Term Paper on "Leagility Supply Chain Design"

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Leagility

Supply Chain Design and Leagility

Leagility with regard to the supply chain may simply be defined as the ability of a supply chain design to maintain a balance of lean and agile supply chain practices during the course of productivity. Critical to this concept is the notion that a supplier must maintain a lean production schedule up to the decoupling point, followed by an agile one that responds and takes advantage of volatile market conditions thereafter.

A supply chain would have to take advantage of volatile markets with high demand for products that may or may not be stable in the long-term, after the decoupling point in production. Up until this point in time organizations would focus more on lean supply chain practices, which would include a reduction or minimization of waste.

Associated with lean productivity include short lead times and JIT delivery, something that is evident in the food industry, as described in the article by Beach, Vorst, Dijk & Beulens (2001). While leagility in the supply chain may result in high profits over time, it is not necessarily suited for all organizations, such as the food industry, where flexibility of production is not necessarily an option. Because the supply chain in the food industry requires use of perishable items, a lean more than agile or balanced supply chain design is more often appropriate. These ideas and more are explored below.

Leagility Defined

Leagility has been explored from many different perspectives. It is characterized by utilization of volatile market conditions to maximize profits in different settings. Leagi
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lity employs the use of flexible production standards to create an environment that is both lean and then agile in nature.

Naylor, et. al (1997) defines leagility with regard to the supply chain as "Combining agility and leanness in one supply chain via the strategic use of a decoupling point" (Jones, 2004). Agility in this sense would refer to the utilization of market information to investigate and use profitable opportunities when the market is less than stable. The goal of a supplier would be to develop a value stream with the intent of eliminating any useless or non-essential components including overuse of time.

In general in the market place the demand for any given product is volatile. Business have an obligation to tackle this head on and exploit it in a manner that profits them.

Beach, Vorst, Dijk & Beulens (2001) examine the concept of supply chain design and leagility with regard to high demand uncertainty as mentioned above in an environment that is generally not flexible. The authors suggest that the opportunities for a leagility supply chain within the poultry industry are limited, meaning that opportunities to maximize the ability and leanness of the supply chain are limited due to extreme high demand uncertainty. However, regardless of the market conditions it is best for an industry to work in a manner that maximizes and if possible exploits the market situation and even demand uncertainty when possible.

In the article Fisher is cited as suggesting that the nature of the demand for a produce "should be carefully considered before a supply chain strategy is devised" (Beach, et. al, 2001). Products according to Fisher may be divided according to whether or not they satisfy basic needs and thus fulfill a predictable demand over a long life cycle, or whether they are innovative and more profitable with higher profit margins. Innovative products however generally result in an unpredictable demand and potentially short life cycle. Supply chains should thus be designed in the case where products are innovated on agility and leanness to minimize extraneous costs associated with production (Beach, et. al, 2001).

Simply defined, leagility is a process whereby the supplier works to utilize lean or cost minimizing strategies up to the decoupling point, or the point in production where "the real demand penetrates upstream in a supply chain" (Beach, et. al, 2001).

After this point a corporation can focus on agility, or its ability to exploit profitable opportunities when a market is volatile and unpredictable. So one might assume that prior to the agility point, a company is working in a fairly straightforward environment where demand is relatively stable and profit margins are low. After the decoupling point however it is more likely that profit margins will rise if a company is willing to gamble and use the volatile marketplace associated with innovation and versatility to its advantage.

In the early steps a supply chain… READ MORE

Quoted Instructions for "Leagility Supply Chain Design" Assignment:

Welcome to the second case study for this course. Please read the article below (Click on the title to link to it.), then answer the following question. The authors of the article do a good job of explaining the concept but I would like you to tell me what they mean in your own words.

What is meant by "Leagility" in reference to supply chain design?

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Supply chain design in the food industry

International Journal of Logistics Management; Ponte Vedra Beach; 2001; Jack G A J van der Vorst; Stephan J van Dijk; Adrie J M Beulens

Abstract:

The concepts of hybrid supply chain strategies and the decoupling point are applied to a poultry supply chain experiencing high demand uncertainty in an inflexible production environment. Several solutions are proposed for this supply chain to cope with high demand uncertainty. The customer order decoupling point, the product differentiation point and the information decoupling point play a central role in these solutions. Because of specific characteristics of the poultry supply chain, the opportunities for a leagile supply chain design are limited.

