Int. J.

Production Economics 133 (2011) 127–134

Contents lists available at ScienceDirect

Int. J. Production Economics

journal homepage: www.elsevier.com/locate/ijpe

Improving supply chain performance to satisfy final customers:

‘‘Leagile’’ experiences of a polish distributor
Danuta Kisperska-Moron a,, Job de Haan b
a
The Karol Adamiecki University of Economics, 40-226 Katowice, ul. Bogucicka 14, Poland
b
Tilburg University, PO Box 90153, 5000 LE Tilburg, The Netherlands

a r t i c l e in fo abstract

Article history: Mass, lean and agile production philosophies, although widely discussed, still cause considerable
Received 10 September 2008 confusion both among academics and in practice. De Haan and Overbooms’ characterizations of lean
Accepted 15 December 2009 (what, when needed but perfect) and agile (first, fast and best) show the paradigmatic differences
Available online 1 February 2010
between the two. When applied in a case study in Poland on a distributor of lifestyle oriented fast
Keywords: moving consumer goods, established after the transition, it appeared that these characterizations
Lean supply chains enabled a proper description and analysis. During the volatile period (1996–2002) an agile approach
Agile supply chains provided the flexibility and competitiveness needed. However, when the market matured the overly
Leagility expensive agility caused last minute crisis. Then a lean approach enabled the optimization of processes
needed to supply customer in a more reliable way. Both approaches stress different aspects but have
quite a few tools in common. The paper does not try to answer the question whether one approach
could outperform the other but indicates when one concept could be more useful than the other.
& 2010 Elsevier B.V. All rights reserved.

1. Introduction 1999) when they stress standardization and a stable environment.

Supply chains, rather than individual companies compete in
markets, in particular in fast moving consumer good (FMCG)
business because of trends such as reducing product life times
and product proliferation. All chain members have to contribute
optimally to meet the chains’ ultimate goal, i.e. satisfy the
demanding final customer. For some customers the price is
the order winner, whereas others demand something intangible
like contributing to lifestyle. Whether the chain meets customer
demands is easier seen in its tangible parts, i.e. those related to
production and when aiming at low prices. However, in the more
intangible parts, i.e. those related to distribution and aiming at
lifestyle, this is far more complex because of the impact of
customer perceptions rather than objective KPI’s. These demands
may change over time due to stage of the product life cycle,
developments in society or consumers’ individual circumstances.
Consequently, supply chains have to adapt their strategies and
organization to retain their customers and attract new ones.
The literature proposes lean and agile concepts as different
approaches to meet this mixture of developing objectives.
However, literature is not consistent about the meaning covered
by these labels. Some see lean as superior to mass (Womack et al.,
1990), whereas others seem to treat it as mass (Mason-Jones et al.,
 Corresponding author. Tel./fax: + 48 32 257 7302.
E-mail address: kispersk@ae.katowice.pl (D. Kisperska-Moron).
Yet others (Harrison and Van Hoek, 2005; Christopher, 2000)
consider agile to be superior to lean because it copes with volatile
demand. These approaches to supply chain management
developed from production philosophies, which in their turn
emerged from car manufacturers’ production strategies. Mass
emerged from Ford, socio-technology from Volvo and lean from
Toyota. Agile, however, has less clearly defined industrial origins
(Stratton and Warburton, 2003), but was ‘invented’ by a group of
researchers at Iacocca Institute (Yusuf et al., 1999). Their report
was on how USA could regain its pre-eminence in manufacturing,
lost to Japan after the implementation of lean and contained best
practices applied in USA, Europe and Japan. In all the approaches
the role of suppliers and (final) customers was stressed and hence
the scope was broadened to the overall supply chains in which
companies participate. De Haan et al., 2006 tried to identify the
characterizing difference between lean and agile rather than
stressing supremacy of one over the other or amalgamating them.
They summarized lean as ‘supply what, when needed, but do this
perfectly’, whereas agile aims at ‘be first, fast and best’. Stratton
and Warburton (2003) make a similar distinction. This implies
that both approaches aim for flexibility and competitiveness but
in different ways.
Since the 1990s most of the economies of Central and Eastern
Europe went through a period of transition from a planned
economy to a market economy. Since then their economies grew
rapidly and both the economy and society as a whole faced
turbulence. After the first introduction the markets became

0925-5273/$ - see front matter & 2010 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2009.12.013
128 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134
mature over time and both suppliers and consumers had to adapt
their strategies and behavior to each stage of the developments.
These developments provide a good background to try
understanding the characteristics and the conditions that are
favorable for lean and/or agile approach to supply chains. Hence,
this paper addresses the question: in what circumstances could
companies move between lean and agile supply chain strategies?.
The remainder of the paper consists of three sections. First the
lean and agile approaches to supply chain are elaborated in a brief
review of literature touched upon above. Then a case study is
presented on the developments in a supply chain of lifestyle
exposing FMCGs in Poland, with distribution as the focal process.
