In today’s modern agile business, providing increased value is the most needed for success. But many companies fail to deliver the product on time or satisfy customers because of their logistic services. There are various issues in the supply chain as; insufficient availability of components or goods from a supplier or at delivery to the customer, or defects in goods. These are caused due to incorrect forecasting, lack of information communication, or unpredictable ordering to suppliers. Reasoning this inefficiency can explain as an organization is focusing on minimizing the supply chain cost but also along with trying to maximize the agility of the supply chain. This balance between demand and supply is complex to manage traditionally. Thus supply chain is updated.
Lean Supply chain provides efficiency in performing things, provides value by identifying and eliminating waste.
Agile supply chain provides quick responsiveness to continuously changing customer demands along with speed and flexibility.
One supply chain concept can reduce the cost and higher the service level for a company. But the same supply chain concept doesn’t need to work for every company or different customers on their diverse needs. In such cases, a hybrid supply chain is required.
A hybrid supply chain is a combination of strategies from agile and lean supply chains. In today’s fast-forward and digitizing world agile-lean supply chain is a necessity. Strategic functions are centralized in a hybrid supply chain whereas, operational are decentralized.
Benefits of Hybrid SCM
Its centralized strategic function allows scaled economies and lowers costs.
A centralized operational function allows for better customer service and low-cost transportation.
It optimizes the area of a supply chain to lower costs, lessen the risk, and provide incomparable customer services.
How It Works
In a Hybrid supply chain, while taking decisions that have high risk, cost, and effect will be performed in a centralized manner. Decisions with low to medium risk, cost, and effect will be performed in a decentralized manner.
It allows companies to classify the customers and divide them into different segments. If companies have more than one product then they need to go through each product with a segmentation process to create a strategy for each product segment strategy.
For Example, the company has two products; ‘lumber’s afunctional product existed for a long time so its demand uncertainty and supply uncertainty is quite low so this requires an efficient supply chain strategy. Whereas the second product is wallpaper, an innovative product whose demand continuously changes, its innovative demand but involves fewer suppliers resulting in demand uncertainty and supply uncertainty as high which requires an agile supply chain. What should a company do? As one supply strategy will affect the result of other products. In such cases, a hybrid supply chain will help the decision. They should segment the supply and demand segment and align strategy according to each uncertainty measure.
By appropriate segmenting of products and implementing the right strategies, companies can achieve the unique needs of every product segment in a better, cheaper, and faster manner.