Being nimble and quick helped a certain young fella clear the flame on that candlestick – and a nimble supply chain can help your company react to fires that flare up from time to time. Actually, a truly nimble supply chain not only reacts to fires, but can keep your company from running into them.
What is a nimble supply chain?
There is a distinction between an optimized supply chain and a nimble supply chain.
While a nimble supply chain is likely one that has been optimized, an optimized supply chain is not necessarily nimble. Which is fine. Most of the time.
My general definition for an optimized supply chain is one that “gets your customer what it wants, when it wants it – and does that costing you the least amount of money.” Optimized supply chains have processes in place that maximize the efficiencies of – and plan using accurate data related to – customer demand, customer ordering patterns, inventory control, supplier lead times – and a host of other factors.
(A sub-optimized supply chain is one that does not have control of one or more of these factors. For example, a company that can ship to its customers on time, but does so by carrying too much inventory, is not sporting an optimized supply chain.)
To understand the difference between an optimized supply chain and a nimble supply chain think about the difference between highway driving and urban driving.
Highway driving is optimized driving.
It takes you the longest distance with the fewest number of stops, while you’re traveling at a higher rate of speed. It’s why you would drive from St. Louis to San Francisco on a highway. It’s a more optimal way of driving than if you tried to make the same 1700-mile drive using surface streets.
But sometimes highway driving doesn’t get you where you need to go. In some scenarios, you might be heading in a direction fraught with distractions and unpredictable roadways. And in the middle of the journey – your destination changes and you have to make a sudden left turn. Highway driving doesn’t do you any good when that happens.
Instead of highway driving, in that scenario, you need nimble driving. You need to be able to change directions without losing a sense of where you’re going and how you’re going to get there. Nimble driving is not the same as erratic driving. And your supply chain can’t be nimble (or optimized) if it is erratic.
Your nimble supply chain anticipates changes in your customer demands (by studying the market landscape, by demand planning, by communicating with your customers often, etc.). Your nimble supply chain has locked up production time at your suppliers and reserved raw materials, to allow for sudden changes in supply requirements. Your nimble supply chain constantly analyzes and adjusts re-order points, safety stocks and supplier lead times.
Long supplier lead times are the most challenging obstacle in creating a nimble supply chain. How do you make that sudden left turn in meeting a revised customer need if it takes 12 weeks for your suppliers to deliver product to you?
That’s where constant communication with your customer is key. If you can find out about that revised customer demand 12 weeks before they need it – instead of 12 hours – you’re on your way. Also, work to shorten that 12-week lead time – possibly by utilizing third party logistics providers.
Jumping over candlesticks is one thing – and the stuff of nursery rhyme legends – but the real advantage of being nimble is that you and your customers can get a real leg up over your competition.