Supply Chain Operations Management: Strategies for Company B Analysis

This report critically examines supply chain management models, focusing on the differentiation between lean and agile supply chain strategies and their suitability for a company. It delves into the benefits and drawbacks of each strategy, supported by examples. The report analyzes the implementation of these strategies, particularly focusing on Company B. It also provides a case study of a company that has successfully adopted either or both of these strategies. The report provides detailed insights into the application of these strategies, including the reduction of waste, cost minimization, and the enhancement of market dynamics. Moreover, the report also focuses on the practical implications of lean and agile supply chain strategies, considering factors like inventory management, customer relationship management, and technological advancements. Finally, the report highlights how companies like Ford Motor Company have used lean strategies to improve their operations.

Supply Chain Operations
Management
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Table of Contents
Introduction......................................................................................................................................2
Brief description of lean versus agile supply chains and suitable strategy for the organisation.....2
Identification of the benefits and pitfalls for each strategy.............................................................4
Implementation of these strategies by company B..........................................................................5
Example of a company that has effectively implemented one (or both) of these strategies............6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
The primary aim of the paper is to critically reflect on the models of supply chain management,
which is determined to be effective resource management. It will help in differentiating the
major supply chain techniques and concepts such as lean versus agile supply chain strategy and
the suitable strategy for the company. The paper will discuss the benefits and pitfalls of these
strategies with the help of relevant examples. It will focus upon the implementation of these
strategies either by company A or B. It will also provide a real-life example of a company that
effectively implements the supply chain strategies.
Brief description of lean versus agile supply chains and suitable strategy for the
organisation
For an organisation who intends to maximise profits and fuel growth, it is significant to structure
the supply chain management around the fluctuating relationship among the demand and supply.
As a result, supply chain strategies helps in enhancing the market dynamics of a company
(Ciccullo et al., 2018). There possess two strategies of supply chain management they are, lean
supply chain strategy and agile supply chain strategy.
The lean supply chain is determined to be the traditional factory chain that emphases on creating
greater volume at reasonable price. The major aim is to increase value for the consumers by
lowering waste and minimising the price of the products. Whereas the agile supply chain is
regarded as highly flexible, that helps in immediately adjusting to the changing situations
(Qamar, Hall and Collinson, 2018). With the help of this method, it becomes easier to adjust
logistics, finding and sales in response to the aspects that include customer demand, technology
changes and economic fluctuations.
The variance among agile and lean supply chains is considered to be the variability in relation to
the market. An agile supply chain emphasises market demand with customizable and smaller
batches of items. While a lean supply chain emphasis on minimising cost by creating high
volumes of goods with low inconsistency. Often an agile supply chain is more adaptable and
flexible, whereas the lean supply chain is more predictable and cost-effective (Gligor, Esmark
and Holcomb, 2015). Lean supply chain uses fewer resources to maximise value and reduces the

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lead time. While, agile supply chain focuses on market sensitive to achieve competitive
advantage as well as improves network infrastructure.
Figure: Agile versus Lean supply chains
(Source: Qi et al., 2017)
However, a lean supply chain strategy can be applied to company B as it seeks to manage the
cash flow, minimise the inventory costs and increase competition within the market. Lean supply
chain management helps the organisation to minimise waste and costs by focusing on
streamlined and efficient operations. By implementing this particular strategy, the organisation
will be able to take steps to include value to service and products and remove layers of waste. It
can be seen that company B possess a higher level of inventory and as compared to company A,
it has a more sustainable order size and less variation in manufactured products. Thus, lean
strategies will further predict how much inventory is required for the company to fulfil the
demand (Rahiminezhad Galankashi and Helmi, 2016). This particular strategy is best suited to
company B as it possesses good forecast from its consumers, and the strategy helps in attracting
more number of customers.
Moreover, it has been observed that although company B has huge customer-base, still it faces
challenges related to time issues. Hence, lean strategies will help the company to reduce lead
time by planning the manufacture before months or even years. However, pre-planning of the
production will be helpful for company B to get the lowest potential cost, especially for huge
volumes of products (Tarafdar and Qrunfleh, 2017). It has been noticed that due of a high
number of work in progress, the parts of the products are surrounded all around the shop floor.

