Impact Of Lean Production Model

Running head: LEAN VS AGILE
Process Improvement, Lean vs Agile
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LEAN V AGILE 2
Introduction
Agile supply chain is also a supply chain that can quickly respond to and meet customer
needs. Generally speaking, the acquisition of agile supply chain is built on the basis of lean
supply chain. A value-added and waste-free supply chain is the cornerstone of achieving "agile".
In addition, the agile supply chain is also achieved by creating a good cooperative relationship
between the parties in the supply chain and improving the competitiveness of the entire supply
chain. The so-called lean is to find the links and steps in the process that have no added value.
The core is to reduce all kinds of waste. Therefore, the lean supply chain refers to those non-
value-added supply links, processes or steps that are discovered, reduced, and eliminated to
achieve zero waste, that is, a lean supply chain. Although there is a natural connection between a
lean supply chain and an agile supply chain, it is generally believed that there are some
differences between the two. The main differences come from the different applications. Using
the findings from the article entitled “ an integrated model for the design of agile supply chain”
by Martin Christopher and Denis Towill and another article entitled “Lean and agile
manufacturing: external and internal drivers and performance outcomes”, by Mattias Hallgren
and Jan Olhager, the paper will attempt to distinguish the two terms and give suggestion on
which of the two is better in terms of process improvement.
Body/Findings
First, Martin Christopher and Denis Towill acknowledged the impact of lean production
model in revolutionizing production process in certain markets. These markets include
automotive and construction industries. These are industries where the cost is the primary order
winning criteria. However, they also revealed that lean model is not practical and feasible for all
markets. They revealed that agile model is feasible in markets where the order winner is

LEAN V AGILE 3
availability. Although Martin Christopher and Denis Towill discussed each of these models
separately, they maintained that the two are not mutually exclusive. In fact, their take away
message is that the companies should attempt to integrate the two.
Christopher and Towill (2001) identified three approaches for integrating the two models.
The first is pareto curve approach. This is based on the fact that in the production process,
products that account for 20% of total output are predictable. Therefore, lean production can be
used for the production of such products, while the remaining products with unpredictable
demand use more agile production methods. The second is the decoupling point approach.
According to this approach, it is believed that for the industry, the supply chain is divided into
two stages, the front stage and the back stage. The front stage of the supply chain uses the
principle of lean production, which mainly produces general modules for products, and the back
stage uses the principle of agile manufacturing, which mainly produces and assembles
customized product parts (Christopher and Towill 2001). The third strategy is separation of base
and surge demands.
Similarly, Hallgren and Olhager (2009) acknowledge lean and agile as two great models
used by managers to improve operations capabilities. However, they also noted that the choice of
which model to adopt depends on internal and external factors. Based on their study, they found
out that the two models differ in terms of drivers and outcomes (Hallgren and Olhager 2009).
They also found out that companies pursuing cost-leadership strategy should consider the lean
model while those companies pursuing differentiation strategy as well as the competitive
intensity of industry should consider the agile model. In terms of outcomes, lean model helps the
company reduce the cost. On the other hand, the agile model helps the company realize higher
volume as well as product mix flexibility. It can be deduced that Lean supply chains are suitable