What Is an Agile Supply Chain? 10 Strategies To Improve Agility

Circuit for Teams can help improve your supply chain agility by giving you more control over your delivery process.

An agile supply chain can respond quickly to changes in the market, customer demands, and unexpected disruptions. It's all about being flexible, adaptive, and able to make speedy decisions.

In this article, I’ll explore the concept of agile supply chains and share practical tips and strategies to help you improve your supply chain agility.

I’ll cover everything from leveraging technology and optimizing processes to establishing better communication, providing employee training, and fostering a culture of continuous improvement.

By the end, you’ll be well on your way to developing your own agile supply chain and boosting your bottom line.

Key takeaways

Developing an agile supply chain means you'll be able to respond more effectively when the market changes, when customers want something different, or when unexpected things happen that could disrupt your operations.
Accurate information and data from your supply chain operations can help you to make smart decisions, predict changes in demand, and adjust your production and delivery plans quickly.
By building strong relationships and partnerships with supply chain partners, you can use your combined knowledge and resources, make processes smoother, and improve how the whole supply chain functions.
Embracing a mindset of continuous improvement can help you identify inefficiencies, eliminate waste, and streamline operations to increase profitability, responsiveness, and customer satisfaction.
Fashion retailer Zara illustrates an agile supply chain with its fast and responsive in-house production, efficient inventory management, collaboration with suppliers, and data-driven decision-making.
Choosing between a lean or agile supply chain depends on your specific industry, market dynamics, and customer requirements — you may want to combine elements of both approaches to create a hybrid supply chain strategy that best suits your needs.

What makes a supply chain agile?

An agile supply chain can adapt and respond instantly to changes, uncertainties, and customer needs.

If you sell peach milkshakes and your peach supplier runs out, do you have a plan in place to keep your business going, or are you turning customers away?

Being agile helps you stay on top of things and keep your business running smoothly, no matter what comes your way.

There are a few important criteria that support agile supply chain practices:

Control

In agile supply chain management, control means having a good grasp and clear view of the whole supply chain process.

It's like having a bird's eye view of everything from start to finish, including getting the raw materials (like peaches) and delivering the final product (the milkshakes) to customers.

By having control, you can stay on top of things and be ready for any potential problems that may arise. This helps reduce risks and make your operations more reliable.

Having control also helps different partners and people involved in the entire supply chain work together more effectively.

Accurate information

Accurate information requires real-time data and insights into things like how much inventory you have, what customers want, what's happening in the market, and what your suppliers can do.

With accurate information, you can make smart decisions, predict changes in demand, and adjust your production and delivery plans quickly.

Was it a bad harvest season for peach growers? Are customers even interested in buying peach milkshakes? Can you sell them year-round or only during the summer?

When you have timely and precise info, it helps prevent things from going wrong, cuts down on the time it takes to get stuff done, and makes it easier to meet customer needs.

Fast decision-making

When unexpected things happen or there are supply chain disruptions, you need to think fast. This could mean giving employees the power to make decisions based on what they know.

The milk supplier didn’t show up today, so there’s no base for the milkshakes. Can your employees handle this issue?

Fast decision-making also needs good ways of communicating and working together within the supply chain network. This lets everyone share information quickly and solve problems together.

Flexibility

Flexibility in your supply chain allows you to adjust and adapt quickly to changes in demand, market conditions, or disruptions.

This means being able to increase or decrease production quickly, change suppliers or where you get stuff from, and adjust how you distribute things when necessary.

Bad weather means people didn’t show up today for milkshakes. Are you throwing away unpurchased milkshakes, or do you have a plan for managing demand?

Being flexible helps you meet customer needs in an efficient way and stay ahead of the competition in fast-paced markets.

Collaboration

Collaboration means working together with suppliers, partners, and customers to achieve shared goals. This approach helps everyone communicate better, share information, and solve problems together.

How many peaches do you need to purchase at a time? How long will they last before going bad? Is there a way to preserve them? You’ll need to work together with employees and suppliers to find the answers.

By building strong relationships and partnerships, you can use your combined knowledge and resources, make processes smoother, and improve how your supply chain works.

Innovation

Innovation is like being a mad scientist in an agile supply chain. It means always looking for new ideas, technologies, and ways of doing things to make processes, products, and services better.

Do you have a new and exciting way to make peach milkshakes? Or a better way to keep them from melting too quickly on a hot day?

