Lean vs. Agile: Why Choosing is no Longer Necessary
In a volatile world where disruption can seemingly be found around almost every corner, businesses are constantly seeking new ways to ensure the resilience of their supply chains and smooth running of their operations.
It’s why the battle between lean and agile – two very different supply chain approaches – has come to the fore in recent years.
“The lean supply chain approach focuses on minimising waste and maximising efficiency,” explains Umar Butt, Regional CEO of Europe at the international logistics and transportation powerhouse, Aramex. “It aims to streamline operations, reduce costs and eliminate any non-value-adding activities.
“Key principles within this approach include just-in-time inventory management and continuous improvement (Kaizen), as well as maintaining strong relationships with suppliers to ensure timely delivery of materials.”
Meanwhile, as its name suggests, the agile supply chain approach places emphasis on flexibility and responsiveness and is designed to enable firms to adapt quickly to changing market demands and external disruptions.
Agile supply chains tend to use tools like real-time data, advanced analytics and collaborative technologies to respond swiftly to customer needs and market conditions.
Umar continues: “Overall, the agile supply chain approach is about creating a dynamic and responsive ecosystem that can thrive in an unpredictable and fast-paced market environment.”
Two different approaches to SCM
Clearly, both lean and agile approaches to supply chain management have their benefits.
Those pursuing the former can rightly hope for and even expect increased efficiency, cost reductions, improved quality control and streamlined operations.
By streamlining operations, companies can easily simplify various processes, reducing issues such as lead times while driving benefits such as increasing throughput.
But it can’t all be plain sailing, as Umar notes: “The lean approach does have its downsides, such as causing issues with adapting to sudden changes in demand and potential supply chain disruptions, as well as having a high dependency on accurate demand forecasting.”
As one might imagine, taking an agile approach means greater flexibility, enhanced responsiveness to market changes and better customer satisfaction, meaning supply chains are better equipped to handle disruptions whether they stem from supplier issues, natural disasters or geopolitical events.
However, Umar warns that with increased agility comes higher operational costs.
“Maintaining the ability to quickly pivot and adapt requires investment in technology, skilled personnel and often higher inventory levels,” he adds. “There is also some complexity in managing diverse suppliers and partners, as well as potential challenges in maintaining consistent quality.”
Richard Tucker, Director of Supply Chain Business Development at Endava, points out that, in today’s fast-paced global market, a significant proportion of organisations are favouring agility in a bid to keep up with ever-changing demand.
He stresses, however, that any decision between the two different paths should depend on the type of business and its goals.
“Most of the time, lean supply chains are more cost-effective and predictable, while agile supply chains are more flexible and able to react to market changes quickly,” says Richard. “You need to consider your product, your customers and end users, the market and your partners and suppliers to determine which strategy works best for you.”
Supply chain strategy: a hybrid approach
So, if both of these supply chain management approaches offer such appealing benefits, how realistic is it to enjoy the best of both worlds and find a middle ground?
The truth is that combining elements of both the lean and agile methodologies is not only feasible, but also becoming increasingly popular.
“If suitable, a hybrid approach is possible for organisations finding that they need elements of both methods,” says Richard.
On paper it sounds fantastic, like the ultimate supply chain strategy – leveraging the efficiency and cost-effectiveness of the lean approach while maintaining the flexibility and responsiveness of agile methods.
By blending the two, companies have the ability to navigate modern markets and the challenges that come their way – both foreseen and unforeseen – more seamlessly.
However, playing devil’s advocate, Umar urges caution: “While employing such methods is entirely feasible, implementing a hybrid approach does require careful planning and coordination. Companies need to ensure the integration of lean and agile practices is seamless and in sync with their supply chain strategy and overall business objectives.”
Despite the potential pitfalls, hybrid models can of course be tailored to specific operational needs and market conditions, providing a balanced and resilient supply chain.
Umar explains: “Companies can implement lean principles in stable areas of their operations where demand is predictable and efficiency is paramount, whereas agile practices can be applied to parts of the supply chain that face more variability or uncertainty.”
He points to the fashion and retail industry as an example of where a hybrid approach is already being utilised, with brands using lean methods to manage the production of basic, high-volume items and agile methods for trendy, high-fashion items that require rapid turnaround and can be more volatile in demand.
Supply chain strategy: a hybrid approach
So, if both of these supply chain management approaches offer such appealing benefits, how realistic is it to enjoy the best of both worlds and find a middle ground?
The truth is that combining elements of both the lean and agile methodologies is not only feasible, but also becoming increasingly popular.