Because of the societal turbulence of transition, the character of
the product involved and the concentration on the distribution
process, this case should reveal questions concerning how to deal
with flexibility and competitiveness. These are the distinguishing
differences between lean and agile (Haan et al., 2006). Finally,
theory and practice are confronted in a discussion section leading
to conclusions and recommendations.
2. Lean and agile supply chain strategies
Lean production was developed at Toyota after a Toyota
delegation visited Ford’s car factories in the US and realized that
they never could serve the small home market with a full array of
types of cars using the technologies of mass production. There-
fore, they started to develop techniques that allowed them to
produce as flexible as batch size 1, to-order (Vonderembse et al.,
2006). Lean firms appeared to be very successful in the global
markets of their industries. Much of their success, however,
resulted from a thorough knowledge of the consumer market as
well as a strong supplier base (Womack et al., 1990). Conse-
quently, the supply chain approach contributed considerably.
American industry lost ground especially to Japanese competi-
tion on important industrial markets, i.e. cars, machine tools and
electronics (Yusuf and Adeleye, 2002). Agile production was
introduced in the Iacocca report as a new paradigm to look
beyond the than current best practices, i.e. lean production, to
make a significant step ahead of competition. However, the report
made no clear distinction between ‘1991 best practices’ and a
radically different manufacturing business model (Kidd, 2005). In
most influential publications the fast response to volatile markets
and hence flexible production base and suppliers is stressed. This
again emphasizes the role of the supply chain as a whole.
2.1. Lean concept
Womack et al. (1990) describe how mass production emerged
from craft production when Ford managed to assemble standar-
dized parts along a conveyor belt. In doing so, he could build
affordable, standardized products for an anonymous sellers
market.
The difference lean production created was that Toyota
produces only what is needed when it is needed by means of
perfect, i.e.100% reliable processes. Slack et al. (2004) show
convincingly the differences in mindset between the two para-
digms when they refer to the view of capacity utilization and that
of buffer stocks. In traditional mass production the focus is on
high capacity utilization to produce more at each stage, but extra
production goes into expensive inventory and hides problems and
inefficiencies. In lean production the focus is on producing only
when needed, so lower capacity utilization but no waste because
of inventory or surplus production and problems are shown and
solved whenever they arise. In traditional mass production, buffer
inventory balances differences in production level and speed in
various processes, whereas in lean production the controlled
processes are aligned and no buffers are needed.
Harrison and Van Hoek (2005) underline this in their pyramid
of key factors that underpin JIT. At the top level they put JIT, i.e.
uninterrupted flows and this is supported by minimum delay and
minimum inventory and these in their turn by well controlled
processes leading to minimum defect products and minimum
machine downtime. These authors also refer to Womack and
Jones’principles of lean thinking: specify value, identify value
streams, create production flows, let customer pull and strive for
perfection. De Haan and Yamamoto (1999) showed that although
‘zero inventory’ is not everyday practice, the relationship
with suppliers and customers is very close and mutual depend-
ability is high.
This requires two additional conditions, which are supplier
communication management and customer involvement. These
conditions are adapted from Olsen (2004) and consist of external
oriented lean practices. If a company really wants to become a
lean enterprise, it has to communicate with its supply chain
partners on a continuous basis, in order to deliver each other in
the right time, the right quantity and in the right manner. To
enable JIT delivery of parts by suppliers, they have to produce
synchronous with their customer. De Haan et al. (2001) show how
lean companies use different planning horizons first to forecast
demand ever more precisely, to determine capacity for a short
period and finally to plan actual orders into this capacity. The
companies communicate this information with their suppliers as
well as the customers. They only can do so if they could adjust
their capacity in time to the forecasted sales and know about the
actual sales as well as the sequence in which individual products
will be produced. This requires timely and adequate information
sharing among partners. The first tier suppliers, in their turn, have
to collaborate in the same way with their suppliers, i.e. the focal
company’s second tier suppliers. The focal firm needs and receives
the market information in a similar way from its first and second
tier customers.
Lean emerged slowly over the years, rather than that it was
invented as a grand theory. At the heart of it is continuous
improvement by means of Kaizen. Management takes mistakes
seriously and as an incentive to improve processes. Small groups
of shop floor workers receive an assignment to analyze a certain
problem and come with a feasible solution. They have to approach
such an assignment in a standardized way using a set of simple
statistical techniques such as the Ishikawa diagram and the Pareto
analysis. Oliver et al. (2002) show the differences in this respect
between Japan and US and UK: the higher percentage of operators
involved, the high number suggestions per head which even
exceeds targets and the percentage of suggestions coming from
operators.
Lean supply chains operate in relatively stable, largely
controllable and predictable environments, maintained by co-
operative long-term trading relationships between partners in
supply chain (Peck et al., 2001). Classic lean supply chain
performance is focused on achievement of low cost and not
over-servicing the customer (Gattorna, 2006).