Embracing innovation helps you stay ahead of the competition, make things work better, and meet the ever-changing needs of customers. This can involve trying out new ways of making things, using data analytics, or exploring cool new technologies like the Internet of Things (IoT) and artificial intelligence (AI).

Sustainability

Sustainability requires thinking about the impact on the environment, society, and ethics in everything we do along the supply chain.

This involves reducing waste, cutting down on carbon emissions, making sure you get your supplies responsibly, and treating your workers fairly.

Who’s growing your peaches? How are they growing them? Are you throwing away too many peaches at the end of the day, creating unnecessary waste?

By making sustainability a part of the supply chain, you not only meet rules and regulations but also make your brand look better, attract customers who care about the environment (pro tip: most of them do!), and create long-term value for everyone involved.

Zara: An agile supply chain example

Let's take the example of Zara, a well-known fashion retailer, to illustrate an agile supply chain.

Zara's supply chain is considered agile due to several key factors:

Fast and responsive production

Zara has a unique "fast fashion" business model that allows it to respond quickly to changing fashion trends.

Instead of relying on long production cycles, Zara designs, produces, and delivers new clothing collections to stores in a matter of weeks.

This agility is achieved through close coordination between Zara's design teams, production facilities, and distribution centers.

In-house production

Unlike many other retailers, Zara has a significant portion of its production processes in-house.

This vertical integration gives them better control and flexibility over their production timeline. They can quickly adjust production volumes, introduce new designs, and respond to customer demands.

Efficient inventory management

Zara maintains a lean inventory strategy by producing smaller quantities of each design and frequently refreshing their product offerings.

This approach minimizes the risk of excess inventory and reduces the need for heavy markdowns.

Zara uses real-time sales data and customer feedback to analyze demand patterns and replenish popular items, optimizing their inventory levels and ensuring product availability.

Collaborative supplier relationships

Zara has built strong relationships with a network of reliable and flexible suppliers.

They work closely with their suppliers, sharing information and collaborating on production planning.

This collaboration with supply chain partners allows Zara to quickly adjust production capacity and respond to unexpected changes or shifts in demand.

Data-driven decision making

Zara heavily relies on data, analytics, and artificial intelligence to make informed decisions throughout its supply chain.

They gather information from various sources, such as point-of-sale systems, customer feedback, and market trends to identify emerging fashion trends and make accurate demand forecasts.

This data-driven approach helps Zara make faster decisions and allocate resources efficiently.

Lean vs agile supply chains

Lean and agile supply chains are different approaches to managing and optimizing the flow of materials, information, and products within a supply chain.

Ultimately, the choice between a lean or agile supply chain depends on your specific industry, market dynamics, and customer requirements. You may even want to combine elements of both approaches to create a hybrid supply chain strategy that best suits your needs.

Let’s explore the key differences between lean supply chain management and agile supply chains:

Focus

A lean supply chain is all about getting rid of waste, making things efficient, and getting the most out of every step. The goal is to cut out any activities that don't add value, make processes smoother, and save money by always looking for ways to improve.

An agile supply chain focuses on being flexible, responsive, and adaptable to quickly react to what customers want, what's happening in the market, and any unexpected things that pop up. This means quickly making decisions and adjusting how things are made and delivered in a snap.

Planning and forecasting

In a lean supply chain, accurate demand forecasting and long-term planning are key. The aim is to have a steady and predictable flow of materials and products to keep inventory levels low and be more cost-effective.

An agile supply chain puts more emphasis on short-term planning and being able to respond quickly using real-time data and feedback from the market.

This allows you to adjust production and distribution plans on the fly.

Inventory management

In lean supply chains, the focus is on keeping inventory levels low and reducing waste using strategies like just-in-time (JIT) inventory management, where inventory is delivered exactly when it's needed. This helps to minimize storage costs and the risk of having too much inventory sitting around.

Agile supply chains may have slightly higher inventory levels to make sure you can respond quickly and keep customers happy.

By maintaining safety stock and using real-time demand information to figure out the right amount of inventory, you can optimize inventory levels and be sure that products are available when your customers need them.

Supplier relationships

In lean supply chains, it's common to form long-term partnerships with a small number of suppliers. This allows for closer, more reliable collaboration, and strong relationships that can save you money and help you maintain quality.

When you have close relationships with your suppliers, they’re more likely to deliver things quickly to keep up with your production needs so you can adapt to changes in consumer demand and market fluctuations.

Risk management

In lean supply chains, the main focus is on stability and efficiency. Sounds great, right?