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Copyright International Logistics Research Institute, Inc. 2001

[Headnote]

The concepts of hybrid supply chain strategies and the decoupling point are applied to a poultry supply chain experiencing high demand uncertainty in an inflexible production environment. Several solutions are proposed for this supply chain to cope with high demand uncertainty. The customer order decoupling point, the product differentiation point and the information decoupling point play a central role in these solutions. Because of specific characteristics of the poultry supply chain, the opportunities for a leagile supply chain design are limited.

Since the 1990s a lot of attention has been given to supply chain management and a number of frameworks and tools for improvement have been presented in literature [1]. Each of these frameworks should help management in deciding how their particular company's situation could be improved. One such framework is proposed by Marshall Fisher [2] suggesting that the nature of the demand for the product should be carefully considered before a supply chain strategy is (re) devised. Fisher divides products into two categories:

Primarily functional products satisfying basic needs which have stable, predictable demand and long life cycles typically with high levels of competition resulting in low profit margins. These supply chains should focus on efficiency/leanness to minimize the physical costs related to production, transportation and inventory storage.

Primarily innovative products with higher profit margins have unpredictable demand and short life cycles and, usually higher levels of product variety. These supply chains should be designed focussing on responsiveness/agility to minimize market mediation costs, the cost that arise when the variety of products reaching the marketplace does not match what consumers want to buy resulting in lost sales opportunities and dissatisfied customers (see Table 1).

Fisher states that the root cause of the product availability problem is a mismatch between the type of product and the type of supply chain. For this reason, he advocates that the nature of demand for products should be considered, before devising a supply chain. However, it is not necessarily the case that a supply chain should be either lean or agile [31. Mason-Jones, et al., [4] and Christopher and Towill [51 stated that the supply chain strategy and structure should be in tune with the characteristics of the marketplace. They focus on hybrid strategies by integrating the lean and agile paradigms. Combining agility and leanness in one supply chain via the strategic use of a decoupling point has been termed "leagility" [6]. Naylor, et al., [7] define leagility as "the combination of the lean and agile paradigm within a total supply chain strategy by positioning the decoupling point so as to best suit the need for responding to a volatile demand downstream, yet providing level scheduling upstream from the decoupling point". The decoupling point refers to the point at which real demand penetrates upstream in a supply chain. According to Christopher [8] the challenge to supply chain management is to seek to develop lean strategies up to the decoupling point, but agile strategies beyond that point. By using generic or modular inventory to postpone the final commitment, it should be possible to achieve volume-***** economies of scale through product standardization.

As a result of developments in food markets such as globalization, a shift of power to retailers, and especially masscustomization, a number of food products can be characterised as functional products with volatile and unpredictable demand. Retailers set the prices and demand frequent and responsive deliveries at short notice. Demand uncertainty has grown for these companies while production flexibility is still rigid. Because these functional products have a low margin, investments in supply chain responsiveness are not automatically paid back. What strategy should be followed when a push-***** inflexible food supply chain with perishable, primarily functional products has to cope with high demand uncertainty and markets that request high responsiveness? This will be the central issue in this paper. We will focus on the specific problem of the case company, Wings & Legs, and its supply chain. As will be shown, the applicability of the concept of leagility is limited in the case, but does give some interesting insights in improvement-opportunities.

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Table 1

Leagility: Combining the Lean and Agile Paradigm

Agility is a business-wide capability that embraces organizational structures, information systems, logistics processes and, in particular, mindsets [9]. Agility means using market knowledge and a virtual corporation to exploit profitable opportunities in a volatile marketplace [10]. It is the result of current market developments making customer demand very volatile and unpredictable while still requiring short lead times. A key characteristic of an agile organization is flexibility. To be truly agile, a supply chain must possess a number of distinguishing characteristics [11]:

Market sensitive: the supply chain is capable of reading and responding to real demand.