2.2. Agile concept
Agile manufacturing reflects production that is first, fast and
best. Christopher (2000, 38) defines agility as ‘the ability of an
organization to respond rapidly to changes in demand, both in
terms of volume and variety’ to serve volatile and unpredictable
markets. Harrison and Van Hoek (2005, 185) add that the agile
approach elevates speed capabilities to much higher levels than
would be possible using previously known tools and techniques.
 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134 129

Simply responding quickly and at the right time are not enough can discourage innovation, differentiation and complex learning
anymore, so being lean and responsive is insufficient, but agility needed to carry on the change (Dubois and Gadde, 2000).
takes the argument a significant step further. Leanness is about doing more with less. Agile supply chain
Harrison and Van Hoek (2005) present an integrated model for operations are market-sensitive, network based, with process
enabling the agile supply chain. It consists of four elements: alignment and virtual operations (Christopher, 2005). Combina-
market sensitive (or customer responsive), virtual (or IT-based tion of these two concepts within the scope of one firm or a single
sharing of information), process integration (of business pro- supply chain can be called as ‘‘leagility’’.
cesses) and networked-based (partners wit a common goal).
Crucial is that a firm can read and respond to end-customer
demand. The breakthrough here was efficient consumer response 3. Methodology
(ECR) and the use of IT to capture data on sales directly from point
of sale to respond to unpredictable market changes (Vonderembse
The case study company was known to the first author from its
et al., 2006).
very inception onwards and shown to the second author as a
Virtual chains are information-based rather than inventory-
Polish best practice in distribution. During his first visit to the firm
based as the business community is learning that visibility
the second author got at first an oral as well as an AV introduction,
of demand; by means of timely information sharing reduces
then visited both a regional and a local distribution centre,
complexity of control. The information systems should give
observed visits of sales representatives to different types of
up-to-date, correct information and they should be able to
customers and finally had a discussion and Q&A session with its
communicate with each other in an easy way. In the ideal
top management. When discussing the summarized results with
situation all partners in a virtual supply chain should be linked
the first author, differences of opinion emerged; some related to
together by a common information system.
different perceptions of firm practices and others related to
Easy communication between the partners enables optimiza-
different perceptions on the content of lean and agile. This caused
tion of their respective business processes from a chain perspec-
two parallel research lines: one related to better understanding of
tive. This implies that processes may be run not only sequentially
practices (the first author explored a number of additional, very
but also on special occasions synchronously.
specific problems) and the other related to additional literature
The supply chain should be viewed as a network of partners
review (as well as re-reading known literature). In a second visit
with a common goal, i.e. to satisfy the final customer. These
to the case company by both authors, quite a few differences in
partners are cross-linked and are all contributing to the value
strategy were observed both during discussions with manage-
generated for the final customer. The competitive strength of
ment and during site visits. Although new technology enabled
the network comes from the synergy emerging from the
strengthening the existing strategy, retailers forced the case
integration of (core) capabilities of the partners.
company to move in the opposite direction, despite the pressure
To organize this successfully, Harrison and Van Hoek (2005)
of their supplier. Supported by the results of the additional
put forward four preconditions. The first precondition is the
literature review the authors concluded that this was a paradigm
‘enterprise reality check’. Cross-functional alignment and enter-
shift and discussed it with the company’s management. The latter
prise-level focus on the contribution of logistics management and
agreed that the changes they implement were not just ‘adapta-
strategy. Revenue-generating functions should adopt at least a
tions’ but more profound change of company’s operational
base-level understanding of agile principles, an enterprise-wide
strategy.
focus on the value potential of agile efforts is needed, to recognize
The methodological approach used by the authors has not
for what they are worth.
been based on formulation of formal propositions but instead on
The second precondition is the ‘cost of complexity check’. Be
confronting theoretical models with practical business operations.
sure neither to go for agility at any cost nor for compensating for
As a result the paper does not aim at indicating the ‘‘best’’
mismanagement in other parts of the organization. The level of
strategy, but rather looks at whether the strategies are applied as
proliferation should be economically justified, but here two
expected from theory. This is done even by the same company
options are possible. On the one hand one can go for ‘how cheap
when situation and hence conditions changed.
can we produce?’, but on the hand one can ask ‘is this, what
customers ask for?’.
The third precondition is avoiding overly expensive agility. Key
questions are as follows: where is the value in this complexity, 4. Case study
what customer need does this address, do these promotions, etc.
just cause short-term success or do they contribute long-term 4.1. The market of laundry, cleaning and paper products in poland
sustainable growth. Christopher (2000) as well warns for overly
agility by means of proliferation of products and brands. In When in the early 90s the economic system in Poland changed,
addition, he proposes to include the in-bound external perspec- the markets emerged and opened up. Consumers seem to have to
tive and pleas for leveraging supplier relations. Important catch up what they missed before and the market looked like a
elements are rationalization of supplier base, a high level of sellers’ market: whatever supply, consumers were anxious to buy.
shared information and a high level of connectivity between In addition to that new distribution channels emerged, new
partners in their working relationships. suppliers from the USA and EU entered the market. After some
The fourth and final precondition advises to forecast to reduce time market-leaders emerged in certain (sub)segments based
the need for last minute crisis. Although agile firms should act not only on product quality but also on adequate visibility and
instantaneous, forecasting is said to be needed as not all actions availability in the shops as the order winning performance
can be real time. Crucial elements of the forecast are that they are criteria.
company-wide, the result of an integrated process and, executives The new distribution channels became more important,
are accountable for results. whereas the market share of the traditional channels declined.
