Lean versus Agile Supply Chains

Supply Chain Structure
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Table of Contents
Introduction................................................................................................................ 2
Description of Lean versus Agile Supply Chains.........................................................2
Application of the Strategies to the Organizations..................................................3
Benefits and Drawbacks of Each Strategy with Examples..........................................3
Implementation of the Strategies by either Company A or Company B.....................5
Real World Example of an Organisation that has Successfully Implemented the
Strategy...................................................................................................................... 7
Evaluation of the Success since Implementation of the Strategy............................7
Conclusion.................................................................................................................. 8
References................................................................................................................. 9

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Introduction
The paper will consider two organizations, company A and Company B as a case study. It will
describe lean versus agile supply chain strategies and identify the application of the approaches
to the organizations. It will also determine the drawbacks and benefits of each of the strategy,
along with real-world examples. It will evaluate the implementation of the strategy by either
Company A or Company B and consider the needs for each case. Moreover, it will provide a
real-world example of a company which has implemented the strategy successfully and analyze
the success the company has achieved from the application of that strategy.
Description of Lean versus Agile Supply Chains
Lean supply chain strategy is about decreasing costs and reducing wastes as much as possible.
This strategy is vital for companies with vast bulks of purchase orders as costs and wastes could
be accumulated rapidly. Moreover, the organizations with vast amounts of low variability
purchase orders like items of food can be benefit for their productivity greatly by using the lean
strategy (Ahmed and Huma, 2018). The suppliers have one contact point across the whole
organization and another contact managing their relations. The same price is offered to all the
locations of the organizations by the suppliers.
Anything that does not add value for the clients is removed in this strategy. While applying this
strategy, the companies continuously look for methods to eliminate the layer of wastes as well as
implement those measures that can add value to the products or services. This strategy depends
on the predictions to forecast the numbers of inventory will be required to fulfil the demands. In
some of the lean supply chains, the goods are produced on an as-needed basis to avoid
unnecessary or excess production (Ciccullo et al., 2018). This strategy is best in those markets
which does not change much.
On the other hand, agile supply chain strategy is a highly flexible strategy for being able to
rapidly adjust to the changing circumstances. This strategy is considered significant for those
companies who want to adapt to the unexpected external changes of the economy like
technological changes, changes in customer demands and economic swings (Dubey and
Gunasekaran, 2015). Applying this strategy enables the companies to rapidly adapt their sales,
logistics and sourcing.

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This strategy waits to observe the market demands before the production is completed. The short
term predictions help the organizations to remain responsive, but a crucial aspect of this strategy
is that it responds to the demands as it takes place. Agile supply chain strategy leads towards the
short order lead times and quickly react to the clients. If some unexpected situations occur like a
regular supplier fails to fill the orders, this strategy allows flexibility.
Application of the Strategies to the Organizations
Agile supply chain strategy can be applied to Company A since this manufacturing company
supplies to the construction industry and is presently examining its manufacturing procedures for
improving its production, increasing the customer responses and reducing lead-times. This is an
attempt by the company to maintain the demands and increased needs of the customers.
Lean supply chain strategy can be applied to Company B since this company is looking to
develop its manufacturing procedure to increase the competition in the markets and also reduce
the costs of the inventory and have better capital management for managing its cash flows.
Benefits and Drawbacks of Each Strategy with Examples
Lean Supply Chain Strategy
Benefits
 Minimizes Wastes and Costs - The essential benefit of the lean supply chain is that it could
effectively minimize waste in the production facilities (Frazzon et al., 2017). As the
organizations sit on a huge amount of wastes and inventory, this strategy removes aged or
outdated inventory. It also reduces costs in the operational facilities of the companies. For
example, Toyota reduces 50% of costs in equipment and 40% in cooling systems by
eliminating all forms of organizational wastes
 Improves Client Relationships - Rather than only concentrating on the needs of all the
customers, this strategy focuses mostly on trusted customers. In this way, the companies can
form reliable and strong relations with loyal customers and maintain the steady flow of the
revenue (Gligor, Esmark and Holcomb, 2015). For example, Toyota offers superior quality
of automotive products at an affordable price to meet the desires of the customers
 Lean Infrastructure - It implies dealing only with many components such as supplies, tools,
equipment, labor and buildings to meet the demands of near-term inventory. The companies
do not waste any area in operation and allow them to come as close as it could to the