Supply Chain Frontiers issue #52
If there was a league table of desirable supply chain attributes, then "agility" would be somewhere near the top. But what exactly is supply chain agility and how can it be evaluated?
Dr. David Gligor, Malaysia Institute for Supply Chain Innovation (MISI), is engaged in research to answer these questions. His initial findings provide a much better understanding of what constitutes this sought-after attribute.
"There has been a lot of research over the last 20 years on agility in business but there is much confusion over what it means and little consistency between the various definitions," says Gligor.
Adding to the confusion from a supply chain perspective is that most of the work relates to other disciplines such as manufacturing. "Nothing new was happening in supply chain because we were building on these other studies," he says.
In order to shed a new light on the supply chain interpretation of agility, "I decided to go outside of the business domain," Gligor explains. Two areas that are steeped in the study of agility and change management emerged: military science and sports science.
Combat troops must deal with constant and, frequently, dramatic change, so it came as no surprise that military strategists have put agility under the microscope. Athletes also have to react to sudden and often unexpected change in the field, and a high level of agility is almost a given in the sports world.
Learning from research carried out in these fields, Gligor identified five dimensions of supply chain agility. Each dimension represents a step in a process towards building an agile supply chain.
Alertness. Defined as the ability to quickly detect changes, opportunities, and threats, companies have to be alert in order to respond to change.
Accessibility. This dimension refers to the ability to access relevant data. Once a new development is detected, the organization must quickly retrieve the data it needs to analyze the situation.
Decisiveness. Enterprises that make decisions resolutely are defined as decisive. In the sequence of responses, this means that the organization is able to act on its analyses of the situation.
Flexibility. The fourth dimension of supply chain agility is defined as the ability to modify the range of tactics and operations to the extent needed. Even if a company can act decisively, does it possess the required flexibility in its operations to take the appropriate action?
Swiftness. Finally, how quickly can the enterprise go through the various steps in the process?
The first three elements are classed as cognitive in that they enable the organization to identify change. The last two are physical elements since they cover taking action after deciding how to react to a given situation.
There is some confusion over the distinction between agility and responsiveness, says Gligor. "Being agile means having the capability to be responsive."
A sports example helps to clarify the difference. In soccer, a defender might be agile enough to tackle an oncoming opponent, but chooses not to follow the strategy because where he is standing in the field puts the opponent in an offside position. In other words, he meets all the requirements for agility but chooses not to respond. The business equivalent might be an agile company that has the option to sell more goods in a new market, but decides not to expand in this way because the sales would not meet its profitability criteria.
The next stage of the research focuses on ways to pinpoint where an organization's strengths and weaknesses are in terms of supply chain agility. The aim is to help companies assess their effectiveness on each dimension and the best combination of elements for their supply chain or a particular strategy. This second phase should be completed in the next several months.
For more information on the research contact Dr. David Gligor at gligor@mit.edu.