Leannes and agility in a supply chain do not have to exclude The foreign suppliers reached these channels by means of
each other, however, lean supply chain paradigm, with its focus emerging distributors. The suppliers had to be able to react
on advanced standardization as the way to improved efficiency, quickly and replenish immediately after sales. Modern ICT-tools
130 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134
were important to reduce the reaction time and support the
logistics operations in the distribution system.
After a couple of years the market started to get saturated and
new technologies were introduced to even further speed up the
replenishment process. Slowly, the market changed into a buyers’
market, in which the established in the mean-time market-
leaders defended their market shares. In addition to availability,
low price and wide range of promotions became important
performance criteria as well. To reduce costs and to increase
reliability of the distribution processes, the suppliers supported
process of mergers and acquisitions among the recently emerged
distributors.
New ICT-technologies allowed even shorter reaction time for
the distributor and delivery within 24 h became possible even in
the traditional channels. In addition to that the available
information also supported the commercial and marketing
decision making processes. Market in the traditional channels
became ‘volatile’: as the external pressure of customers increased,
the suppliers could react much faster based on the most recent
ICT technologies in use. The shop owners in these channels could
no longer live up to the speed with which they were approached.
4.2. The laundry, cleaning and paper products downstream
supply chain
In one of the fast moving consumer good sectors, i.e. laundry,
cleaning and paper products the nineties showed an explosion of
small distributors trying to connect all foreign suppliers with the
local shops in their immediate region. After early successes,
processes of specializing and increasing scale of operations by
means of external growth started.
Within this framework a new distribution firm was established
to distribute FMCG’s for a foreign Multi National Company (MNC).
In only a few years the number of wholesalers, selling products
for this MNC, was reduced from 650 to 25 (1991), to 10 (1999),
and to only 4 (2000). Then these 4 merged in 2001 to the only
company which we will call as ‘‘Distributor’’*.
The MNC concentrates on the modern sector, i.e. sells to the
large Western super- and hypermarket chains they also know
from abroad. The Polish distributor focuses the traditional
distribution channels, such as more or less specialized shops in
residential areas. Sales of the distributor account for 40% of sales
of the MNC in Poland and they sell around 400 types of these
products. The distributor sells also other brands of other
producers and altogether they deal with around 17,000 products
lines.
Consumers use the MNC’s products on a daily basis. They
chose the products because of the price and (perceived) quality
ratio. The quality is shown in the international brand name the
MNC uses on a global scale. As international competitors follow
the same strategy consumer will not enjoy a premium price for
the products.
In the supply chain three actors can be distinguished who have
to cooperate to serve the final customer:
 the MNC as a manufacturer of mentioned group of products
(it is just one global corporation but manufacturing processes
take place in different plants in the US, Western and Central
Europe),
 the distributor as the intermediating link,
 large number of retail shops cooperating with the distributor.
The MNC is the market-leader in this segment and pushes its
products, perceived as those with the best price/quality ratio, into
the chain. That policy is reflected by the speed of the launches of
new or improved products. Every month a couple of dozens
of new or improved products replace existing ones. For each of the
new and the existing products from the assortment, the MNC
prepares sales forecasts and sets sales targets that have to be met.
One of the tools to meet the targets is promotions. For each of
these promotions the responsible product manager has a budget
at his disposal. With the help of the modern ICT tools it is visible
on-line to what extent the budget has been used. When the
budget is spent, the promotion will be stopped. Promotions are
also organized in a form of special bundles of old products. So it is
not just reduced price for a single item but for a set of
promotional prices for number of products sold as a single
bundle. In the terms of SKUs each promotional bundle constitutes
a separate SKU.
The shops are happy to have the products of the market leader
in their assortment as final customers buy them anyway.
However, they try to have the lowest price possible and postpone
their purchases to achieve that. From their experience they know
that in case sales targets have not been met by the end of the
month, price reductions will be given. For them the number of
promotions is overdone, as they are not aware of all promotions
that are active at a certain moment in time. Sometimes for up to
60% of the products some kind of promotional prices are valid. The
distributor suggested to the MNC that for the efficiency of their
operations there should be no more than 20% products subject to
promotion.
It is the visiting sales representatives of the distributor who
inform their shop managers about promotions available for them.
