Outsourcing Towards Greater Agility Through Investigating Decoupling Points in Leagile Supply Chains

Abstract

In today’s competitive business environment, with a continuously increasing diversity in customer demand, a high level of supply chain responsiveness is an imperative requisite for companies’ survival. As a consequence, enhanced agility is requested for the supply chains. The purpose of this paper is to investigate the determinants that influence the position of the ‘decoupling points’ along the value chain, as according to the reviewed literature these represent the separation point between leanness and agility in a hybrid supply chain. It has been found that by applying different technical solutions along the chain, including breaking down the complete production process in modular sequences and outsourcing specific ones, considering reshaping the supply chain, the decoupling points’ location can be moved, allowing greater agility. The chosen methodology is a case study of a FMCG company, aiming to illustrate how increased agility is achieved by outsourcing labour-intensive and time consuming activities, while shortening the downstream to customer. The selected firm is since several years under Lean and Agile strategies implementation. The study shows that understanding both, material and information decoupling points, certain lean processes can be moved upstream, leveraging more agile processes close to the end customer. This way, supply chains can be redesigned towards increasing market responsiveness.