.M. & Berry, D. (1997). "Leagility: integrating the lean and agile manufacturing design in the total supply chain." International Journal of Production Economics, 62: 107-18