* Vital: using information technology to share data between buyers and suppliers.

* Process integration: referring to collaborative working between buyers and suppliers, joint product development, common systems, and shared information.

* Network based: organizations have to structure, coordinate and manage their relationships with their partners in a network committed to better, closer and more agile relationships with their final customers.

The characteristics of the lean company and the lean supply chain are described by Womack and Jones [12] providing a vision of a world transformed from mass production to lean enterprise. The authors highlight the huge amount of waste that occurs in most organizations and show that a systematic attack on waste, both within companies and along the supply chains, can have tremendous benefits to the short run profitability and long term prospects of companies and organizations. To satisfy customers a company needs to eliminate or at least reduce the wasteful activities for which customers do not wish to pay. Lean is about doing more with less. The term is often used in connection with lean manufacturing to imply a zero inventory, just-in-time approach [13]. The origins of lean manufacturing can be traced to the Toyota Production System, with its focus on the reduction and elimination of waste.

Both agility and leanness focus on customer responsiveness since one of the main principles of lean supply is to make only what is pulled by the customer. However, leanness emphasizes efficiency and cost reduction and thus deals with the trade-off between long lead times and the presence of inventory (both are considered waste). Economic trade-offs based on physical assets, labor, capital and land are most relevant in the functional, lean environment that is focussed on eliminating waste in operational processes [14]. Trade-offs based on time, information and knowledge are more relevant in the innovative, agile, environment. Leveraging information and knowledge is one of the primary dimensions of the agility concept [15]. Leanness departs from a relatively stable market demand and searches for an optimal supply chain design at the lowest cost. Agility emphasizes the fast response to changing customer demand, since product availability is considered the market winner [16]. However, cost is an important market qualifier, and this is usually reduced by leanness. The solution is to utilize the concept of the leagile supply chain and position the decoupling point in the optimal location [17]. Table 2 presents the differences of lean and agile supply on some distinguishing attributes.

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Figure 1

Leagility and Decoupling Points

A central notion in the strategy of leagility is the supply chain decoupling point. Processes upstream from this decoupling point should focus on leanness; processes downstream from the decoupling point should be focussed on agility (see Figure 1) [18]. The Customer Order Decoupling Point (CODP) is associated with the point that separates the part of the supply chain geared towards directly satisfying customer orders (order-driven or demand-driven) from the part of the supply chain based on planning (forecast driven) [19]. However, the issue in supply chains is not how far the order penetrates, but how far real demand is made visible in the supply chain [20]. Orders are aggregations of demand, often delayed and distorted due to the actions and decisions of intermediaries. On the other hand, demand reflects the ongoing requirement in the marketplace as close to real-time as possible.

Christopher and Towill [21] go beyond the one-dimensional perspective of the decoupling point and recognize two types of decoupling points in real-world supply chains. First, they distinguish the Information Decoupling Point (IDP), stating that it represents the furthest point to which information on real final demand penetrates. Upstream from the IDP processes are forecast-driven and based on planning; downstream processes can be demand driven and based on real-time demand. The idea is that the IDP should lie as far as possible upstream in the supply chain. This is in accordance with the general findings in SCM literature that demand information should be exchanged in the supply chain as far upstream as possible.

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Table 2

Secondly, Christopher and Towill distinguish the Material Decoupling Point (MDP) where strategic inventory is held in as generic a form as possible. They refer to the concept of postponement [22]. By delaying product differentiation one delays for as long as possible the moment when different product versions assume their unique identity, thereby gaining the greatest possible (mix) flexibility in responding to changing consumer demands. Postponed manufacturing equates to assemble to order where fabrication of parts is standardized, but the assembly and distribution process is customized [23]. Postponement is based on the principle of seeking to design products using common platforms, components or modules, but where the final assembly or customization does not take place until the final market destination and/or customer requirement is known. Downstream from the MDP products or goods are differentiated to specific customers or markets. Upstream from this point (production) processes are generic, which means no customer or market-specific attributes or value is added to the products. The MDP ideally should lie as far downstream in the supply chain and as close to the final marketplace as possible [24].

