Agile Supply Chain Management

Introduction

Oxford’s Dictionary defines Agile as “the ability to move quickly and easily”. The term “agility” ideally refers to a “continual readiness to change, sometimes to change radically” (Goldman et al. 1995). Agility in the industrial engineering domain was first used for manufacturing. By the end of the Cold War, the United States were left with two parallel industrial infrastructures—one for defense, and the other for general commerce. Each sector relied on distinct technologies, production processes and business practices. This made defense systems unaffordable, that encumbered the US’ industrial competitiveness. There was a need to unify the industrial base where defense and commercial products would share dual-use technology, and would be manufactured on rapid responses to meet customer demands. This study was tasked to the Iacocca Institute of Lehigh University in Pennsylvania, USA. The institute reported the study in a forum on their 21st Century Manufacturing Enterprise Strategy report and introduced the term 'Agile Manufacturing' therein.

The word then began catching the imagination of researchers across the globe and soon it was generalized to the “Agile Supply Chain” and extended to market behaviour. From the market’s perspective, agility is defined as “using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile market place” (Naylor et al., 1999). From a supply chain perspective, according to Christopher (2000) & Banerjee et al (2012), agility is “the capability to embrace organizational structures, information systems, logistics processes and mindsets”. As it could be seen from different definitions, it basically deals with the buoyancy between volatile markets and unpredictable demands. It is all about how to gain the buoyancy and apply it to the supply chain.

One of the key challenges today for any organization in any business space is the need to respond to unpredictable volatility in demand and variety. The consumer behavior is rapidly evolving in today’s ever changing landscape with constant pressure to deliver as per the need. To meet this challenge the organization needs to be agile, such that, it can respond in shorter time-frames. In other words, it needs to be able to meet the market expectations both in terms of demand and cost.