In addition to that they know the limited buying capacity of their
customers: if they spend more on one product, they will spend
less on others. Their major concern of retail shops is the reliability
of supplies although they claim to accept a limited number of
mistakes in delivery as they keep safety stocks themselves.
4.3. The distributor as an integrator of the supply chain
In its mission statement the Polish distributor says, it wants to
be the preferred partner for both producers and stores providing
high service at low costs. Its major competence is in the perfect
presentation and exposure of the products. This is based on the
strength of a strong team of professional, experienced and
involved employees, supported by dedicated HRM. World class
IT service supports the operations.
4.3.1. Distribution system
To distribute the products to the shops the company has been
organized into a few districts. Each of them consists of a
number of regions depending on the density of customers. The
distributor operates with 3 distribution centres in Poland and the
distributor organizes supplies from there to 19 depots operating
without stocks on the basis of cross-docking. The MNC supplies
only 1 distribution centre located near Warsaw in central Poland.
The general level of inventories in distribution centres has been
increased in the last year from 14 to 20 days of sales. However,
the target level for inventories of the MNC products was set
through bilateral negotiations to 10 days. The distributor plans to
undertake various policies and activities to get to that level, since
presently they store 16 days of sales of the MNC products.
Common policy of the MNC and the distributor is also to maintain
a proper structure of inventories. The expected changes in that
structure are presented in Table 1.
Due to the ‘‘push’’ system applied by the MNC warehouses of
the distributor remain quite full and if they do not have adequate
space for stock, the distributor rents outside space in the
warehouses of other companies. Additionally, there is a separate
 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134 131

Table 1. Also this is increasing not only its reliability, but also its efficiency
Planned changes in the structure of inventories in distributions centers.
especially in transportation.
Class of inventory The share of a class of inventory in the total The representatives are over occupied with large number of
level of inventory promotions and they do not have enough time to explore the
whole set of promotions. At the same time they are not able to
At present (%) The target (%) concentrate more effectively on profit management.
Fast rotating inventory 78 90
Slow rotating inventory 17 8 4.3.3. Support of information technology
Non-moving inventory 6 2
The Polish distributor uses EDI both for its internal and
external (with the MNC) IT communication. In addition to this,
relevant information is collected and processed in mobile
computers the sales representatives use when visiting shop. In
warehouse for ‘‘old’’ products, which have been withdrawn from
the external communication, clients can use the e-line to
the market and replaced by their new versions. Decisions about
approach the distributor as well. These systems are compatible
withdrawal of products from the market are made by the MNC,
and data are ‘on line, real time’ available where and when they
however, they are always negotiated with the distributor. They
might be needed.
have to ‘‘clear the warehouse’’ at the distribution centre by
Starting point of the information flow are the mobile
organizing a special ultimate promotion for ‘‘old’’ products, and if
computers, which support the representatives. When they visit
they do not manage to sell them, they have to scrap them at their
a shop they have all relevant information about the client at hand
own cost.
about all processes they have to deal with. Consequently, they can
The distributor operates also its own logistics services. They
discuss with the shop-owner not only the physical aspects of
are responsible for transport operations between distribution
the order but also the financial ones. They learn what the different
centres and regional depots. The use they own fleet (for regional
types of products are ordered and how much inventory is in the
operations) as well as buy services from other professional
shop, etc. Also the consequences of these decisions for prices and
logistics operators.
bonuses can be calculated on the spot. This is important because
The distributor integrates the physical (storing and transpor-
of the large number of products in the assortment as well as the
tation), commercial (sales and merchandising) and financial
complex system of bonuses and promotions in use. Therefore,
(billing and checking on payment) activities for its whole sales
the shop owner will not face surprises when the goods are
area.
delivered within the next 2 days and he will be prepared to pay to
the driver. But also past financial performance of the shop can
be addressed and if needed, the shop owner can pay to
4.3.2. Selling
representative to avoid ‘punishment’ for paying late.
Shops can be divided in partners (with levels A, B and C) and
After the visit certain levels of sales data are transferred to the
non-partners. Partners meet specific requirements: number of
depots and the deliveries can be prepared.
products from the assortment of the Polish distributor (e.g. at
The financial department prepares the formal billing. The sales
level A: 128 products, level B: 80 products), room occupied by
department analyses the composition of the order and relates this
their products on shelve in the shop (at level A; minimum 40% for
with overall sales figures from the region. Finally, the data are
Polish distributor products at eye-level) and merchandising. The
included in the ERP system to prepare the work orders for the
advantage for the shop is in lower prices. The Polish distributor
order pickers as well as for the drivers.
determines layout of the shelves.
