Considering the challenges confronting today’s supply chain executives, the ability to be flexible ranks among the most critical of needed capabilities. But what is supply chain flexibility, why is it important, and how do you achieve it? These were among the important questions covered at the fall 2010 meeting of Georgia Tech’s Supply Chain Executive Forum.

With the theme, “SUPPLY CHAIN FLEXIBILITY: Critical Changes May Require Expanded Flexibility,” the two-day meeting, sponsored by the H. Milton Stewart School of Industrial and Systems Engineering’s (ISyE) Supply Chain & Logistics Institute (SCL), featured prominent speakers and facilitated discussions to help stimulate thought and dialogue to address these questions.

John Welling, vice-president of Wal-Mart Innovation; Eric Peters, CEO of FoodLink Online; Jack Allen, director, Global Logistics, Cisco Systems; and John Bauer, director, Global Transportation, Supply Chain Operations for Starbucks Coffee Company all gave presentations tackling the topic of supply chain flexibility in their own companies.

Additionally, Dr. John Langley, SCL professor of Supply Chain Management and Executive Forum faculty director; Dan Gilmore, editor, Supply Chain Digest; and Gene Tyndall, executive vice president – Global, Tompkins Associates, facilitated an interactive session revealing the results of a member survey on supply chain flexibility. A unique feature of this afternoon session was the graphics representation of the discussion facilitated by Martha McGinnis, president of Visual Logic, Inc., a graphic facilitation firm.

The key questions and issues the presenters were asked to address with respect to supply chain flexibility included:

• What is your definition of supply chain flexibility?
• Why is flexibility important to your supply chain?
• What are some objectives and priorities you have set for supply chain flexibility?
• How do you measure supply chain flexibility?
• What are some examples of supply chain flexibility that you have experience with at your company?
• How to achieve supply chain flexibility (e.g., process, organizational challenges, etc.)?
• Barriers to greater success with supply chain flexibility?

John Welling of Wal-Mart was the first to address these questions in his Wednesday keynote presentation, “Supply Chain Flexibility at Wal-Mart.” Quoting from the article “Perspectives, practices and future of supply chain flexibility” by Dileep More and A. Subash Babu, Welling defined supply chain flexibility as the  inherent ability or characteristics of the supply chain and its partners to be sensitive to minor and major disturbances in the business environment; to correctly assess the actual situation; to quickly respond, adjust and adapt with little time, effort and cost; and to effectively control the organization; and to keep the performance stable. Expanding that definition with his own, Welling said that a flexible supply chain supports multiple, evolving business models by leveraging common physical assets and inventory and collaborates with suppliers to remove waste, reduce cost, and improve service levels.

Continuing the theme on Thursday, FoodLink’s CEO, Eric Peters, in his talk, “Cold-Chain Solutions to Create Supply Chain Flexibility,” said that the produce supply chain is unique in both the way in which product is delivered from farm to consumer, as well as the communication required across links in the chain. Flexibility in that supply chain is important because perishables, unlike dry goods, have a short shelf life and fragmented vendor base, are subject to commodity pricing and purchase order changes, and require multiple pickup locations. For Peters, flexibility starts with the flow of information. “Without an effective trading partner communication channel that is integrated with back-end systems,” Peters points out in his presentation, “perishable procurement becomes extremely difficult.”

In his presentation, “Flexibility at Cisco in Unusually Uncertain Times,” Jack Allen defines supply chain flexibility as the “promptness and degree to which our supply chain can respond with proactive and reactive adaptations of our speed, processes, network locations, and volume in order to handle changes in demand volume (up or down) and mix, operating costs, and business needs.” Continuing, he explains that Cisco’s objective is to satisfy the customer, reduce cost and amount of unsatisfied demand, and improve utilization, all with little or no penalty in response time.

To achieve this, Allen recognizes that there are multiple layers to flexibility, which he describes as:

• Supply Flex -- The ability of suppliers to flex up and down through multiple levels of the supply chain
• Tactical Flex -- The ability of the supply chain to respond to immediate unexpected events
• Capacity Flex -- The ability of the production capacity to change up or down in time
• Leadership Flex -- The ability of the management team to change for events and trends
• Systems / Process Flex – The ability of the processes and systems delivering the supply chain to change in time to new requirements.

Rounding out the presentations was Starbuck’s John Bauer, with his talk titled, “Supply Chain Flexibility: The Starbuck’s Coffee Story.”  Bauer discussed Starbuck’s uplifting mission - to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.  The Starbucks Coffee story reinforced the need to build flexibility into today’s supply chains, in both the short- and long-term. 

The spring 2011 Executive Forum will meet on April 6 - 7, 2011. To learn more about Georgia Tech’s Supply Chain Executive Forum, visit the website at http://www.scl.gatech.edu/professional-education/scef/.