The supply chain flexibility is defined as the speed in which the supply chain responds to changes in demand and the business environment; this is in order to either create or preserve competitive advantage.
At Leket Israel, our core activity is food rescue and distribution to the needy; managing the flexibility of the supply chain is the key factor in creating an efficient and valuable alignment. Lack of flexibility in the supply chain causes a situation in which the food is thrown out instead of being collected to reach 175,000 supported people throughout Israel.
According to the SCOR model, which is a tool to analyze and improve the supply chain, supply chain flexibility metrics are:
Upside Supply Chain Flexibility – The number of days required to increase quantities in the supply chain by 20%
Upside Supply Chain Adaptability – The volume growth (in percentage) of quantities, that can be achieved by the supply chain within 30 days
Downside Supply Chain Adaptability – The volume decrease (in percentage) of quantieis that were ordered from suppliers, that can be achieved within 30 days, with no additional costs or fines
Adopting a strategy of a flexible supply chain is required when:
- A high uncertainty in demand where customer delivery time is very short
- A high uncertainty in demand and production quantities are relatively small and don’t enable the exploitation of economies of scale
In Leket Israel, preparing and planning for inceases and decreases in demand is even more complex. In a majority of the cases, calls from farmers to come and collect produce aren’t planned in advance since the preference of every farmer is to actually sell and receive full compensation for their goods. “The call” to Leket Israel, to come and collect the produce from the field, is the last choice of the farmer.
In order to meet organizational objectives, the organization’s supply chain must be able to reach every farmer immediately, in accordance with the time required by him. Not arriving on time “encourages” the farmer to destroy the crop, and the agricultural produce, which could hae gotten to the needy, will be thrown in the garbage.
Leket Israel’s supply chain assesments, to deal with the required operational flexibility, goes in both directions of the supply chain:
- Downstream of the supply chain – Improved flexibility in responding to farmers (suppliers of goods/produce)
- Upstream of the supply chain – Improved flexibility in responding to non-profit organzations (NPOs), (customers), taking into account the needs of the different NPSs, their storage capacity, their distribution times, and other operational variables
Ways to improve the supply chain flexibility:
- Institutionalizing partnerships with suppliers and subcontractors in order to “straighten the chain” while dealing with fluctuations and changes in demand
- Transfering operations to external sources, i.e. outsourcing (using subcontractors to respond to changes in demand)
- Building tools and capabilities to quickly identify changes in demand
- Building means of dealing with variable demand and supply chain efficiency (training workers for a number of activities, building manufacturing capacity in a few establishments, formulating agreements with suppliers, subcontractors, etc.)
- Forumulation of organizational structure and work support processes
Barriers for greater flexibility in the supply chain:
- Integration capability between the various information systems throughout the supply chain, which would allow visibility and faster response time to changes in demand
- Organizational structure and processes that don’t support supply chain flexibility
- Management requests to lower costs at the expense of flexibilty
- Harnessing the management process due to the difficulty in quantifying the economic value of “upgrading” the flexibility in the supply chain
Leket Israel’s supply chain requires a high level of flexibility and quick preparedness to changes. These are due to the nature of the activities of the NPOs (customers), the nature of the acitivies of the suppliers, and the nature of the chain’s activities.
A typical example of supply chain flexibility in Leket Israel is as follows:
- Receive a call to collect a donation of refrigerated food that expires in 2 days
- Leket Israel’s supply chain is required to reach the supplier as quickly as possible in order to collect the donation/good and to distribute the goods as quickly as possible to the NPO, before the expiration date
The complexity is even greater since not every NPO can accept the refrigerated food due to lack of infrastructure.
The flexibility of Leket Israel’s supply chain, in response to the above challenges, occurring on a daily basis, requires:
- Bulding an organizational structure and supporting work processes in the nature of the aforementioned activities that aren’t “pressured” from daily “malfunctions”
- Capacity building to respond quickly and to reach suppliers in a short amount of time.
- Quick identification of NPOs that can receive the merchanidise (i.e. the rescued food) in terms of both infrastructure and their individual constraints.
- Capacity building in the sorting center to handle the goods when they arrive, sort them, and quickly prepare them to be sent.
- Capacity building to change vehicular distribution lines (trucks) using organic trucks or subcontractors.
- Long-term agreements with subcontractors in order to deal with the challenges faced by Leket Israel.
- Ensuring that all the aforementioned activites are carried out efficiently and at the lowest economic cost to Leket Israel.
Shai Rise is the owner and CEO of consulting firm RISE which specializes in implementing solutions in the supply chain. You can reach Shai by email: [email protected].
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