Introduction This report will outline and evaluate what supply chain management is andthe three supply chain strategies – lean, agile and hybrid, taking into accountstrategic, tactical and operational decisions. It will also discuss how Brexit couldpotentially have an effect on these supply chain strategies. Whatis supply chain? A supply chain can bedefined as the “sequence of events that cover a products entire life cycle,from conception to consumption” (Blanchard, 2010, pp.3EH1 ). Itcan involve the “facilities, functions and activities involved in producing anddelivering a product or service from suppliers (and their suppliers) to thecustomers (and their customers)” (Russel et al.
, 2014EH2 ). Inother words, it is the flow of products and services from the originator to theconsumer (Simchi-Leviet al., 2008EH3 ).It has been stated thathaving a high level of supply chain management can enhance competitiveadvantage, thus driving improvements with the organisations overall performance(Li etal.
, 2004). EH4 Supplychain has three elements – strategic, operational and tactical. Strategicdecisions made in supply chain deal with the more high level and ‘riskier’decisions which are usually long term and are relevant to the wholeorganisation. An example of this would be ensuring your supply chain is themost developed and positioning it in your market within the next 3-5 years.Tactical supply chain elements can be planned monthly (Madu and Kuei, 2005EH5 ) andusually focus around making decisions regarding minimizing costs and trying toeliminate risks.
Aspects of this include safety, quality and standards andensure that best practise is being implemented throughout the organization. Operational elements ofsupply chain are planned frequently, and can include the day-to-day processesand activities that are carried out. The focuses with operational elements areusually based around individual customer orders, which could be related tospecific planning of shipments and resources (Madu and Kuei, 2005EH6 ).
Supply chain strategies Supply chain strategiescan be defined as “how thesupply chain should operate in order to compete, which is an iterative processthat evaluates the cost-benefits and trade-offs of operational components” (Happek, 2005EH7 ). There are different types are supplychain strategies that are used within markets. The three supply chainstrategies that will be discussed in this report are Lean, Agile and Hybrid.LeanLean supply chainmanagement focuses on efficiency and cost reductions that can help to eliminatewaste within supply chain (Kerber and Dreckshage, 2011EH8 ). Toeliminate waste within a supply chain, companies will identify areas such astime, costs and inventories and examine these in thorough detail (Murray, 2016EH9 ). A lean supply chain managementdoes not need to be necessarily focused on those that produce products, but canbe for those who want to “stream-line their processes” (Murray, 2016EH10 ). The principles of lean supplychains are as follows:· Converting the process to flow · Optimisation of value stream whichinvolves removing waste and losses where possible · Product value which can includequality, cost and best performance · Perfection of all products, processesand services which includes continuous improvement of all principles · Activating Demand Pull by producingand delivering the product to meet customer needs (Ross, 2011EH11 ).
As a lean supply chainaims to eliminate waste, it tries to only produce what it needs to and wheneverit is needed. This ensures that the supply chain stays efficient. Leanmanufacturing was established by Toyota, and was known as the Toyota ProductionSystem (TPS), with its focus on “the reduction and elimination of waste within thefactory environs” (Ohno,1988EH12 ). Having a lean supply chain often means that customer demands are meton time, which increases overall satisfaction and can give a competitiveadvantage. However, as a lean supply chain puts so much emphasison trying to reduce costs, they may struggle to adapt or react quickly to anever-changing market. AgileAgile supply chain management is focused on “the rapidresponse for change in market and customer needs” (Baharmast and Kashani, 2017EH13 ). “Speed, cost and efficiency” are the top drivers of an agile supplychain (Sher,2016EH14 ). Agile is a strategy used when the market is volatile, unpredictableand extremely demand driven (Sher, 2016EH15 ).
Consumer patterns can change from one day to the next, so the supplychain needs to be able to respond and keep up with these changes (Sher, 2016EH16 ). Agile supply chains are flexible, and having flexible information systems allowfor evaluations to be made with regards to business practice and those have canhave any sort of impact on the organisation (Baharmash and Kashani, 2017EH17 ). The key characteristics of an agile supply chain are:· Demand driven · Flexible and market driven · Enhanced collaboration betweenproduct development and common systems between the customer and supplier (Christopher,2000EH18 ). Agile supply chains areused when there is little predictability in the market and responses are madein real time demands (Bruce and Daly, 2004EH19 ). Both lean and agilestrategies are different from each other, but it is possible to combine theboth to create a Hybrid strategy. Hybrid A hybrid supply chainis a combination of both lean and agile supply chains.
In some markets, thereare products that have a predictable and stable demand, for example, toothpasteor other essential toiletries, but there are other products in the market thatdo not possess this stability. To create a hybrid approach, the lean strategycan be used for stable demand products and an agile approach can be used tomeet unexpected demands. Lean supply chain will be used downstream and agilewill be used upstream, thus hybrid will “enable cost effectiveness of theupstream chain and high service levels in a volatile market place in thedownstream chain” (Masonet al., 2000EH20 ). Brexit The European union is apolitical union with 28 member states based primarily in Europe. One the 23rdJune 2016, the British public decided to vote in favour of leaving the EuropeanUnion, and the term Brexit was coined.It is still unclear howBrexit will unfold, but there are two ways in which Britain could implement it:’soft’ Brexit or ‘hard’ Brexit.
Those in favour of a’soft’ Brexit would prefer for the UK to “retain some form of membership withthe European Union single markets in return for a degree of free movement” (Ahmed, 2016EH21 ). Norway is a good example of acountry that has a deal with the European Union like this. Those in favour of a’hard’ or ‘clean’ Brexit would prefer for the UK to be completely removed fromthe European Union and the single markets, which would enable Britain to havefull control over its laws, boarders and trade deals which they haven’t had inover 50 years. As it stands, Britain’sbusinesses are busy preparing for what seems like a very unpredictable futureahead with unclear consequences Brexit could potentially bring (Rossi, 2016EH22 ).
Brexit could potentially be a huge change to businesses, and many might have tochange the way they are structured, represented, how they deal with newlegislations and how they deal with the European Union (APM, 2017EH23 ). Theimpact of Brexit on supply chains As Brexit has not yetbeen fully implemented and is still undergoing negotiations, nobody reallyknows the true extent of what impact Brexit will have on supply chains. The UKis now in a two year period of negotiations discussing exit terms, and newtrading agreements have to be agreed on, which will either be the signing tothe European Economic Area or the World Trade Organisation (WTO) (Ahmed, 2016). During exitnegotiation, it has been assumed that the Pound Sterling will weaken againstthe US dollar, potentially making “imports and raw materials more expensive” (Rossi, 2016EH24 ). International currency rates couldbe altered drastically, and those have implemented an agile supply chain willmost likely cope best, as they are flexible, market driven and able to adjustquickly to real time demands (Rossi 2016EH25 ). It has also beenassumed that Brexit could have an impact on the free movement of people (Rossi,2016).
If free movement is reduced, the operations within the UK that arestaffed by large numbers originating from outside of the UK could see a fall inlabour, resulting in an increase pressure on costs (Rossi, 2016EH26 ).