Leagility: Integrating the lean and agile manufacturing paradigms in the total supply chain

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Abstract

As the lean thinking and agile manufacturing paradigms have been developed there has been a tendency to view them in a progression and in isolation. This article shows that this is too simplistic a view. The use of either paradigm has to be combined with a total supply chain strategy particularly considering market knowledge and positioning of the decoupling point as agile manufacturing is best suited to satisfying a fluctuating demand and lean manufacturing requires a level schedule. This view is supported by consideration of a PC supply chain case study.

Introduction

Two current popular paradigms are lean thinking and agile manufacturing. As new paradigms are developed and promoted there is a tendency to view them in a progression and in isolation. Thus there is a view that first there was a need to adopt the lean manufacturing paradigm and now manufacturers should strive to become agile 1, 2. This article proposes that this is too simplistic a view and that the lean and agile paradigms, though distinctly different, can be and have been combined within successfully designed and operated total supply chains. It will show how the need for agility and leanness depend upon the total supply chain strategy, particularly by considering market knowledge and positioning of the decoupling point. It will be shown that the agile manufacturing paradigm is best suited to satisfying a fluctuating demand (in terms of volume and variety) and lean manufacturing requires, and promotes, a level schedule. These key differences between the two paradigms relate them to the positioning of the decoupling point.

The need to combine the two paradigms in many real supply chains will be shown by discussing the differences between the two paradigms and when and where they should be adopted within the supply chain. A case study will be presented to demonstrate how agility and leanness have been combined successfully within one supply chain to meet customer requirements.

Section snippets

The paradigm definitions

Firstly, it is important to make some key definitions so as to ensure there is no ambiguity in further discussions. The following two definitions relate the agile and lean manufacturing paradigms to supply chain strategies. They have been developed by the authors so as to emphasise the distinguishing features of leanness and agility.

  • Agility means using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile market place.

  • Leanness means developing a value

Which paradigm?

Table 2 presents some of the key characteristics of the agile and lean manufacturing paradigms as supply chain strategies. Table 2 is based upon literature regarding lean manufacturing, agile manufacturing and supply chain management and on industrial case studies. Highlighted are the prerequisite characteristics of the lean and agile paradigms. These can be regarded as essential, desirable and arbitrary for a given paradigm to be successfully implemented. The table can be broken down into the

The supply chain structure and the decoupling point

This section discusses the relationship between the supply chain structure and when and where to adopt lean or agile manufacturing. Firstly, some simplified structures will be presented with the decoupling point in different positions along the supply chain. This will then be linked to the explanation of the two paradigms given in the previous section.

Fig. 4 presents the family of simplified supply chain structures with the decoupling point marked as a stock holding point 5, 23. The

Reengineering of a PC supply chain [25]

Electronic product supply chains are characterised by poor supply chain dynamics with a highly variable product demand. The PC manufacturer (or the company) in this case study is involved in a wide range of large and complex supply chains. The supply chains consist of both company owned members and independent members, though the company is highly vertically integrated with plants in three of the main manufacturing echelons. Generally the operation of any member is limited to one echelon. Fig. 6

Conclusions

This paper has compared the lean and agile manufacturing paradigms, highlighting the similarities and differences. Through considering the differences between the two paradigms we have shown that they should not be considered in a progression or in isolation. Neither paradigm is better nor worse than the other, indeed they are complementary within the correct supply chain strategy. Both the Hewlett Packard case and the PC manufacturer case study clearly demonstrate the combination of the two

Acknowledgements

This work has been supported in part by an EPSRC CASE award and part by the EPSRC ACME Directorate under the “Logistical dynamics of supply chain management” programme recently undertaken within the Logistics Systems Dynamics Group. Particular thanks are due to Professor Dr Towill, Director of the Logistics Systems Dynamics Group, for his advice and guidance.

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