FLEXIBILITY – THE UlTIMATE CAPABILITY

Today’s customer-driven markets environment is becoming increasingly complex, unpredictable and uncertain for companies that operate in highly globalised markets. The grown pressure to create competitive advantages is driving shorter product life cycles combined with faster technological leaps. This situation results in the effect that a continuously growing number of entities faces an ambivalent challenge of trying to cut costs further while being more responsive and flexible towards changing customer requirements. A survey executed by McKinsey in 2011 (The challenges ahead for supply chains) revealed the biggest challenges nowadays that companies in cyclic industries have to cope with are uncertainty and market demand volatility.

A static supply chain fails to flex as customer needs change and will be known as the “one-size-fits-all” approach of the organisation and the supply chain remains insensitive to customer ever-changing needs and demands.

Flexibility

“The measure of intelligence is the ability to change.” ― Albert Einstein

According to SCOR (supply chain operations reference) supply chain flexibility is divided into two segments. The first segment deals with Customer-facing metrics and the second segment deals with Internal-facing metrics. The success of flexibility is to satisfy both metrics within any organisation that intends to be flexible. Let us test this with an example.

Supplier One – Carries red, blue, black and white cars of the same model in order to meet the customer needs instantaneously. Based on customer-facing supply chain metrics, supplier one scores high marks because they are flexible and meet customer needs. Whereas by carrying all above-mentioned colours, the supplier inventory carrying costs are high and scores low marks when assessed based on internal facing metrics.

Supplier Two – Carries one popular colour per model in the showroom. And based on customer’s requirements sources different colour car from the dealership network across the country with an assured delivery date. Customers are willing to wait in case of capital investments. This supplier will score high both on customer-facing metrics and internal facing metrics.

The global and dynamic markets demand better quality, more product variances and extended services including higher reliability and faster deliveries. Each of those requirements can be a crucial differentiator that decide whether a company sustains on the market or not. Besides that, customized products with short lead times characterize the current situation in various industries. Flexibility is not all about customer-centric objectives and ending up with financial losses. It is all about being flexible to meet customer needs by able influencing customer requirements.

Collaboration and flexibility

Collaboration increases flexibility and makes it easier for organisations to meet customer needs. The stakeholders (both internal and external) within the supply chain start embracing change rather than fearing it and learn to turn a potentially challenging situation into an opportunity. In fact, this type of teamwork and collaboration are the very foundations of agile work methodologies, which allow teams to be more flexible and thus, responsive.

Change Drivers

In any flexible supply chain change is the way of life. The drivers will be there in every organisation exerting force for a change that’s not recognised within the organisation. Some companies will be slow in recognising the drivers that initiates flexibility and collaboration through the change process and that ultimately leads to customer satisfaction. But the need for coming to grips with change is inevitable. Flexibility with a collaborative approach and willingness to change is the ultimate mantra for business success.

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