The Polish distributor serves dozens of thousands of client
The length of a visit a representative pays to a shop differs. In
stores both through its representatives and through e-line. In the
partner A shops this may take 45 min whereas in non-partner
latter clients can order either through a call centre or through the
shops it may be only15 min. This depends mainly on the number
web.
of products a shop has in its assortment. In A shops products are
The Polish distributor has a strategic partnership with the MNC
presented with high exposure (height, concentrated in blocks).
as it is the only distributor of the latter’s products through the
About 20% of all shops are A-partners, but yield 80% of total sales.
traditional retail channels. The relationship with the MNC is very
The Polish distributor’s representatives visit the shops in their
open and characterized as friendship and trust. For the last 15
region on a regular basis. Their tasks in the retail shops they
years they cooperated in joint projects, and exchange of informa-
service are as follows:
tion and experiences. The cooperation is really two-sided and
managers from both sides who deal with the same products and
 collect payments if shop owners are late with paying (rule: pay or the same regions have close contacts.
on delivery by driver gives a 2% price reduction, payment after All parties benefit from the strategic partnership with the MNC
2 weeks or later causes a ‘punishment’ loss of 1% bonus/week), and the Polish distributor strategy as the products get the optimal
 check inventory position both in shop and in ‘warehouse’ and marketing, exposure and promotion, supported by the loyalty
refill the shelves (representatives do not keep track of the level programs for the partner shops.
of inventories at retailers),
 sell promotional products,
4.4. Problems faced by the distributor
 sell other products from the assortment,
 handle merchandising.
The distributor is in between two parties: the MNC and retail
shops, and has – as its only tool – its operational efficiency to
After the visit they send the results electronically to regional meet both the targets set by the MNC and the demands of the
depot where people work 24/6 to fulfill the orders with delivery customers from the traditional distribution channels.
that used to be within 24 h but slowed down to 48 h at present. Recently they faced problems because of too much of
Delivery period was extended since the distributor recognized inventory as well as too many mistakes in deliveries. The level
that the requirements of shop managers are not so time sensitive. of inventory, in terms of days of sales, exceeded the target they
132 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134
agreed upon with the MNC with 50%. In addition to that the
distribution over the ABC classes was also unattractive with C: 3
and B: 2 times the target. The distributor even hired an additional
warehouse to store the extra inventory. The promotions as well as
their often unanticipated stop and the sales targets for them are
important causes. Although the ‘owner’ of the promotion at the
MNC is responsible for these leftovers, often the distributor has to
deal with them, selling at reduced prices or even scrap them.
Another set of causes are the changes in the assortment: new
products replacing old ones, renewed products making the old
types outdated, products can be taken temporary out of the
assortment. In case of changes the distributor has to rely on
forecasts and targets defined by the MNC. The MNC is not always
precise in its forecasts as people in different regions may react
differently to new items and adequate historical data do not
always exist.
Most of the mistakes in delivery are caused by the within 24 h-
delivery enabled by the most recent ICT technology in use. To
increase its reliability and improve efficiency especially in
transportation the delivery time was extended to 48 h.
The distributor and the MNC have to cooperate very closely as
one cannot do without the other. The distributor only sells the
products of the MNC and the MNC depends on the distributor for
its sales in the traditional channels. Consequently, if the
distributor encounters problems both parties will suffer. To deal
with this representatives of the two companies meet every
month, product category by product category, to discuss opera-
tions for the next month: sales targets, promotions and the like. In
addition to that, all managers involved at the two companies meet
to discuss the performance of the previous periods. Not only the
relevant KPI’s at the overall level of the distributor, but also on a
category and an individual product level. In case of misbalance
between targets and actual performance parties look together for
causes and solutions.
5. Discussion
From the case study we can conclude that the Polish
distributor is an example of changed approach to lean/agile
strategies due to the evolution of market requirements and
strategy adopted by the producer of main product groups (MNC).
5.1. From agile to lean
At the initial stage of fierce competition on the market of
laundry and cleaning products (the period of 1996–2002) the
whole supply chain consisting of the MNC, the distributor and
traditional small retail shops was operating according the very
aggressive market strategy aiming at winning as much of the
market as possible. There were several competitors and all of
them were trying to get for themselves some major portions of
newly established and very fragile market for laundry and
cleaning products and for cosmetics. It was still the period before
large distribution networks successfully segmented that market
leaving only its portion for small retail shops constituting the
traditional channels for sales of P&G products.
That aggressive strategy was based on the concept of agility
according to its specific profile of being ‘‘fast, first and best’’. That
strategy was the only option for all actors fighting for their fair
share of newly emerging market. The priority for the MNC was to
be first in the market with new product varieties and for the
distributor to have them first in the shops of their customers. The
priority for the distributor was to deliver in shorter periods than
their competitors (i.e. within 24 h and less). It enabled them to get
to the shops quicker then their counterparts so that they were
able to sell their products even before their competitors managed
to bring them to the retailers. In that context the distributor was
‘‘fast’’ at their customers. With high certainty of their deliveries in
terms of time, quantity and quality they were able to become the
‘‘best’’ distributor of the MNC products in Poland but also among
other manufacturers in the same family of laundry and cleaning
products and for cosmetics. However, internally this had some
negative aspects as well as the distributor had to balance the push
strategy of the MNC and the pull strategy of its customers. The
increasing possibilities of new ICT tools enabled the MNC to
become even more flexible, whereas retailers relaxed more or less
as they and their customer got familiar with the market economy.
