The business landscape evolves rapidly. From emerging AI capabilities to consumer trends shaped by viral TikTok videos to shifts in manufacturing partnerships, countless factors influence how you source and distribute products. Agile businesses can adapt to these dynamic changes and turn them into competitive advantages—even when managing complex supply chains.
Laura Schwabe, vice president of supply chain at Austin-based Somos Foods, recalls an instance where agile supply chain management enabled the brand to pivot on a dime: A retailer collaborating with Somos on a product asked for a last-minute change. Ten days before the production run, they said the recipe for Somos’s exclusive Birria Taco Simmer Sauce needed to be adjusted to eliminate seed oil. Laura assembled her team and decided to make the switch to avocado oil.
“Within a week and a half, we were able to reformulate, get a new quote, generate samples, order new labels (because the labels had already been printed with the other oil), get to production, and get it to the US in time—and the product is actually better,” Laura says. “We were able to do what our customer asked at the final hour, and it resulted in a better product.”
Somos’ successful pivot was driven by its agile supply chain. Read on to learn how to develop supply chain agility for your business.
What is an agile supply chain?
An agile supply chain is a flexible approach to procuring materials, manufacturing goods, and selling the finished products to consumers. It allows you to adapt quickly when internal and external disruptions occur, adjusting your strategies based on real-time data. But agile supply chain management is about more than just crisis contingency plans—it facilitates all kinds of changes, like a rapid expansion or working with a new partner. In the end, it helps your company remain relevant and competitive by maintaining sufficient inventory and a high level of customer satisfaction.
Let’s say you face a delay in procuring raw materials to manufacture a product. In a scenario like this, an agile supply chain team can work together to adapt and find alternative solutions. Depending on the size of your company, you might simply handle this via emails and Zoom calls, or you might rely on enterprise resource planning (ERP) software to connect the various departments and teams, like manufacturing, warehousing, and shipping. Beyond merely reacting to events as they arise, you can also analyze data from your supply chain management software and study consumer trends to predict future demand and ramp production up or down accordingly.
Agile vs. lean supply chain management
Traditionally, lean and agile strategies in supply chain management have been considered separate modalities, but for many businesses today, the two are intertwined. Lean supply chains focus on trimming the fat off logistics and operations to cut costs, while agile supply chains are designed to change course quickly and effectively.
However, aspects of lean and agile supply chain models can be at odds. Take inventory levels: Lean inventory management tends to minimize inventory levels to keep warehousing fees at a minimum and reduce the risk of spoilage or obsolescence. An agile approach might have higher levels of inventory at the ready in preparation for a possible demand spike.
For Somos, agility doesn’t come at the cost of bloat. “I would say we’re super agile, but not in the traditional sense of burdening ourselves with inventory to flex to any scenario possible,” Laura says. “We’re agile in that we’ve set up our teams, our processes in the supply chain, to react quickly to new accounts, changes in demand, and market conditions.”
How to create an agile supply chain
- Analyze data
- Train your team
- Diversify manufacturers
- Choose agile warehouse partners
- Adopt technology
While the type of product you produce, your company’s scale, and your supply chain’s geographic location factor into your ability to create agile processes, there are a few key steps to consider:
1. Analyze data
Data analysis is foundational for agile supply chain practices. Accurate data, typically culled from an ERP system that tracks product performance and other stats, can help you make decisions around procurement, the manufacturing process, and inventory levels. Let’s say there is a significant spike in demand for a particular food product every February in connection with the Super Bowl; a business could plan to ramp up production, arrange for additional warehousing space, and change delivery routes on an as-needed basis, depending on local demand fluctuations.
Use your data to gauge when to adjust production levels and shipping routes. Over time, you’ll also be able to assess suppliers’ ability to accommodate demand fluctuations.
2. Train your team
Businesses with an agile supply chain may encourage decentralized decision-making, rather than a traditional top-down hierarchy. “We have a very agile and open culture,” Laura says. “No process is the best process. If anyone sees an opportunity for improvement or efficiency, it’s all hands on deck.” This approach allows team members on the ground to make quick, accurate assessments, followed by decisive action.
To facilitate this, provide team members with the tools and training necessary to respond quickly to supply chain situations and make data-driven decisions. Reduce bureaucracy by simplifying decision-making steps, and provide a clear rubric for assessing which decisions can be made on the fly and which require approval.
3. Diversify manufacturers
Operations that use an agile supply chain model may invest in some degree of supplier redundancy. Many consumer packaged goods (CPG) companies, for example, formulate or manufacture products in two or more locations for geographic accessibility and to easily increase production. “That allows us to quickly ramp up if we were to get a club opportunity [Sam’s Club or Costco] on that item,” Laura says, “If you sell into a club account, the volume is significantly higher than what’s required for a traditional retailer.”
4. Choose agile warehouse partners
Outside partners like warehouses and fulfillment networks must also be flexible for an optimal agile supply chain. “In CPG, the supply chain can be a nightmare,” Laura says, noting that delays, mistakes, and markups can occur at each touchpoint, from procurement to distribution. Reducing the number of touchpoints can help you move more quickly.
To this end, Somos recently made the switch to a full-service warehouse, which doubles as a logistics partner. The warehouse stores all of Somos’ products, which are then delivered using the warehouse’s own trucks, rather than Somos contracting with another company to pick up and deliver its products.
It’s been a worthwhile endeavor thus far. “When you find a partner that you trust and who can control your inventory without much variance, I think it’s very important,” Laura says.
5. Adopt technology
Useful software is available for every facet of supply chain management. Streamline, Anaplan, SAP Advanced Planning Optimization, Oracle Supply Chain Management, and Kinaxis are supply chain platforms with robust planning, inventory management, and consumer demand and forecasting.
Additionally, supply chainvisibility solutions like Project 44, Coupa, Blue Yonder, and SAP Integrated Business Planning can help teams locate products at the procurement, manufacturing, and warehousing stages in real time. Visibility software can also identify issues around repeat bottlenecks or production delays for remediation.
Agile supply chain FAQ
What are the 3 T’s of an effective supply chain?
The three T’s of effective supply chain operations are transparency, time, and trust. Transparency is visibility into processes across the entire supply chain for all parties involved. Time is the speed and efficiency of the supply chain. Trust involves confidence in decisions among team members and partners.
What is the difference between lean and agile supply chains?
A lean supply chain focuses on cutting costs by trimming back processes that have become redundant or outdated, and eliminating waste. The main goal of an agile supply chain is to be flexible so that when change occurs, the supply chain can efficiently adapt without disruption to the consumer.
What is an agile supply chain strategy?
An agile supply chain strategy is flexible, with multiple contingency plans in place should disruptions occur. Some disruptions might be surprises, like a surge in consumer demand based on a random viral TikTok video. Others are planned, such as a massive expansion.
