Dynamic Supply Chains, 2nd Edition

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T

he notion of the Triple-A supply chain has been around since

2004. But is this a phenomenon we see in practice? The more

you look under the covers of the concept as originally described by

Hau Lee, the more unlikely it looks. Certainly, some confusion is cre-

ated by the definitions he uses. When these are redefined in a more

liberal way to reflect reality, we find that Agility and Adaptability (or

extreme flexibility if you like) are at the same level in the conceptual

hierarchy, and represent two quite separate supply chain configura-

tions. My concept of dynamic alignment is at a higher level in the

conceptual hierarchy – it is the over-arching organizing principle

under which the other two operate in this multiple supply chain

world. And it is the dynamic alignment concept that brings the

notion of flexibility alive, allowing different patterns of demand and

supply to be serviced by discretely different configurations. The idea

is designed for the reality of a plural world, rather than a world where

a single supply chain contains all three qualities. The single supply

chain state just won’t materialize any time soon!

Hau Lee’s highly acclaimed seminal article

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on the Triple-A supply chain

has been in the domain for six years now, during which time our under-

standing of how supply chains function has increased exponentially. So

C H A P T E R 1 1

The triple-A supply

chain revisited

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What is really going on under

the covers?

D Y N A M I C S U P P L Y C H A I N S

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it’s high time to revisit the ideas in that article, discerning some helpful

nuances and adding some refinements.

Lee gives many interesting examples to support his definitions of each

of the A’s – Agility, Adaptability and Alignment – but while these are

quite descriptive, lingering questions remain about exactly what is going

on under the surface. Indeed, Lee himself admits as much in the last para-

graph of his article when he muses that ‘what they [firms] need is a fresh

attitude and a culture to get their supply chains to deliver Triple-A per-

formance’.

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He is right, of course, and in this extension to Lee’s article I

will endeavor to introduce that missing ingredient – the internal cultural

perspective. Without it, I’m afraid the story, while instructive, remains

purely descriptive and consequently lacks explanatory power.

By better understanding the human dimension of supply chains, it

becomes possible to move from a purely reactive to a more predictive

level. In other words, if you know what subcultures are in place and what

supply chain strategies are being proposed, you’re in a better position to

predict the likely outcomes in the all-important implementation phase.

Unfortunately, in my experience, more than 40 per cent of intended

strategies written into business plans fail to be fully executed, and it’s

mostly due to a misalignment between those strategies and the values of

the people inside respective organizations and their partner organizations

in the supply chain. When the chips are down they tend to do what they

‘prefer’ to do. That’s human nature all over and we better get used to it.

Lee posits that ‘only those companies that build Agile, Adaptable,

and Aligned supply chains get ahead of the competition’.

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I agree with

his overall thrust, but we need to explore and refine his definitions of the

three A’s to better understand why this might be so.

Redefining the three key properties

Lee’s first ‘A’ – Agility – is becoming increasingly critical in today’s vola-

tile markets. But you pay a price for it. You can’t be agile and lowest cost

concurrently – something has to give. In truth, you will find customers in

your markets that want one or the other or, at times, both responses. If

the latter, you have to try to understand which they want more. To give

an agile response at lowest cost-to-serve is, in effect, rewarding custom-