After 2006 the situation on the market of laundry and cleaning
products and for cosmetics achieved some balance and stability
and the major players (competitors) reached more or less fixed
market shares. To support their positions the strategy for the
chain changed as did the MNC and its distributor. The distributor
became the sole distributor of the MNC products for traditional
small retail shops while distribution to large retail networks
became a separate operation for MNC. In that new market status-
quo the distributor’s strategy shifted towards leanness. On the
one hand, it became enough to provide ‘‘what and when needed’’
products to maintain their market position. Local shops did not
need both frequent and fast delivery as their turnover time was
not that fast and stock keeping was possible. Yet at the same time
the distributor had to stay one step ahead of the competitors, i.e.
had to operate in a ‘‘perfect’’ way. Hence, they were able to reduce
the speed of delivery from 24 to 48 h and yet ensure that products
are available at the customers when needed. The only tool for the
distributor to make a profit is to increase its efficiency. The
extended lead time allowed for such an increase as transportation
costs may decrease because of higher utilization rates, fewer
mistakes will be made because of reduced time constrains and,
stocks can be more in line with actual sales because relevant
information can be absorbed properly.
Hence, we can suggest that proportions between lean and agile
operations probably depend on the character of market
operations. The aggressive agile approach of first, fast, but best
was suited in the hectic circumstances of the ‘inventing’ and
implementing the market economy in Poland. However, once the
market got settled the lean approach was preferred to meet
the customer demands. Agility became too expensive and created
too much waste, whereas lean could provide what, when
needed and reduce waste because of continuous improving
perfection in the whole supply chain.
5.2. Validity of the ‘agile’ model of ‘‘lean operations
According to Harrison and van Hoek (2005), an integrated
model for enabling the agile supply chain consists of four
elements: market sensitivity, virtuality, process integration and
networking. However, the case studies showed that the Polish
distributor still uses the same elements of management and
techniques even now they focus more on leaning their operations
in place of former agility.
During agile operations the distributor heavily adopted all four
elements to deal with producer and serviced stores. They became
quite market sensitive trying to win their customers’ orders
against the competitors. They were multiplying their merchan-
dising efforts and inventory flow. The MNC invested large money
into IT technologies for their Polish distribution system. It was the
most important factor contributing to the highest level of
competitiveness of the Polish distributor on the market. Through
that investment business processes became more integrated and
cross-linked in constantly growing network of partners.
 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134
Under lean strategy the distributor still has to respond to
customers demand, although it is less volatile now and more
stable. But they do have to follow carefully detailed ‘what and
when’ requirements of retailers and therefore they employ the
whole ‘‘army’’ of sales representatives who periodically (but
rather often) contact dedicated shops in order to get constant
information about their real needs.
The whole supply chain is heavily based on information giving
still the full visibility of demand; by means of timely information
the control procedures can be easily performed. Information has
not replaced inventory held in warehouses since inventory still
serves as a robust tool of customer service. In the lean drive the
distributor tries to reduce its inventory from levels resulting from
high agility to more appropriate lean levels, eliminating wastes.
The whole chain displays its virtual nature since all partners are
connected by proper information technology and network. It is
EDI for the distributor and the MNC and Internet technology for
retailers and the distributor. However, they did not reach the ideal
situation of virtuality yet when all chain partners are linked by
common information systems.
Process integration has been achieved to great extent by
integration of information systems. Therefore, all partners can
optimize their respective business processes from a chain
perspective. However, one has to remember that it is the MNC
who is the supply chain leader in the analysed case and the
management of the chain is quite centralized. The crucial point
here is that processes can be carried out in such a way that they
meet the demand of the final customer. So the process integration
in the Polish distribution system guarantees their correct
sequence and synchronization.
The downstream portion of the MNC and the distributor’s
supply chain is a network of partners with a common goal, i.e.
satisfaction of final customers (buyers at respective retail shops).
All of these partners are cross-linked and contribute to the value
generated for final customers.
After that analysis one may conclude, that the four elements
indicated by Harrison and van Hoek (2005) do not reflect
exclusively the elements of agility. Moreover, they remain
important managerial approaches useful for both agile and lean
practices in supply chains. It contradicts with the concepts
proposed in classical literature on the nature of supply chains.
5.3. Adaptability of preconditions for going ‘‘lean
Harrison and Van Hoek (2005) also put forward four
preconditions, whereas Christopher comes up with a number of
advices for successful agile supply chain practice. From our case
study we can clearly conclude that the Polish distributor almost
‘‘literally’’ employed these ‘‘advices’’ in their operations.
