LEAN OR AGILE? FOR A COMPETITIVE ADVANTAGE IN THE SUPPLY CHAIN, THE ANSWER IS BOTH
Maintaining competitive advantage in the global logistics playing field is no easy task. There are hundreds of companies striving to earn the loyalty and business of global and domestic clients and the competition is becoming more intense with each passing day. Thanks to technology, companies are now able to take a step back and truly evaluate what structures make the most sense to meet customer demands in unpredictable markets.
Technology offering features such as predictive analytics are enabling logistics leaders to employ proactive measures for even the most complex of disruptions. However, readily available technology does not prove successful without careful consideration of the right platform and what supply chain management structure will meet the needs for specific company goals and customer demands. Company A might require a lean approach, while company B requires characteristics of both lean and agile supply chain structures. Before diving into which one benefits the most, it’s important to understand the differences between the two.
An agile supply chain structure focuses heavily on layered benefits including visibility, predictability, and speed in terms of reaction times. Lean supply chain focuses on the most cost-effective options, ultimately reducing costs and recovering what’s been spent. Both are extremely important and attainable, but the trick is finding the right balance between the two while recruiting the best partners fit to support meeting the needs of customers. This element is critical in maintaining competitive advantage and ultimately makes or breaks customer relationships.
“Everyone is striving to find that balance between having an agile supply chain and a lean supply chain because logistics and transportation costs fall to the bottom line,” explains Matt Castle, vice president, Global Forwarding Products and Services at C.H. Robinson. “These costs need to be recovered at some point in time, regardless of what business you’re in. There’s always going to be a focus on ensuring a lean supply chain in terms of cost and the economy, as well as how to find that balance of also maintaining flexibility based on the needs of the business. Having that agility can be a major differentiator in delivering on customer expectations.”
Castle adds: “Another question to think about is how to approach diversification in your supplier base. There can obviously be restraints based on a particular importer or exporter in terms of where they’re sourcing or buying product and availability, but I recommend ensuring you have an outlet from a secondary supplier. It’s worth the front-end legwork from a planning perspective to ensure you have a multitude of choices.”
The advantages of agile supply chain go far beyond mastering efficiencies or recovering costs and requires taking a holistic look at all the moving parts of your business. Implementing this type of approach relies heavily on planning and thinking differently in approaching the management of customer expectations while ensuring your business can offer a level of flexibility your competitors can’t offer.
“When I think about an agile supply chain, I think about having flexibility—the ability to adapt at a quick pace, speed and the ability to recover from a certain level of uncertainty,” Castle says. “I believe it’s important to collaborate with a company that has a diverse portfolio of services. This is so businesses are able to adjust quickly from an ocean service to an air service, from an intermodal to a truckload, or even breaking down at a warehouse facility, LTL or small parcel.
“Having a provider that can seamlessly move from one product to the next is extremely important. It’s also important to ensure you’re engaging with a provider that has a global footprint. There are different scenarios playing out in different countries, so your ability to have a presence that can engage a global environment is critical.”
Any business implementing an agile supply chain approach must ensure supporting providers and partners are a good fit. Choosing the right third-party logistics provider can determine just how quickly your business can recover from an unpredictable situation and continue operations. Uncertainties cannot be completely eliminated, but they can be managed in a way that your business and customer relations do not suffer with the right partner. Without this, an agile supply chain structure is limited.
“When thinking about uncertainty in the supply chain, having a third-party logistics provider that’s multimodal or that offers a variety of products allows you to seamlessly move from one product to the next,” Castle advises. “That is one of the best defenses against being able to navigate any level of uncertainty–from speeding up or slowing down products. It comes back to having some level of a global presence, as it’s something a lot of importers and exporters are trying to navigate today.”
Technology is equally important when aligning operations with an agile approach. This also requires careful consideration of what works in terms of what kind of products and the regions associated with operations. The technology needs to provide a level of visibility that enables your business to react to a variety of disruptors–from weather to policy, disruptions can come in different forms and require proactive, quick solutions to mitigate additional risks.
“Put simply, it’s a matter of having product available–whatever your business may be, to either sell or have within the production cycle so that you’re not ending up with a plant shutdown,” Castle says. “An agile supply chain creates an opportunity to deliver product on the shelf that a competitor isn’t able to.”
“For C.H. Robinson, Navisphere is our technology platform. Managing any kind of supply chain is about how you bring visibility to what’s happening with the movement of your goods. What’s changing in terms of expectations around technology is how do you start to weave different factors in so that it starts to align with more predictive elements.”
Matt Castle is vice president of Air Freight Products and Services at C.H. Robinson. He joined C.H. Robinson in 1996 and has 25+ years of experience in the transportation industry. Castle is responsible for driving growth through global airfreight product. He received his degree in Aviation Administration and Management from the University of North Dakota.
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