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Therefore, a lean strategy will help in increasing productivity that in turn, will reduce the work-
in-process inventory.
Identification of the benefits and pitfalls for each strategy
Benefits of lean and agile strategy
The benefits of lean strategy are that it helps in minimising the inventory cost through mass
production. It also helps in reducing the transaction volume that helps in improving the supply
chain. It makes the organisation action biased where consumer requirements are fulfilled rapidly
in the shortest possible time. This strategy helps in incorporating current needs into the
production process that facilitates new products within the market (Stevens and Johnson, 2016).
It helps in reducing lead time and space utilisation and enhances quality improvement.
Moreover, streamlining and documentation of processing allow the out-sourcing of non-critical
functions. It enables organizations to fulfil consumer needs and focus on core competencies. For
example, Nike has adopted a lean strategy that helped the company to minimise production time
and material waste. The lean strategy helped Nike to operate the supply chain more efficiently.
Agile supply chain strategy also possesses various benefits such as it makes use of updated
information and real-time data. It is also beneficial in improving the productivity and efficiency
of the given entity. Another benefit is that it focuses on removing excessively stocked inventory
and avoiding potential shortages. It is advantageous when producing customizable and fast-
changing items (Govindan et al., 2015). It helps the organisations to respond to new market
opportunities immediately. For instance, IBM uses an agile strategy by developing agile concepts
and agile capabilities, learnings and frameworks into operations, processes and people.
Pitfalls of lean and agile strategy
Lean supply chain strategy possesses certain limitations such as it is highly dependable on
suppliers to serve goods for the process of manufacturing. It creates problems like quality errors,
transportation delays and employee strikes. The lean manufacturing process needs a complete
renovation of manufacturing systems that may lead to rejection by the employees and cause
stress. It leads to disruption in the manufacture and supply chain that creates a negative impact
on the consumers (Ahmed and Huma, 2018). As a result, the vendors may be unwilling or unable
to supply products or parts with unprofitable costs that directly affect the manufacturing process.

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For example, after the implementation of a lean strategy, Toyota has to face delivery delays that
resulted in long-term marketing problems.
Agile supply chain strategy also comprises of various disadvantages such as the agile
manufacturing operations are unclear that creates challenges to account the production process,
time, cost and resources. It clearly states that the implementation of agile strategy serves limited
resource planning. Through an agile strategy, it becomes difficult to track the progress of overall
production. For example, after the implementation of agile supply chain strategy it became
challenging for Tesco to track the development of the organisational activities. This particular
issues arose because of limited resource planning. Changes in the cycle make the team unable to
facilitate output in a single unit. If there possess a sudden growth in both variety and volume
shortages will take place. In order to operate an agile manufacturing process, companies need
highly skilled personnel (Thanki and Thakkar, 2018). Moreover, due to interchangeability, the
installation costs and maintenance cost is high. The agile strategy needs management and
planning as the management of these systems is intensive and difficult. Due to new technology
and short-life cycles, the workers and machinery need to keep up-to-date.
Implementation of these strategies by company B
Implementation of Lean supply chain strategy by company B
It can be seen that company B's objective is to have better-managed cash flow, reduce inventory
costs and enhance competition within the market. Hence, the adaption of the lean supply chain
strategy will be helpful in achieving these objectives. The company can implement this strategy
by eliminating all waste within the supply chain. The implementation of this strategy requires all
the functions and departments within the company to work in collaboration (Abdollahi, Arvan
and Razmi, 2015). Furthermore, the company is also required to consider technological
advancements to enhance the supply chain. Hence, the organisation must focus upon Customer
Relationship Management, Omni-channel fulfilment, Customer Order Management and
Workforce Management. Moreover, it is significant for the organisation to present the data
regarding consumer usage in front of all the members of the supply chain. Implementation of this
strategy needs to generate a level flow of information and material (Li et al., 2017). The
company must focus on reducing outbound and inbound transportation logistics that help in
fulfilling consumer demands. This aspect leads to reduced waste of overproduction, increased