Well, it also means a more limited ability to handle unexpected disruptions or changes. On the other hand, agile supply chains have mechanisms in place, such as redundant suppliers, backup plans, and rapid decision-making processes that allow them to adapt and mitigate disruptions quickly.

This flexibility helps agile supply chains to navigate unexpected situations and maintain continuity in their operations.

10 Strategies to improve your supply chain agility

Putting the following agile supply chain strategies into action can help make your supply chain more flexible and better equipped to handle all kinds of situations.

1. Set goals

Defining specific objectives and key performance indicators (KPIs) gives you a direction for your supply chain operations and allows for continuous improvement.

Identify key improvement areas. Determine the specific aspects of supply chain agility that you want to enhance, such as reducing lead times, being responsive to market changes, or improving customer satisfaction.
Set SMART goals. Create goals that are Specific, Measurable, Achievable, Relevant, and Time-bound. For example, you could aim to reduce lead times by 20 percent within six months or increase customer satisfaction ratings by 10 percent in the next quarter.
Communicate goals. Make sure that all relevant stakeholders within your organization are aware of the goals and understand how they align with the overall business objectives. Clear communication helps everyone work towards the same targets.
Implement tracking mechanisms. Establish mechanisms to track and monitor progress towards the set goals. This can involve using key performance indicators (KPIs), data analytics tools, or regular progress reports to keep tabs on performance.
Foster accountability. Cultivate a culture of accountability, where individuals and teams take responsibility for their roles in achieving the goals. Encourage collaboration and empower employees to contribute their ideas and efforts towards improving supply chain agility.
Celebrate achievements. Recognize and celebrate milestones and achievements along the way. Acknowledging success boosts morale, motivates employees, and encourages a continuous improvement mindset.

2. Simplify processes

Streamlining and simplifying processes helps you to improve efficiency, reduce lead times, and quickly adapt to changing market demands. Here’s how:

Analyze existing processes. Take a close look at your current processes to identify bottlenecks, inefficiencies, and areas of complexity. This analysis will help you understand the areas that need improvement.
Use process mapping techniques. Utilize process mapping techniques like value stream mapping to visually map out and understand the flow of materials, information, and activities within your supply chain. This will give you insights into the current state of your processes.
Identify simplification opportunities. Look for opportunities to simplify processes by eliminating unnecessary steps, standardizing procedures, and automating repetitive tasks. Identify areas where you can streamline operations to reduce complexity and improve efficiency.
Implement lean principles. Apply lean principles to your supply chain, focusing on eliminating waste, improving the flow of materials and information, and empowering employees to make continuous improvements.
Regularly review and optimize processes. Continuously review and optimize your processes based on feedback, data analysis, and emerging best practices. Regularly seek input from employees and stakeholders, and leverage data-driven insights to identify areas for further improvement.

3. Embrace technology

Embracing advanced technologies and digital solutions helps you to optimize your supply chain operations, improve responsiveness, and gain a competitive edge. A few key approaches are to:

Evaluate your technological infrastructure. Assess your current technological capabilities and identify areas that can benefit from advancements. Determine where there may be gaps or opportunities for improvement in terms of efficiency, visibility, and collaboration.
Research and select cloud-based systems. Explore and select appropriate cloud-based systems that deliver real-time data sharing and collaboration across the supply chain. These systems allow for seamless communication, improved coordination, and better decision-making capabilities.
Implement supply chain analytics tools. Explore and implement supply chain analytics tools to gain predictive insights into demand patterns, optimize inventory levels, and effectively manage risks. These tools use data analytics and algorithms to deliver valuable insights for proactive decision-making.
Integrate IoT devices. Incorporate Internet of Things (IoT) devices into your supply chain network. IoT devices can enhance visibility by providing real-time data on asset tracking and condition monitoring, allowing for proactive decision-making based on accurate information.
Assess automation opportunities. Evaluate opportunities for automation and robotics in various supply chain processes, such as warehousing, order fulfillment, and transportation. Implementing automation technologies can increase efficiency, reduce human error, and accelerate operations.