According to Christopher and Towill, the challenge to supply chain management is all about the effective management of these two decoupling points. However, some questions appear when you relate these two decoupling points to the concept of leagility.

First of all, the IDP is not the point to which information about actual endconsumer orders penetrates the supply chain, but is the point to which information about final consumer demand of an earlier moment is made visible. This means that downstream of the IDP processes are not driven by actual orders, but that they are driven by demand data. This is the case in most ECR food supply chains; producers receive EPOS data of today and replenish the inventory of distribution centers and retail-outlets for the next day. The actual order of an end-consumer in retail outlets has already been fulfilled at that time; the end-consumer has already bought his or her product. Actually, in this case the EPOS data of today is used as a forecast of the demand of the next day.

The exchange of EPOS data requires data translation capabilities; the organization should be able to use the EPOS data for planning purposes. For example, a potato supplier to a salad producer has no use for consumer demand data of salads in retailer outlets if he cannot translate them into quantities of potatoes, especially if he is not the only potato supplier to that particular producer.

The MDP is directly related to a certain position of the CODP (assemble to order).

In practice it is possible that the Point of Product Differentiation (PDP) is not the same point as the CODP. For example, customer orders can be sent further upstream in the supply chain than the PDP. In that case this information can be used to improve the customer-relatedness of the strategic inventory (to agile supply) or the information is used to plan efficient production runs (to lean supply). When the CODP is located downstream of the PDP, it means that products are made customer/market-specific and stored in this way at a central strategic inventory point (the CODP). There is a risk that the wrong product-variant has been produced for the wrong customer. Hence, flexibility of the strategic inventory at the CODP is low. It is worthwhile to either move the PDP downstream to the same point as were the CODP is located or move the CODP upstream. In the first case, the flexibility of the strategic inventory increases and customer or market specific attributes and value are only added to the product when actual customer orders are known. In the second case, the risk of obsolescence could be reduced. Postponing the PDP has to be evaluated relative to the position of the CODP.

Although demand information could penetrate the supply chain far upstream, it does not automatically mean that all processes downstream from that IDP are designed for agility. Demand data could also be used to make production even more efficient and still pursue a lean approach.

The Poultry Supply Chain

Poultry supply chains in the Netherlands are confronted with increasing demands from customers concerning customer service elements and governmental rules concerning quality and environment. The current way of working must change to remain competitive in the future. In this case analysis we will use the concept of leagility and the decoupling points to distinguish multiple alternative supply chain designs. First, we will present a short summary of the case methodology. Second, a review is given of the case company Wings & Legs and its supply chain with respect to market and demand characteristics. Third, the possible strategic positioning of the PDP/CC)DP and the IDP are considered. Finally, an overview of identified improvement options is presented.

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Figure 2

This case is part of a ten-month research project, which has been performed at several companies in a poultry supply chain in the Netherlands. All companies belong to the same cooperative organization resulting in high trust level between them. Cooperation takes place on product specifications, quality and specifications of raw materials. In Figure 2 an overview of the relevant actors in the poultry supply chain is given. During this project several interviews have been held with senior managers of each company. Most information has been gathered at the poultry processor company. Because the CODP is situated at this stage in the supply chain, most complications arise at this point, where a level supply meets a variable demand. An analysis of the production planning and control structure of the poultry processor was performed and improvement options defined.

Several characteristics of demand and market determine the operations strategy of the supply chain. These are the product/demand characteristics [25] and market qualifying and market winning factors [26]. Both of these classifications will be used to describe the supply chain market and demand characteristics.

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Table 3

Wings & Legs, the poultry processor, produces fresh poultry products for the consumer market. It supplies retail distribution centers, which distribute poultry products to the individual retail outlets. Fresh poultry products are typical commodity products with low profit margins. The market winner in the Netherlands is still cost. Market qualifiers are quality, lead-time and service level. This holds true for the end consumer, who buys its products in retail outlets, and for the retailer, who is the direct customer of Wings & Legs. One could argue that, because of the growing attention for food safety and recent outbreaks of animal disease, quality is moving from a market qualifier to a market winner. The risks associated with poor quality are so high, that retailers and consumers are increasingly prepared to pay more for higher quality. The high demands on quality, place constraints on the flexibility of the supply chain.