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flexibility and reduced reliance on forecasting. As the company deals with the issue of lead time,
hence it becomes essential for the company to increase velocity that helps in minimising lead
times and inventories and allows the company to meet the actual consumer requirements.
Implementation of Agile supply chain strategy by company B
Company B can implement agile supply chain strategy by developing a prototype that focuses
towards the demand of the customers. Implementation of the agile strategy includes regular
testing of ideas and products during the development phase. Thus, it is essential for the company
to create an agile team that will focus on attaining a fast output by developing frameworks and
processes (Purvis et al., 2016). It is important for company B to tolerate failure and reward
efficiency. Building agile supplier contracts will help the company to implement this strategy. It
will also help in building strong and positive relationships with the suppliers to serve the
products. The implementation of this strategy helps in minimising risk within the supply chain.
To implement an agile strategy, it is significant for company B to have collaborative technology
and integrated internal systems to leverage external and internal knowledgeable resources. It will
help the company to enhance manufacturing operations and develop services and products to
serve customer value. It is also significant for the company to determine the appropriate
information to capture market share objectives and sales and design the supply chain (Potter,
Towill and Christopher, 2015). It needs company B to gather information about the behaviour of
the consumers, along with the consumers who are willing to pay for its goods. However, as the
company gets a good forecast from its huge customer base, thus, it is essential to determine
whether the company enables and promotes information sharing and collaboration for informed
decision making (Gaudenzi and Christopher, 2016). Therefore, implementing this strategy will
help the company to provide an immediate response to the customer needs without increasing the
product cost and sacrificing the quality of the product.
Example of a company that has effectively implemented one (or both) of these strategies
Ford Motor Company is determined to be an American multinational automobile manufacturing
company that was founded on 16th June 1903 by Henry Ford. On January 1995, the company
adopted a lean supply chain strategy, which is called as the Ford Production System (FPS). By
adapting FPS, Ford transformed itself from a mass production system to lean manufacturing

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system. Based on this system, the aim of the firm is to facilitate disciplined, suitable and lean
production system. This strategy helped the company to employ groups of empowered and
capable people, working and learning together safely (Simatupang and Sridharan, 2018). With
the help of this system, Ford uses data and time management, process confirmation, visual
management and policy deployment. As a result, FPS facilitates a more capable and aligned
organisation that improves its operations and provides the best manufacturing environments.
With the successful implementation of the lean strategy, the company can together bring
mechanical resources, material and people at the appropriate time. It helps the company to
achieve the organisational goals minimising the cost and sustainable improvement (Swenseth
and Olson, 2016). The implementation of this strategy enabled the company to remove seven
types of waste that involves waste from products defects, waste of motion, inventory waste,
waste of waiting time, processing waste, transportation waste, and overproduction. On the other
hand, all the plants of Ford have implemented lean manufacturing system into their operations.
However, it can be seen that after the adoption of lean supply chain strategy, the company has
gained savings of $500 million per year (Moyano-Fuentes, Bruque-Cámara and Maqueira-Marín,
2019). At the plants, the personnel also achieved web-based training, whereas best practices were
recognised and shared among the plants. By 2003 Ford has implemented the procedure of
standardising manufacturing operations all over its plants worldwide. Thus, the firm adapted
uniform plant layouts as well as standard operating procedures.
Henry Ford practised lean principles to create the best product and supply it to its consumers.
The lean strategy helped the employees to execute their work more efficiently by eliminating the
waste. The integration of moving conveyance, human effort and individual parts state the facts
that the company makes efficient use of lean principles. For instance, Ford has created Model T
with a small group of engineers in one large room under his direct oversight (Mittal et al., 2017).
This clearly states that the company surely utilises lean practice in its business operations. With
the implementation of lean strategy, Ford used effective techniques to improve some of the areas
such as customer service, manufacturing products on time, welding, wasted materials, high
wages and standardisation. Ford has implemented various lean techniques into its assembly
operations and is looking forward to making huge progress in manufacturing productivity.

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The company use six sigma techniques like the process of problem-solving to get solutions to
waste issues. However, the organisation's lean methodologies for waste elimination and quality
improvement saw a stunning effect on the business processes. Adoption of lean methodologies
helped Ford to overcome from the lowering environmental impact by minimising solvent
consumption, increasing the satisfaction rates of the consumers, improving quality and reducing
the cost (Tortorella, Miorando and Tlapa, 2017). The lean strategy also helped the company to
break down complex tasks into easier processes by utilising interchangeable parts and specialised
tools. It enabled the company to use existing processes and make them effective, efficient and
functional.
Conclusion
The paper concludes by analysing the supply chain strategies like lean and agile strategy within
the organisations. Based on differentiation, it has been observed that an agile strategy focuses on
adaptability and flexibility, whereas lean strategy emphasises predictability and cost-effective.
Moreover, it can be seen that a lean strategy could be applied to company B as it seeks to reduce
inventory cost and manage cash flow. It also discussed the benefits and pitfalls of these strategies
for the organisations. By providing an example of Ford Motor Company, it discussed the fact of
how the company has successfully implemented lean manufacturing system into its business
operations.

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