4. Adopt a demand-driven approach

Adopting a demand-driven approach can help you align your supply chain with customer demand, improve responsiveness, and enhance overall agility. Here are some of the best places to start:

Implement integrated systems. Integrate systems that deliver seamless sharing of demand-related data across the supply chain. This allows all stakeholders to have access to real-time information on customer demand, enabling better coordination and responsiveness.
Use demand-sensing techniques. Utilize demand-sensing techniques, such as analyzing point-of-sale data, monitoring social media, and conducting market research to gain insights into changing customer preferences and trends. These techniques help you understand customer demand patterns and anticipate shifts in the market.
Foster customer collaboration. Building strong relationships with customers helps you optimize your supply chain to meet their needs. Use feedback mechanisms, surveys, and direct conversations to gather insights that inform demand-driven decisions.
Use demand forecasting. Use demand forecasts to optimize production schedules, inventory levels, and distribution strategies. By accurately predicting demand, you can avoid shortages or overstocking, optimize resource allocation, and improve overall responsiveness.
Analyze historical data and market trends. Analyze historical data, market trends, and external factors to generate demand forecasts that drive proactive decision-making and resource allocation. This analytical approach allows you to make informed decisions and adjust supply chain activities accordingly.

5. Build a resilient network

Building a resilient supply chain network of suppliers, partners, and logistics providers will help you reduce the impact of disruptions, improve your flexibility, and help you maintain a robust and responsive supply chain. Here’s how:

Seek alternative suppliers. Research and establish relationships with multiple suppliers for critical materials or components. This lessens the dependency on a single source and gives you options in case of disruptions or changes in market conditions.
Establish backup sourcing options. Identify backup sourcing options for key materials or components to mitigate risks. Having alternative suppliers ready to step in during emergencies or unexpected events helps maintain continuity in the supply chain.
Foster strong partnerships. Build strong partnerships with suppliers, logistics providers, and other stakeholders. Collaborate closely, share information, and establish mutual trust for effective communication, collaboration, and problem-solving during times of uncertainty.
Utilize multi-modal transportation. Using multi-modal transportation to leverage different modes of transport offers flexibility and efficiency. This allows you to adapt to changing circumstances, optimize delivery times, and mitigate disruptions in transportation.
Implement dynamic routing and tracking systems. Implement dynamic routing and real-time tracking systems to adapt to changing circumstances and optimize delivery times. These systems give you visibility into the movement of goods, enabling you to make informed decisions and respond quickly to disruptions.
Use supply chain analytics. Leverage supply chain analytics and predictive tools to identify potential disruptions and take preventive actions proactively. By analyzing data and trends, you can anticipate risks and implement strategies to minimize their impact on your supply chain.

6. Enable cross-channel integration

As omnichannel retailing becomes more prevalent, integrating different sales channels (such as brick-and-mortar stores, e-commerce platforms, and mobile apps) into a unified supply chain can enhance your agility. Below are a few pro tips:

Evaluate existing sales channels. Assess your brick-and-mortar stores, e-commerce platforms, and mobile apps to identify areas where integration is needed. Streamlining processes and creating a seamless customer experience should be the primary focus.
Implement an integrated inventory management system. Adopt an inventory management system that integrates across all sales channels. This shows real-time visibility of stock levels for accurate inventory information throughout the supply chain and allows for efficient inventory allocation.
Centralize order management. Establish a centralized order management system that consolidates orders from different channels. This allows for efficient order processing, allocation, and fulfillment, regardless of the sales channel.
Integrate customer data. Integrate customer data across channels to create a unified view of customer interactions and preferences. This lets you deliver personalized experiences, targeted marketing campaigns, and improved customer service.
Standardize fulfillment processes. Standardize your fulfillment processes across channels to deliver consistent service levels. Optimize your logistics operations to support seamless order fulfillment, whether it's from a store, warehouse, or through drop-shipping.

7. Invest in employee training

Investing in employee training and development will empower your workforce with the necessary skills and knowledge to adapt quickly to market changes and contribute to the agility of your supply chain. Start with these key pointers:

Identify training needs. Assess the specific areas within your supply chain that require training. Focus on areas such as inventory management, demand forecasting, data analytics, and problem-solving. Identify skill gaps and areas for improvement.
Develop comprehensive training programs. Design training programs that address needs and create a curriculum that includes both theory and practical application. Consider incorporating case studies, simulations, and real-world examples for well-rounded educational training.
Utilize various training methods. Use a mix of training methods to cater to different learning styles, including workshops, seminars, online courses, and on-the-job training opportunities. This variety helps employees to learn and apply new skills effectively.
Assess training effectiveness. Regularly assess and evaluate the effectiveness of the training programs by gathering feedback from participants and measuring the impact of the training on their performance. Use this feedback to make improvements and adjust the training programs as needed.
Foster a culture of learning. Encourage a culture of learning and development within your organization through ongoing opportunities for skill enhancement and career growth. Offer continuous learning resources, mentorship programs, and knowledge-sharing platforms to promote a learning mindset among employees.