Based on the matrix of Mason-Jones, et al. [27], and the market winning factors cost and quality, the most effective supply chain operations strategy would be lean supply. We also have to take into account the nature of demand of poultry products. Fisher [281 makes a distinction between predictable and unpredictable demand. The demand for poultry products of end-consumers shows a very peaky pattern and seems unpredictable. This is explained by the heavy use of promotional activities at the retail level, which are not communicated in detail to Wings & Legs. If there were no promotional activities, demand would actually show a seasonal pattern, which would be predictable. The promotional activities initiated by the retailers place heavy strains on the upstream supply chain. An opportunity to level demand is to eliminate all promotional activities, but this encounters much resistance from the retailers; poultry products are a favorite for promotions to bring in new customers. Meat products are the most expensive components of evening meals, and a reduction in the price is attractive to consumers.

Also, the poultry processor itself initiates promotional activities. Mostly this is motivated by the need to sell over-production of products. Over-production of poultry products will always be the case, because the demand for the different poultry products is not equal or balanced, and the product structure of poultry is divergent. If there is a large demand for chicken wings, there should also be a demand for, for example, chicken legs and chicken breasts. One could argue that over-production should be stored to fulfill demand at a later time. Unfortunately, this is a limited possibility because of the perishability of fresh poultry products.

Furthermore, the supply chain is characterized by very short required lead times (retailers demand a delivery between 18 to 48 hours), frequent deliveries and increasing product variety; typical elements of an agile supply chain. The required service levels for poultry products are high and stock needs to be held at the poultry processor. The poultry processor has to comply with a minimal delivery reliability of 99 percent. The demand and market characteristics of the case company are summarized in Table 3.

Demand uncertainty is relatively high. As a result, the need for production capacity, and thus the need for raw materials (live chickens), fluctuates. The production capacity itself is fully utilized (to keep production costs per kg product as low as possible) resulting in very low production flexibility. Finally, the supply of (certified) chickens from (vertically integrated) suppliers has to be planned 12 weeks ahead because of the duration of the breeding and growing stages. Buffering is not possible in the supply chain since the quality of the supply (chickens) will deteriorate. Production planning and control is material ***** with concern to the supply of chickens, is capacity-***** with concern to production costs and is inventory-***** concerning shelf life of (end) products. Production and supply are based on demand forecasts, which are unreliable given the market characteristics presented.

Most of the case characteristics point to a lean operations strategy for the poultry supply chain. However, the uncertainty of demand and the short required lead-times suggest that a part of the supply chain should be designed for agility. We will evaluate the opportunities for a leagile poultry supply chain. First, we will examine the possible positions of the PDP/CODP and the constraints (inherent to the processing of fresh products) that limit these possibilities. Second, the alternative strategic positions of the IDP are examined for the case supply chain.

The Strategic Location of the Material Decoupling Point

Before an analysis of the PDP/CODP can be made, customer or market specific attributes of the poultry product and the associated product differentiation processes have to be defined.

The end-consumer has the choice between several volume-variants at the outlet. For instance, he or she can choose between 4, 6 or 10 chicken legs in a package (3 product variants). Each retail outlet belongs to a larger retail-company. Each retailer has its own specific or private label and packed poultry products. So, the two-customer/market specific attributes that will be considered in this paper are, "retail-specific label-variant" and "consumer-specific volume-variant". Two production processes are related to these attributes:

The packaging process, at which a specific number of components (e.g. chicken legs) are combined into one package.

The labelling process, at which a retailer specific label is printed and attached to each product.

The position of the PDP/CODP relative to these processes will be evaluated. Departing from the current position, two future positions will be analyzed. In Figure 3 these three positions are depicted. For each of these positions the possible benefits and limitations are explained. The objective of the re-positioning of the PDP/CODP is to increase supply chain flexibility to cope with relatively unpredictable demand and short required lead-times.

