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A lean and responsive supply chain is one that seamlessly integrates the ability to sense changing demand with the agile execution of plans.
The current business environment is extremely challenging—shorter product life cycles, product customization, changing customer demands and upstream supply fluctuations. As a result, the supply chain has become highly complex and uncertain for the organizations.
Seventy percent of executives who responded to an Accenture survey expressed dissatisfaction with their inability to predict their organization’s future performance in today’s new normal of market volatility and uncertainty.
What are the implications? The traditional model of planning and execution (fixed cost and long implementation time) will no longer work for organizations. They will need to move to a supply chain model that is demand-driven.
In this point of view, we have identified key elements of a truly integrated capability to help organizations formulate and implement an effective supply chain strategy. By creating supply chains that can sense and respond in real time, an organization can better navigate the increasingly volatile and unpredictable business environment.
A sense and respond capability ensures that there is one plan across the organization customized to meet the distinctive supply and demand needs. It is responsive to changing demand signals by planning per requirement, and synchronized with fulfillment by continually planning and replanning based on real-time data.
Well-coordinated execution across the supply chain helps respond to market changes and conditions more quickly than traditional supply chain models.
By leveraging flexible and adaptable operating models, organizations can seize opportunities based on actual demand, not just perceived demand.
It is supported by applications that can enable instant, accurate visibility inside and outside the organization.
We recommend three key steps to transform static supply chains into the supply chains of the future:
Getting control: Companies can deploy a “supply chain control tower” for visibility, predictive analytics and decision making, and improving business performance on a continuous basis. The control tower connects different business units, regions and legal entities, and gives organizations the flexibility to plug in new processes and technologies as per changing needs.
Creating adaptable structures: Sense and respond capabilities require an adaptable supply chain structure—building flexibility into the operating models that allow for adjustments to changing market conditions. By having operational flexibility, organizations can quickly respond and recover in case of any engineering change or disruption.
Executing with agility: The greatest value comes from agile execution—leveraging visibility and flexibility to rapidly respond to frequent changes that could negatively impact the business, if mismanaged or left unattended. Agile execution is enabled by various components such as sales and operations, and technology.
July 17, 2014
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