“If suitable, a hybrid approach is possible for organisations finding that they need elements of both methods,” says Richard.
On paper it sounds fantastic, like the ultimate supply chain strategy – leveraging the efficiency and cost-effectiveness of the lean approach while maintaining the flexibility and responsiveness of agile methods.
By blending the two, companies have the ability to navigate modern markets and the challenges that come their way – both foreseen and unforeseen – more seamlessly.
However, playing devil’s advocate, Umar urges caution: “While employing such methods is entirely feasible, implementing a hybrid approach does require careful planning and coordination. Companies need to ensure the integration of lean and agile practices is seamless and in sync with their supply chain strategy and overall business objectives.”
Despite the potential pitfalls, hybrid models can of course be tailored to specific operational needs and market conditions, providing a balanced and resilient supply chain.
Umar explains: “Companies can implement lean principles in stable areas of their operations where demand is predictable and efficiency is paramount, whereas agile practices can be applied to parts of the supply chain that face more variability or uncertainty.”
He points to the fashion and retail industry as an example of where a hybrid approach is already being utilised, with brands using lean methods to manage the production of basic, high-volume items and agile methods for trendy, high-fashion items that require rapid turnaround and can be more volatile in demand.
Dual SCM approach ‘delivers consistency’
Aramex is one of an increasing number of companies to have adopted a hybrid approach, integrating both lean and agile strategies across its operations.
Its commitment to this dual approach ensures the organisation can deliver reliable and high-quality services on a consistent basis, regardless of market conditions or the latest geopolitical state of play.
“Through utilising the duality of both methods, we find we’re able to drive efficiencies across our entire operation, while also being able to respond swiftly to market changes and customer needs,” Umar explains.
This approach also allows Aramex to remain cost-effective. By focusing on continuous improvement and optimising processes, it can lower operational costs, improve quality control and ensure a reliable and efficient service to clients.
Umar goes on: “Both approaches are very much a yin and yang way of operating, but, in many ways, integrating lean and agile strategies into one harmonious system is the fundamental reason we have remained at the forefront of global logistics for more than 40 years.
“Rather than attempting to go against the grain, we’ve been able to consistently flow with whatever market changes or challenges have come our way.”
How Endava boosted agility at Arm
Given the rapidly-changing business environment and constant threat of unanticipated interruptions, Richard’s take is that having an agile supply chain is essential.
When those rapid changes in demand occur, it’s crucial for supply chains to be able to quickly divert goods to another location or find alternative sources of supply.
“To achieve this, companies need to consider whether to pursue diversity of supply or rely on the convenience of just one supplier,” Richard emphasises.
“Consolidation and mergers with a view to bringing links in the supply chain ‘in-house’ will have implications for business restructuring and potentially for competition policy.”
Endava’s ability to greatly improve client outcomes while helping them implement an agile approach is perhaps best demonstrated by its work with the semiconductor giant, Arm, which powers technology used by 70% of the world's population.
Facing the challenge of on-premise compute limitations, which restricted its growth and caused workflow bottlenecks, Arm turned to Endava to help them become more agile by migrating workflows to the cloud.
Having adopted an agile supply chain methodology, Arm experienced a remarkable sixfold improvement in certain types of workloads. This transformation enabled it to scale up to 350,000 concurrent virtual CPUs, allowing engineering teams to perform verifications without needing to book slots weeks in advance. In turn, this not only streamlined processes but also significantly reduced time to market for its IP designs.
“To maintain its high standards of quality and timely delivery, Arm needed to overcome the growing complexity in IP design and verification,” continues Richard. “Its on-premises compute capacity was causing longer wait times for resources, hindering verification cycles and delaying their time to market.
“To improve the flexibility of its compute resources and reduce its global data centre footprint, Arm partnered with us to move the majority of its electronic design automation (EDA) workloads to the cloud.
This partnership has not only improved its operational efficiency, but also allowed it to continue delivering top-quality technology that transforms the way people live.
Supply strategy: Proactive over reactive
Companies were already faced with the challenge of establishing new supply chain strategies in the wake of COVID-19. In the ensuing couple of years, they’ve also been forced to quickly adjust their approaches in response to turbulence on the global stage.
Aramex and Endava are among the firms proactively managing and preparing for what has become an increasingly volatile marketplace, rather than simply reacting to issues as and when they occur.
Being able to adapt quickly to changing conditions, manage unforeseen disruptions and meet evolving customer expectations has become crucial in maintaining a competitive edge.
To read the full story in the magazine click HERE
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