The first precondition is the ‘enterprise reality check’. To win in
the marketplace, the distributor heavily invested into logistics
technologies and cross-functional alignment, so that they applied
finally process-based approach to their business. As suggested in
literature, the distributor continuously works on further improve-
ments, not only in coordination and integration but also in shop
floor process activities. At the same time they continue some lean
practices, e.g. waste elimination in the form of unnecessary
stocks, thus contributing to achieving higher value from activities.
The second precondition is the ‘cost of complexity check’. As
we indicated in our case study, they did go for agility at any cost
when they conquered their market segment. However, after that
the distributor applied two options: one that goes for how cheap
they can distribute their products, and second making sure that
they distribute, what customers really ask for. The starting point
of the principles of lean thinking is, as indicated above, in
133
specification what customers really want. Through the system of
extensive network of sales representatives the distributor is able
to follow very closely detailed customers’ requirements. The
company can estimate the trade-off between the required
complexity of the offer for the market and its costs they would
have to cover. That issue is a constant subject of negotiations of
the distributor with the MNC managers who tend to impose their
targets, sometimes irrespective of current customers’ needs on
the market.
The third precondition is avoiding overly expensive agility. The
Polish distributor properly understood that concept. The main
proof for that was the reduction of leadtime for deliveries from
24 to 48 h, as the distributor’s customers (retail shops) do not
expect extremely fast delivery but rather prefer receiving a
complete set of what they ordered. The main motivation for
shoppers is to have at their disposal the full array of the MNC
products as the brand has been well recognized by individual
buyers. The main issue here would be as follows: does the wide
range of promotions offered by the MNC result just in short-term
success of the brand or do they contribute to long-term
sustainable growth of the Polish company distribution system.
Indeed it is important to understand which level of agility would
bring a satisfactory compromise for all partners in the supply
chain. In lean approach it is often customers, who pay for the
extras that go with the main products.
The final precondition advises to forecast to reduce the need
for last minute crisis. Although agile firms should act instanta-
neous, forecasting is said to be needed as not all actions can be
real time. It is connected to location of a material decoupling
point at the Polish company’s distribution centres and regional
depots. The MNC prepares forecasts of sales for new products and
the rest of forecasting is done by the distributor. Thus, the
information decoupling point has been moved as much upstream
as possible, demonstrating application of lean concept. Important
elements supporting the forecasting use at the distributor would
be a high level of shared information and a high level of
connectivity between partners in their working relationships.
Finally, one may conclude that these preconditions
were adapted by the Polish distributor in full but again they are
being applied both for combined lean and agile concepts of
operation.
5.4. Functional and lean versus innovative and agile
There is some more discussion resulting form the analyzed
case study. There is a view (Fisher 1997) that firms should decide
between a lean or agile approach to supply management
primarily on the basis of whether their product offering is
‘‘functional’’ (predictable demand, low variety and a long life
cycle) or ‘‘innovative’’ (unpredictable demand, high variety and a
short life cycle). This paper aims to present and test the
proposition that this dichotomy is less useful in complex market
environments, because large scope of promotional activities
launched by the MNC typically requires the temporary assembly
of many different, largely functional, products in a unique or
innovative configuration of promotional packets. The case study
reveals that the process of creation of promotional sets of
products introduces radical unpredictability into the demand for
‘‘functional’’ components of these sets.
6. Conclusions
Despite the confusion in literature about what the exact
content of lean and agile is, the case study shows that Haan et al.,
2006 characterization of the two concepts describes various
134 D. Kisperska-Moron, J. de Haan / Int. J. Production Economics 133 (2011) 127–134
strategies applied in practice in a proper way. At first FMCG was
first, fast and best and outperformed its competitors in an agile
way when the market was still volatile. However, when the
market got more mature expansion of agility appeared to be
counterproductive and the firm’s agility became overly expensive,
exposing the company to a last minute crisis. After a cost of
complexity check and an enterprise reality check, the strategy
was changed to adapt to real customer demands. Then the firms’
strategy could be described as supplying the customers with what
they needed, when they needed it but in perfect way, hence acting
in a lean way. Hence, we conclude that firms can change from one
supply chain approach to another and should do so when
circumstances change.
Since 1990s Poland went through a period of both economic
and institutional transition and all parties: the previously existing
ones and the newcomers alike had to learn and adapt to these
changes. Under some circumstances one approach is more
appropriate then another and under different circumstances it
may be the other way around. Hence whether the claim that one
approach would outperform the others is true, depends on
specific circumstances.
Despite the claim that agile concept seems to be the more
advanced than lean (Harrison and Van Hoek, 2005), both in
practice and in literature the approach applies many of the best
practices as developed in the lean approach. The proportions
between lean and agile elements in operations of a single
company or the whole supply chain might be changing all the
time and we could only very seldom find an example of pure
leanness and pure agility in real business. Such patterns of
operation based on ‘‘leagile’’ approach require further
research both in theoretical and practical terms. At the same
time popular characteristics of lean and agile operations might
seem to be somewhat too general to support successfully
distinction between such different concepts like leanness
and agility.
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