Monday, June 24, 2024
Monday, June 24, 2024
HomeProcurement/Supply Chain ManagementWhat are Lean, Agile and Leagile Supply Chains?

What are Lean, Agile and Leagile Supply Chains?

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Leagile is a supply that combines lean and agile philosophies. The Spanish clothing store Zara is a prime example of a lean supply chain. It has created a flexible supply chain that yet embodies “lean” principles. It operates to respond quickly to the customers’ shifting needs.

But Before understanding Lean and Agile Supply Chains Let us first understand Lean and Agile Supply Chains.

Lean Supply Chain 

As product changeover flexibility is low in this supply chain, the efficient or lean supply chain places a strong emphasis on volume flexibility to move the product into the market and gain cost efficiencies. The internal flexibility type, namely capacity flexibility, is what causes this. Because their method of producing products is based on expected data, the lean supply chain has the flexibility to adjust capacity in response to anticipated demand.

By cutting the cost of goods and waste (which is defined as anything that isn’t helpful to the consumer), the objective is to add value for customers. Instead of focusing on flexibility and adaptation, this type of supply chain places more emphasis on dependability and predictability. Production is planned for months or even years rather than adapting to a changing market.

This in planning aids in determining the most affordable price for huge quantities of goods. In general, lean supply chains work best for goods with little market fluctuation.

Despite the economy or shifting trends, demand for certain products remains stable. These are typically useful, essential items like food and toiletries. Due to its emphasis on cutting costs—and the fact that everyone likes to pay less—the lean supply chain has historically been the most widely used method of production.

The Just-in-Time (JIT) idea or the Toyota Production System (TPS), which is regarded as the originator of lean manufacturing, was initially developed to reduce costs by compressing inventory levels at all points of operation.

Now let us look at Agile Supply Chain.

Agile Supply Chain

A skill that spans the entire business, agility includes organizational structures, information systems, logistics procedures, and, most importantly, attitudes. Flexibility is a crucial aspect of an agile supply chain. An organization’s agility is its capacity to react quickly to shifts in demand, both in terms of volume and diversity. Demand that is erratic and turbulent characterizes the market conditions that call for agility.

A supply chain needs to be able to recognize and react to demand if it is to be agile. To accomplish this, the organization must switch from a forecast-driven environment in which inventory is pushed through the supply chain to an environment driven by orders in which inventory is pulled through the chain.

Agile supply chains are generally used for products with short life cycles or customizable elements. Take fast fashion as an example. Fashion changes rapidly in today’s Instagram and blogger culture, so production needs to be prepared to keep up with emerging and shifting trends.

Global apparel brands such as Mango and H&M are example of having agile Supply Chains.

Now let us look at what Leagile Supply Chain is.

Leagile Supply Chain

Leagile is a comprehensive supply chain strategy that combines the lean and agile paradigms at a decoupling point, often known as a delay strategy. Agile supply chains may deliver to a changing market and have a decoupling point where the product becomes one of a kind. Lean methodology is used, and products are constructed by the forecast before the decoupling point. After that, supply networks are flexible, fulfilling orders from customers.

Let us understand Leagile Supply Chain with the example of ZARA

Zara has built a flexible supply chain with elements of “lean” manufacturing. It operates to respond quickly to the customers’ shifting needs. The assembler is where the decoupling point is located. Based on the forecast, the so-called “commercial managers” envision the kinds of clothes and fabrics that will be ordered. The designs are created using real-time data gathered from customers on the shop floor, from visits to international fashion shows, rival retailers, college campuses, clubs, etc. As a result, the final design is “constructed” in response to market demand. It tries to reduce waste by not producing in excessive quantities. All non-strategic functions at Zara have been outsourced, yet all internal resources are used for product development and final production. The system is flexible enough to cope with sudden changes in demand, though the stock is maintained a little less than the demand keeping in line with the lean approach.

Conclusion

Effective and real-time communication technology is the cornerstone of lean and agile initiatives, even though they both appear to be fundamentally different frameworks. Leagile supply chain methods have revolutionized the way businesses handle their supplies since these ideas have increased business profitability and competition. The goal of the leagile strategy is to achieve flexibility and competitiveness economically. Therefore, forming a leagile supply chain not only can bring the benefits of both lean and agile paradigms and avoid their weaknesses but also can lead to a flexible and sustainable business.

Also read: Lean Procurement and Procurement 4.0! New Procurement Practices

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Shantanu Trivedi
Shantanu Trivedi
Shantanu Trivedi is working as a faculty at the University of Petroleum and Energy Studies, Dehradun. He holds an MBA and a Ph.D. degree in Supply chain management. He has more than a decade of experience in teaching and research. He has published 2 books, 5 book chapters and more than 12 research papers and articles in international journals of repute. His research interest includes Supply chain management, agribusiness, online and distance education, Business sustainability and infrastructure management. He is the reviewer of many international publishing houses. He has presented his work and won awards at many research conferences and symposiums. He has worked on many research with state governments and the government of India. In his spare time, Shantanu loves to travel and explore nature.
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