8. Improve communication

Improving communication within your supply chain helps strengthen information flow, collaboration, and decision-making, ultimately improving supply chain agility and responsiveness. Here are some ways to accomplish that:

Identify communication gaps. Assess your current communication practices and identify any gaps or bottlenecks that hinder the flow of information. Look for areas where communication breakdowns occur, both internally within your organization and externally with partners and suppliers.
Utilize digital communication tools: Implement digital communication tools that offer seamless and real-time communication. Cloud-based platforms, instant messaging apps, video conferencing tools, and collaborative project management software can facilitate efficient information sharing and collaboration across different stakeholders.
Foster a collaborative culture. Cultivate a collaborative culture that promotes open and transparent communication by encouraging teams to share information, ideas, and feedback openly. Facilitate cross-functional collaboration and encourage departments to work together towards common goals.
Establish clear communication protocols. Define clear communication protocols and guidelines to maintain consistency and efficiency using standard operating procedures for communication channels, frequency, and content. Clarify roles and responsibilities to make sure everyone understands the communication expectations.
Regularly evaluate and refine communication processes. Continuously evaluate and refine your communication processes and solicit feedback from stakeholders to identify areas for improvement. Regularly assess the effectiveness of communication channels and practices and make adjustments as needed.

9. Foster a culture of continuous improvement

Fostering a culture of continuous improvement and engaging employees at all levels can help you tap into their expertise and creativity, leading to ongoing enhancements in supply chain processes and improved agility. Make sure to:

Create an environment for employee engagement. Establish an inclusive and open environment where employees feel empowered to share their ideas and suggestions. Encourage active participation by providing forums for idea generation, such as suggestion boxes, regular team meetings, or dedicated improvement sessions.
Offer continuous improvement training. Offer training programs on continuous improvement methodologies such as Lean Six Sigma or Kaizen. Equip employees with the tools and techniques needed to analyze processes, identify bottlenecks, and propose innovative solutions.
Form cross-functional improvement teams. Create cross-functional teams dedicated to driving continuous improvement initiatives within the supply chain. These teams can consist of members from different departments who collaborate to assess processes, implement improvement projects, and monitor progress.
Establish relevant KPIs: Define key performance indicators (KPIs) that align with your supply chain agility goals, such as lead time reduction, on-time delivery, inventory turnover, and customer satisfaction. Regularly track and monitor these KPIs to assess performance and identify areas for improvement.
Recognize and reward contributions: Acknowledge and reward employees who actively contribute to continuous improvement initiatives. Celebrate successes, share best practices, and publicly recognize individuals or teams that drive significant improvements.

10. Bring your delivery operations in-house

Bringing delivery operations in-house gives you more control over the delivery process, helps you to respond swiftly to customer demands, and optimizes the last mile of your supply chain. Here’s how to stick the landing:

Assess current delivery operations. Evaluate your existing delivery operations to identify any inefficiencies or areas for improvement. Consider factors such as delivery times, costs, customer satisfaction, and the level of control you have over the process.
Conduct a feasibility analysis. A feasibility study will help determine whether bringing delivery operations in-house is viable for your organization. Evaluate the cost implications, required resources (vehicles, technology, personnel), and your organization's capabilities to manage delivery operations effectively.
Invest in infrastructure and technology. Invest in the necessary infrastructure and technology to support your in-house delivery operations. This may include acquiring vehicles, implementing tracking systems, and utilizing delivery management software.
Train your drivers and dispatchers. Train your delivery personnel to make sure they have the necessary skills and knowledge to perform their duties efficiently. Give training on delivery protocols, customer service, and handling unexpected situations. Continuous training and development can help enhance their performance and adaptability.
Continuously monitor and optimize. Continuously monitor and analyze your delivery processes to identify areas for improvement. Utilize data analytics to optimize delivery routes, enhance operational efficiency, and proactively address any issues that may arise.

Discover how Circuit for Teams can bring agility to your supply chain

Circuit for Teams offers a powerful solution that brings agility to your supply chain by providing real-time coordination, route optimization, and efficient communication between drivers and dispatchers. With our innovative platform, you can streamline your delivery operations, respond quickly to changing customer demands, and optimize your last-mile logistics.

Discover how Circuit for Teams can revolutionize your supply chain and empower your business to thrive in the face of evolving market challenges.