The Current Situation

The CODP does not coincide with the moment of product differentiation (PDP). The strategic inventory (the CODP) is located downstream of the two differentiation processes (packaging and labelling); the strategic inventory is customer/market specific and produced against forecast. The mix flexibility of this inventory is low and risk exists that products have to be re-packed and relabelled as actual demand for a specific product differs from the predicted demand. The costs incurred by re-packing and relabelling are high, because these activities require a considerable amount of manual labor. Using the concept of leagility, the packing and labelling process should be postponed as much as possible hence moved downstream. One could also say that the CODP has to move upstream. One way or another, the position of CODP and point of product differentiation have to coincide as much as possible.

Postpone Labelling

Here the labelling process has been postponed, downstream of the CODP at the poultry processor. Strategic inventory does not contain any retail-specific stockkeeping units. Hence, mix flexibility with respect to different retailers has increased. The risk of labelling the wrong amount of products for a specific retailer is eliminated. The labelling process is executed on demand, against real customer orders. The position of the CODP at this point is feasible. The throughput time of the labelling process is short, which creates the opportunity to delay it without exceeding the required lead time. Furthermore, the labelling process does not consume costly resources and a varying capacity utilization can be easily dealt with.

Postpone Packaging

It would seem that positioning the CODP before the packaging process (or postponing the packaging process) could increase the mix flexibility of the strategic inventory even more. But there are some constraints specific to the products and production process in the poultry industry, which make this position unfeasible. One of the main constraints is the perishability of the semi-finished products, and the requirements that stem from the trackability and traceability of products and batches in the production process.

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Figure 3

The processed semi-finished poultry products are perishable. This means that products can only be held in stock for a limited time span before they become nonconsumable, or obsolete. The vacuumpackaging of semi-finished components in very small batches extends the lifetime of these components. When these components are stored together in large batches (nonvacuum), quality deteriorates much faster and the risks of contamination increase. At this moment, the costs associated with advanced forms of meat-storage which do not have the above mentioned drawbacks are too high, compared to the costs associated with reduced mix-flexibility of strategic inventory. Quality and cost constraints also apply for the postponement of the packaging or labelling process further downstream, to the distribution center for instance. Furthermore, packaging of fresh poultry products at the distribution center requires an advanced production line in a low-temperature environment. This is only feasible if more fresh meat products are packaged at the distribution center (for reasons of economies of scale).

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Figure 4

The above evaluation of the position of the PDP/CODP shows that the most ideal situation would be that the PDP and the CODP coincide in the MDP. In this particular case, this is not possible due to quality requirements in the production process.

The Strategic Positions of the IDP

As stated before, the IDP concerns the most recent undistorted information about past sales. Downstream of the IDP each stage in the supply chain has the same view of marketplace demand, and is able to coordinate its distribution and production activities accordingly. The difference between IDP information and actual end consumer orders is important, as will be shown in the evaluation of two alternative positions of the IDP (see Figure 4).

Situation 1: The IDP is Positioned at the Poultry Processor

Information (EPOS data) of past sales of all retail outlets is grouped and sent to the poultry processor. The EPOS data is used by the poultry processor and the retail companies to control their distribution activities (high frequency deliveries of small batches to stock points at the distribution centers and retail outlets). Inventory is refilled to such a level that the next days' demand can be fulfilled, whereby the EPOS data is used as a forecast for future sales. This position of the IDP is commonly associated with the ECR concept [29]. The undistorted exchange of EPOS data between retailer and producer enables the continuous replenishment of distribution centers and retail outlets. At the poultry processor the EPOS data can be used to schedule and control the packaging process.

Situation 2: The IDP is Positioned Upstream from the Poultry Processor

The IDP should be positioned as far upstream as possible [30]. Moving the IDP further upstream in the poultry supply chain increases the part of the supply chain that is geared towards demand pull. The EPOS data could also be used to time and synchronize the distribution processes between broiler houses and poultry processor, and the slaughtering/processing activities at the poultry processor. But, this is only possible if these processes actually can be synchronized. Synchronization is possible if cycle times, batch sizes and/or processing time are decreased or shortened. This is necessary because the pace of supply to the marketplace is a daily interval, once a day the distribution centers and retail-outlets are supplied. If EPOS data, which shows the variability of demand, is used to plan and control production processes downstream of the IDP, these processes have to be flexible and should be able to cope with varying capacity utilization, mix and volume variability.

