Supply chain agility is most likely a buzzword that you’ve heard quite a lot this past year, whether you’re on the warehouse floor or in the executive boardroom. But quite frankly, wouldn’t you agree that being able to adapt and change your operations is almost a given in the world today?
In my last blog post Lean vs. Agile Supply Chain, I explained how an agile supply chain often waits to see what the marketplace asks for and then responds by supplying the goods using very short lead times and only finishing the demand when it is actually known. There are so many factors that have accelerated the need for supply chain agility in the last two decades — whether it’s customer expectations, competitive pressures or external forces like the pandemic — your organization must be able to quickly course correct in order to remain profitable and accomplish your goals.
At Tecsys, we have helped companies design and build agility into their supply chain for 35 years. And from this experience, we can identify some common roadblocks that prevent or slow down successful transformation. I’d like to share the top five barriers you must look out for in creating and maintaining supply chain agility.
5 Barriers to Supply Chain Agility
1. Lack of Transparency
Are the plans and goals for your supply chain clear and unambiguous? Let me clarify this question by asking if your organization has a well-defined and published supply chain plan that is communicated to all employees as well as to your suppliers and partners? While this point may appear trite, having transparency in your supply chain forces you to think through your operations and clearly lay out strategies that will be most important to the success of your business. This has more value than you can imagine in enabling you the flexibility to being agile.
2. Failure to Balance Short vs. Long Term Goals
Don’t feel alone if you have planned your supply chain around a long-term forecast and that plan gets spoiled when suddenly there is an executive directive that the company must “make our quarter” and everything changes. This happens to the best of us. However, one way to help prevent this challenge is by having a well-defined and balanced set of both long- and short-term goals. Make sure you factor both into your supply chain plan. This will give you a better understanding of how even a small, short-term change (or executive directive) can impact your long-term goal.
3. Insufficient Budget in Technology
In order to achieve supply chain agility, your company must have a committed investment in technology. This investment needs to happen before your supply chain is in crisis mode. Technology is the lifeblood of modern supply chain management today — and getting access to it is essential to agility. How can you be agile without knowing the impact of the change? Technology is the means to having that data and empowering you to make confident business decisions. Lack of investment and focus in your warehouse management systems will reduce your company’s ability to achieve fundamental, sustainable improvement.
4. Disconnected Processes and Data
Lack of process coordination and sharing of data across the extended supply chain is the death knell for agility. Successful supply chain operations that deliver the right supplies, to the right places, at the right times and at the right prices do not work in a silo. Rather, there are multiple stakeholders that impact supply chain processes, and subsequently quality and costs. Your supply chain must be a coordinated machine that all flexes together when needed rather than a set of independent parts who all change in different directions.
5. Poor Organizational Structure
The truth of the matter is that many supply chain teams are organized for failure. How do you know if you have a structure problem? One example would be if you have different supply chain teams planning different channels — an example we often see is one team for e-commerce and another for physical distribution. Or perhaps you have a supply chain executive who is not a part of the decision-making team and, therefore, unable to advocate the importance of supply chain in executive strategy planning sessions. You will need to consider your supply chain and executive structure as a potential barrier to agility.
Now What?
Hopefully, these ideas have gotten your attention and you are asking yourself how your organization stacks up. You may be facing one or more of these barriers within your own organization. If you do, you can have these barriers in your company yet still, somewhat, create an agile supply chain. It’s just going to be a much longer, uphill journey because true agility requires a well-coordinated, informed and funded group that is a part of the core organization.
Work on removing these obstacles and keep your eye on the finish line. I promise you it will be worth it in the end. Building greater supply chain agility will enable your organization to innovate, drive cost reductions, improve service and meet customer expectations better than ever.
