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Agile supply chains thrive on flexibility in production.
Imagine if the supply chain is forced to work without any finished goods inventory… as these could travel to consumers at the speed of light. How would you synchronize supply with demand in such a scenario?
Power plants face this challenge every day. They need to adjust their production levels continuously to match the changing levels of demand. Their inability to do so would mean power outage for consumers. The inherent flexibility they have built in works for normal fluctuations in demand, but what happens if the demand in their region has an unusual surge?
Power plants have solved this problem by establishing the national grid, where additional demand in any region can be fulfilled by plants in other regions.
While FMCG companies have the luxury of meeting demand variations through inventory buffers, higher flexibility in production lines would definitely result in lower inventory and lower stockouts.
How flexible is your production system?