The Importance of Supply Chain Agility

Most people have a general understanding of what a supply chain is. Essentially, everything that goes into producing and delivering a product/service is part of its supply chain. This begins with sourcing raw materials from which to use in the production process and ends with a product or service being delivered to the end consumer.

For manufacturers, understanding and properly controlling supply chains is a critical component of managing operations. Doing so guarantees that there is always enough supply to meet fluctuating demand. When fluctuations happen, they are accounted for and changes are made throughout the production process automatically to adjust.

What is Supply Chain Agility?

Agility, by definition, refers to the ability to move quickly and easily. Those “movements” can be mental, as in a thought reaction to an event, as well as physical.

In the manufacturing world, supply chain agility refers to the ability of a manufacturer to adjust its strategy and actions to the ever-evolving supply chain demands. In manufacturing, issues arise often that affect the optimal level of production. Being able to anticipate and prevent or bounce back from unexpected events all factor into an organization’s agility.

To have supply chain agility, manufacturers must have visibility throughout their operations, including access to accurate, real-time data. Knowing how to pivot quickly starts with an accurate baseline.

Organizations generally must also implement effective technology and automation process to optimize logistics such as order processing and scheduling. A proactive approach to monitoring and
adjusting based on demand is far more effective than a reactive approach.

Benefits of Supply Chain Agility

The benefits of having an agile supply chain are plentiful. Starting with the ability to consistently meet market demands, the positive impacts of this agility trickle all the
way down to the end consumer.

Ability to Meet Market Demands

A fluctuating market means demand for items isn’t consistent over time. Manufacturers with an agile supply chain can pivot quickly based on changing demand. An example of this is scheduling an additional production shift to meet production quotas as demand rises.

Reactive manufacturers lose time in waiting for demand to change prior to making internal changes. Those with an agile supply chain in place can better anticipate those changes. They can also have processes and technology in place to automate changes – such as in scheduling – rather than doing that manually.

Reduction in Supply Chain Costs

Keeping production and logistics costs as low as possible is critical for profitability in manufacturing. An agile supply chain is also an economic supply chain.

One of the ways these costs are reduced is by limiting excess inventory on hand. It costs money to store and transport inventory, so avoiding excess inventory in stock as much as possible (without running out while meeting consumer demand) is best. The automation used by most successful manufacturers also reduces labor costs by triggering actions based on set thresholds rather than having a human make those decisions.

Improvements in Customer Satisfaction

In this modern-day, consumers want products fast. In order to accommodate demands regarding order turnaround time, manufacturers need to have an agile supply chain. When fluctuations in demand don’t disrupt operations because processes and logistics are coordinated and automated, orders are going to consistently be processed, shipped, and delivered on time. Customers receiving their orders on time are more likely to convert into long-term, repeat customers.

An Inventory Optimization and Management System can
Improve Supply Chain Agility

So, how does a manufacturer create an agile supply chain for itself? It starts with advanced inventory management. This may be handled by a Manufacturing Execution System (MES) or another inventory management solution. Either way, inventory management should be directly integrated with all other organization functions, with changes being recognized and communicated in real-time.

An inventory management system accurately tracks receipts of raw materials, components, and finished goods as well as other helpful information, such as the production of finished and intermediate goods, remnants, and scrap. This information is taken directly from machine operations. It also tracks the dispatching of finished goods to fulfill orders.

Because of this high visibility level, manufacturers can adjust processes quickly due to changes in demand. And, because an inventory management system communicates with all other departments, adjustments can be made automatically all around.

IMCO Software – Solutions for Inventory Optimization & Beyond

The team at IMCO has been partnering with manufacturers for over two decades to achieve supply chain agility as well as many other production, quality, and profitability goals. From our proprietary software to our many partner integrations, we offer manufacturers a suite of solutions that are customizable to each organization.

Optimizing various manufacturing functions – such as inventory, shipping, and order fulfillment – requires high visibility, real-time communication, and process automation. The right combination of technology can completely transform your shop floor and your entire organization. We would love to show you how. Contact us today to get started