In today’s fast-paced, fiercely competitive world of commercial new product development, Companies have discovered that it takes more than high quality, low-cost, and differentiation to excel. It also takes speed and flexibility. Companies are increasingly realizing that the old, sequential approach to developing new products simply won’t get the job done. Instead, companies in Japan and the United States are using a holistic method— as in rugby, where a team tries to go the distance as a unit, passing the ball back and forth— to better serve today’s competitive requirements. - Hirotaka Takeuchi and Ikujiro Nonaka, Harvard Business Review
Agile thinking, which is characterized by flexible, responsive and hyper-alert problem solving, is commonly applied to the field of logistics. There’s a good reason for this: mental agility in logistics allows businesses to compete at the highest level, use resources efficiently and cut back on wasteful performance.
Logistics professionals who are slow to adapt and only provide stock solutions can easily create situations of delay, revenue loss, dissatisfied customers and a state of confusion. In today’s business climate, connectivity, the grand scale of partnerships and complex communication keeps everything moving at fast speeds. Analysts have no choice but to adapt quickly to emerging consumer or company demands and come up with innovative ideas while in action and under pressure, even as the full details of the situation are still unclear.
The masters do all that without losing their cool. Here are some lessons analysts can learn from managing logistics with an agile approach.
In agile logistics, the make-to-order system had long been king of meeting customers’ needs in supply chain environments. Assembling products just the way a customer wants instead of offering stock models allowed Dell to become one of the largest computer suppliers in the world.
While the brand doesn’t make headlines like it used to in the late 1990s, Dell was an expert example of how agile logistics could generate a new business model that was capable of causing industry-wide shifts.
Dell looked at the new Internet resource and the growing, but diverse computer needs of buyers and strategized a way to provide customized personal machines on demand – and directly to consumers, cutting out the middleman. This innovation was a game changer at the time.
Now, Dell continues to show agile thinking by changing its model again now that consumers are less interested in customized computers.
The Takeaway: Not all industries can mimic Dell. Business analysts can, however, duplicate the company’s commitment to agile thinking by recommending strategies that involve:
1. Being bold enough to react to market changes as quickly as possible
2. Using fast product cycles
3. Offering a high level of variety for customers to choose from
4. Manufacturing according to real market demand and location, and, most importantly,
5. Being open to studying new and changing technology and how that can be paired with business practices to revolutionize industry activities.
Convenience Stores: Efficient Customer Response (ECR)
The link between agility and logistics is also evident in modern convenience store practices. Many convenience stores are built in commercial oases near residential areas. They provide key items for families who would rather not travel down to larger, far away supermarkets. Instead of trying to force products on consumers, they order products solely based on consumers’ wishes. These stores are thus, able to avoid large quantities of unsold stock, cut costs and target specific and not speculative demand. While 7-Eleven originated this agility technique decades ago, it was so successful that grocery stores also partially adopted it to compete.
The Takeaway: Analysts in the supply chain domain can consider these practical agility tips from the successful ECR model:
1. Forge strong and flexible supplier-vendor relationships that allow supplies to be shipped quickly and at a set price to meet the ebb and flow of customer demand.
2. Design a rapid and reliable system of communication between suppliers and vendors as well as between vendors and customers. ECR works because ground forces quickly identify and communicate customer needs to vendors, and the needs of stores to suppliers. This response model would break down if customers have to wait for products they want immediately.
As you can see, when it comes to logistics, the agile approach is best. Business Analysts who consider agility in proffering recommendations to their clients will continue to see increased opportunities for success.
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Willie Pena is a freelance writer, video producer, visual artist, and music producer. In addition to writing for firms such as IBM, Colgate, Transunion, Webroot and a multitude of private clients and websites, he also shoots, directs, and edits the hit celebrity web series “Teens Wanna Know”. Catch his rare blog posts on williepena.com, and connect with him on Google+, LinkedIn.