Finally, information enrichment could extend the basic idea of the exchange of EPOS data, by including tactical information exchange with respect to promotional activities. Longer term information about future promotions, but also category management decisions at the retail outlet concerning the product assortment, can be characterized as tactical information. Transparency of this tactical information in the supply chain can increase the responsiveness of the supply chain. The concept of information enrichment at the operational level can be extended at this tactical level. In the literature this tactical level is supported by, for instance, the concept of collaborative planning, forecasting and replenishment [311. Furthermore, we state that feed-forward information (concerning production volumes, quality, etc.) going downstream the supply chain can also aid in the coordination process of the different supply chain stages.

Conclusion

Using the leagility and decoupling point concepts proves to be very helpful in the an*****s of supply chains and in the identification process of innovative supply chain designs. However, because of specific characteristics of food supply chains the applicability of the concepts is restricted. The usefulness of IDP information, the position of the CODP and the choice of agile versus lean production depend on the possibilities of synchronization in the supply chain.

The relationships between the quality requirements of raw materials and products in the food industry and supply chain logistics are of uppermost importance, but have only been briefly addressed in management research. In the poultry supply chain, quality requirements limit flexibility. A more intensive collaboration between food technologists and operations management scientists could be worthwhile.

[Sidebar]

... the challenge to supply chain management is to seek to develop lean strategies up to the decoupling point, but agile strategies beyond that point.

[Sidebar]

What strategy should be followed when a push***** inflexible food supply chain with perishable, primarily functional products has to cope with high demand uncertainty and markets that request high responsiveness?

[Sidebar]

A central notion in the strategy of leagility is the supply chain decoupling point.

[Sidebar]

Postponement is based on the principle of seeking to design products using Common platforms, components or modules, but where the final assembly or customization does not take place until the final market destination and/or customer requirement is known.

[Sidebar]

Several characteristics of demand and market determine the operations strategy of the supply chain.

[Sidebar]

The risks associated with poor quality are so high, that retailers and consumers are increasingly prepared to pay more for higher quality.

[Sidebar]

Using the concept of leagility, the packing and labelling process should be postponed as much as possible hence moved downstream.

[Sidebar]

Using the leagility and decoupling point concepts proves to be very helpful in the an*****s of supply chains and in the identification process of innovative supply chain designs. However, because of specific characteristics of food supply chains the applicability of the concepts is restricted.

[Reference]

References

[Reference]

[1] Beamon, Benita M., "Supply Chain Design and Analysis: Models and Methods," International Journal of Production Economics, No. 55, (1998), pp. 281-294; Christian Bechtel and Jayanth Jayaram, "Supply Chain Management: A Strategic Perspective," The International Journal of Logistics Management, Vol. 8, No. 1 (1997), pp. 15-34; Jack G.A.J. van der Vorst, Effective Food Supply Chains: Generating, Modelling and Evaluating Supply Chain Scenarios, PhDthesis, Wageningen University, the Netherlands, 2000.

[Reference]

[2] Fisher, Marshall L., "What Is the Right Supply Chain for Your Product?," Harvard Business Review, Vol. 75, No. 2 (1997), pp. 105-116.

[3] Christopher, *****, "The Agile Supply Chain: Competing in Volatile Markets," Industrial Marketing Management, Vol. 29, (2000), pp. 37-44.

[Reference]

[4] Mason-Jones, Rachel, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; Rachel Mason-Jones and Denis R. Towill, "Using the Information Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[5] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[Reference]

[6] Naylor, Ben, Mohammed M. Naim and Danny Berry, "Leagility: Interfacing the Lean and Agile Manufacturing Paradigm in the Total Supply Chain," International Journal of Production Economics, Vol. 62, (1999), pp. 107-118.

[7] Naylor, Ben, Mohammed M. Naim and Danny Berry, "Leagility: Interfacing the Lean and Agile Manufacturing Paradigm in the Total Supply Chain," International Journal of Production Economics, Vol. 62, (1999), pp. 107-118.

