Database Reference
In-Depth Information
The organizational requirements of an agile enterprise include
◾
A flat, fast, flexible organization, with continuous interaction, support, and communications
among various functions
◾
Highly decentralized management that recognizes its knowledge base and manages it
effectively
◾
A multi skilled, flexible workforce that is proactive and responsible
◾
Extremely flexible strategies and relationships with suppliers
◾
Complete control of lean production and concurrent engineering
◾
Flexible tooling and automation
◾
Deep understanding of the customer based on operating integration and real-time market
data collection and analysis
Though they appear similar, there are fundamental differences between the
agile
and
lean
approaches for running a business. Lean production is at heart simply an enhancement of
mass-production methods, whereas agility implies breaking out of the mass production mold
and into mass customization. Agility focuses on economies of scope, rather than economies of
scale, ideally serving ever-smaller niche markets, even quantities of one, without the high cost
traditionally associated with customization. A key element of agility is an enterprise-wide view,
whereas lean production is usually associated with the efficient use of resources on the opera-
tions floor.
As pointed out by Jagdish Sheth in these times of market change and turbulence, the
half-life
(i.e., the time within which it loses currency by 50%) of customer knowledge is getting shorter and
shorter. The difficult challenges facing businesses today require organizations to be transitioned
into flexible, agile structures that can respond to new market opportunities quickly with a mini-
mum of new investment and risk. As enterprises have experienced the need to be simultaneously
efficient, flexible, responsive, and adaptive, they have turned increasingly to the network form of
organization with the following characteristics:
◾
Networks rely more on market mechanisms rather than on administrative processes to
manage resource flows. These mechanisms are not simple
arm's length
relationships usu-
ally associated with independently owned economic entities. Instead, to maintain the posi-
tion within the network, members recognize their interdependence and are willing to share
information, cooperate with each other, and customize their product or service.
◾
While a network of subcontractors have been common for many years, recently formed
networks expect members to play much more proactive role in improving the final product
or service.
◾
Instead of holding in-house all assets required to produce a given product or service, net-
works use the collective assets of several firms located along the value chain.
The agile organization is composed of small, autonomous teams or subcontractors who work con-
currently and reconfigure quickly to thrive in an unpredictable and rapidly changing customer
environment. Each constituent has the full resources of the company or the value chain at its
disposal and has a seamless information exchange between the lead organization and the virtual
partners. Sections 1.2.1 and 1.2.2 earlier discussed aspects of the customer-centric and customer-
responsive enterprises.
