The Impact of Agile Manufacturing on Supply Chain Dynamics

Traditional supply chains can greatly amplify changes in end‐customer demand and thereby produce their own internally generated boom‐and‐bust scenarios. Improvement in supply chain performance is often greatly separated by time (many months) and distance (many miles) from the action taken to trigger better customer service coupled with lower stockholdings. A global long‐term view must therefore be taken if we are to be sure that enhancement is real and permanent. This paper outlines the problem areas associated with supply chain dynamics and reviews a set of Supply Chain Material Flow Principles originally based on established results from simulation models and observation of good industrial practice. The paper further shows that these Principles were embedded in an Agile Manufacturing Program undertaken in order to re‐engineer a real‐world mechanical precision products global supply chain. Subsequent improvements in supply chain dynamics recorded include a 45 per cent reduction in global inventory and the damping of supply chain amplification patterns by up to 58 per cent.