Agile and Lean Supply Chain Management

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Leanness means developing a value stream to eliminate all waste, including time, and to ensure a level schedule. Agility means using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile marketplace. Leagile is the combination of the lean and agile paradigms within a total supply chain strategy by 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 marketplace. The decoupling point separates the part of the organisation (supply chain) oriented towards customer orders from the part of the organisation (supply chain) based on planning. In this report, I attempt to prepare the literature review of five papers ranging from 1999 to 2011 regarding development and application of lean, agile, and leagile to supply chain management. Naylor et al. (1999) analysed lean and agile manufacturing paradigms and integration between them so called leagile in supply chain management for the first time. They highlighted and rated some of the prerequisite characteristics of the lean and the agile paradigms in supply chain management and then categorized and compared them into three sections, equal, similar and different characteristics. Furthermore, some simplified structures were presented with the decoupling point in different positions along the supply chain. By varying the position of the decoupling point five distinct classes of supply chains were indicated, buy to order, make to order, assemble to order, make to stock, and ship to stock. They realized that the lean paradigm can be applied to the supply chain upstream of the decoupling point as the demand is smooth and standard products flow through a number of value streams and the agile paradigm must be applied downstream from the decoupling point as demand is variable and the product variety per value stream has increased. This study indicated agile manufacturing paradigm was best suited to satisfying a fluctuating demand (in terms of volume and variety) and lean manufacturing requires, and promotes, a level schedule. Also, neither paradigm was better nor worse than the other, indeed, they were complementary within the correct supply chain strategy. At last, the Hewlett Packard and the PC manufacturer case studies were presented to demonstrate how agility and leanness have been combined successfully within one supply chain to meet customer requirements. To sum up, this paper showed whether to develop an agile capability or a lean manufacturing the structure would depend on where in the supply chain the members were located. This total supply chain perspective was essential and companies should be attempting for leagility; that is, carefully combining both lean and agile paradigms. Mason-Jones et al. (2000) analysed the lean, agile and leagile paradigms and their roles in tackling different marketplace uncertainty scenarios; that is, matching the supply chain paradigms according to marketplace requirements. They categorized products into two general types: fashion products which had a short life cycle and high demand uncertainty and commodities which were basic products and had relatively long life cycles and low demand uncertainty. Considering that these two product types responded to distinctly different marketplace pressures and hence required a different supply chain approach to address their specific features, they determined that the commodities were very well suited to the lean supply chain as demand was relatively predictable and conversely the characteristics of fashion products were more suited to the agile supply chain where the unpredictability of the demand was admitted as a business risk. However, a total approach across the thorough supply chain might not be proper; thus, leanness and agility could sometimes be combined with the strategic use of a decoupling point; the combination is known as leagility. They presented Material Flow...
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