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Differences Between an Agile Supply Chain and Lean Supply Chain

You are currently viewing Differences Between an Agile Supply Chain and Lean Supply Chain
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The supply chain in today’s world of eCommerce has become much more complex. Ever-changing consumer behavior and market dynamics are the driving force of modernization and agility in the supply chain to achieve the goal of customer happiness and business growth. This agility in eCommerce determines how quickly an eCommerce business can adjust to customers’ expectations in speed and delivery of the product to their doorstep.

Through a lean supply chain, organizations try to reduce cost by producing high volumes of products with low variability. With an agile supply chain, organizations respond to the market demand with fewer customizable batches of products. While a lean supply chain is more cost-effective and predictable, an agile supply chain is more flexible and adaptable.

What is a Lean Supply Chain?

A lean supply chain focuses on the operation and delivery of the products quickly to the end customer, with minimum waste. Through lean supply chain management organizations strives to become more efficient trying to reduce the price of the goods and lower the waste. Lean supply chain works on the principle of reliability and predictability rather than on flexibility and adaptability.

Following are some of the factors to be considered while designing the Lean Supply chain strategy:

  • Prioritization of customer needs
  • Quick & efficient response to the customer demand
  • Prediction of the consumer behavior and adapting accordingly
  • Understanding the value stream
  • Benchmarking the best practices
  • Inventory waste reduction
  • Optimization of the order fulfillment
  • Automation

Through its real-time dashboard inventory reporting, ShipBots can help track and control your inventory levels in order to avoid any waste. It also helps in predicting the consumer buying patterns and provides a sales forecast to keep you from over or understocking the inventory. You can optimize your supply chain by maintaining a safe level of inventory.

Through historical data of sales, you can perform demand forecasting and sales. You should also perform inventory audits at a regular interval to avoid shrinkage. Using a 3PL fulfillment company helps in optimizing the supply chain by reducing the warehousing cost, faster delivery, and streamlining the fulfillment process.

What is an Agile Supply Chain?

The agile supply chain is designed to work on the principle of responsiveness, competency, flexibility, and quickness. It also works the ability to anticipate, and mitigate any disruption in the flow of goods. The agile supply chain works on the real-time collaboration of all the stakeholders involved in the supply chain process.

Following are some of the factors to be considered while designing the agile supply chain:

  • Accuracy in the demand forecasting
  • Using real-time data and collaboration
  • Incorporating warehousing technology
  • Inventory distribution
  • Using third party logistics

Inventory and demand forecasting is equally important in both lean and agile supply chain methods. Access to real-time information and reporting is the key determinant of success in the agile supply chain method so that you can adapt to customer preferences. Using a 3PL company helps you to distribute your inventory across various strategic locations in order to fulfill the order faster. ShipBots provides you with multiple warehouse locations across America to significantly reduce the lead time.

How to Choose between a Lean and Agile Supply Chain

Both lean and agile supply chains have their pros and cons. In order to decide what works for your business, consider these factors:

  • Types of goods you are producing or selling
  • Product sales volume throughout the market and industry
  • Your niche and the target market
  • Customer feedback and behavior
  • Market demand and demand fluctuations
  • Market and industry trends
  • Economic trends
  • Length of your supply chain

Demand for some basic products stays even and more predictable. Organizations that produce functional products like food and toiletries rely more heavily on the lean supply chain methods to make them competitive in the market.

Industries like fashion, especially fast fashion, change very rapidly and those companies rely on the agile supply chain to quickly respond to the changing trends in the market.

E-commerce is a fast-paced industry, in order to meet customer expectations it is very important to optimize the supply chain using the latest technology. Partnering with a 3PL company can significantly reduce the logistics cost by optimizing shipping, warehousing, and fulfillment. With ShipBots, you can optimize your supply chain whether lean, agile, or hybrid without the capital investment in infrastructure or technology stack.

In the wake of the COVID-19 pandemic, eCommerce businesses realized that their supply chains were not agile enough to keep up with sudden spikes in demand or major delays due to supply chain disruption. Both agile and lean supply chains are different in terms of dynamics and practicality which are used for different types of industries, products, and issues. Hybrid supply chain bridges between agile and lean strategies, which is a more dynamic combination of both.