[Reference]

[8] Christopher, *****, "The Agile Supply Chain: Competing in Volatile Markets," Industrial Marketing Management, Vol. 29, (2000), pp. 37-44.

[9] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[10] Naylor, Ben, Mohammed M. Naim and Danny Berry, "Leagility: Interfacing the Lean and Agile Manufacturing Paradigm in the Total Supply Chain," International Journal of Production Economics, Vol. 62, (1999), pp. 107-118.

[Reference]

[11] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[12] Womack, J.P. and Dan T. Jones, Lean Thinking, New York, NY: Simon and Schuster, 1996.

[13] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[Reference]

[14] van Hoek, Remko L, Alan Harisson and ***** Christopher, "Measuring the Agile Capabilities in the Supply Chain," International Journal of Operations and Production Management, Vol. 21, No. 1/2 (2001), pp. 126-147.

[15] van Hoek, Remko I., Alan Harisson and ***** Christopher, "Measuring the Agile Capabilities in the Supply Chain," International Journal of Operations and Production Management, Vol. 21, No. 112 (2001), pp. 126-147.

[Reference]

[16] Mason-Jones, Rachel, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; and, Rachel Mason-Jones and Denis R. Towill, "Using the Information Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[Reference]

[17] Mason-Jones, Rachel, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; and, Rachel Mason-Jones and Denis R. Towill, "Using the Information Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[Reference]

[18] Mason-Jones, Rachel, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; and, Rachel Mason-Jones and Denis R. Towill, "Using the Information Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[Reference]

[19] Hoekstra, Sjoerd J. and Jac HTM. Romme, Integral Logistic Structures: Developing Customer ***** Goods Flow, London, England: McGraw Hill, 1992.

[20] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[21] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized,"

[Reference]

Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[22] van Hoek, Remko I., "Reconfiguring the Supply Chain to Implement Postponed Manufacturing," The International Journal of Logistics Management, Vol. 9, No. 1 (1998), pp. 95-110.

[23] van Hoek, Remko I., "Reconfiguring the Supply Chain to Implement Postponed Manufacturing," The International journal of Logistics Management, Vol. 9, No. 1 (1998), pp. 95-110.

[Reference]

[24] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213.

[25] Fisher, Marshall L., "What Is the Right Supply Chain for Your Product?," Harvard Business Review, Vol. 75, No. 2 (1997), pp. 105-116.

[Reference]

[26] Mason-Jones, Rachel, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; and, Rachel Mason-Jones and Denis R. Towill, "Using the Information Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[Reference]

[27] Mason-Jones, Rachel, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; and, Rachel Mason-Jones and Denis R. Towill, "Using the Information

[Reference]

Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[28] Fisher, Marshall L., "What Is the Right Supply Chain for Your Product?," Harvard Business Review, Vol. 75, No. 2 (1997), pp. 105-116.

[29] Kurt Salmon Associates, Inc., Efficient Consumer Response, Enhancing Consumer Value in the Grocery Industry, Washington, DC: Food Marketing Institute, (1993).

[Reference]

[30] Christopher, ***** and Denis R. Towill, "Supply Chain Migration from Lean and Functional to Agile and Customized," Supply Chain Management, Vol. 4, No. 5 (2000), pp. 206-213; Rachel Mason-Jones, Ben Naylor and Denis R. Towill, "Engineering the Leagile Supply Chain," International Journal of Agile Management Systems, Vol. 2, No. 1 (2000), pp. 54-61; and, Rachel MasonJones and Denis R. Towill, "Using the Information Decoupling Point to Improve Supply Chain Performance," The International Journal of Logistics Management, Vol. 10, No. 2 (1999), pp. 13-26.

[31] Raghunathan, S., "Interorganizational Collaborative Forecasting and Replenishment Systems and Supply Chain Implications," Decision Sciences, Vol. 30, No. 4 (1999), pp. 1053-1071; and, Theodore H. Stank, Patricia J. Daugherty and C.W. Autry, "Collaborative Planning: Supporting Automatic Replenishment Programs," Supply Chain Management, Vol. 4, No. 2 (1999), pp. 75-85.

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