The merits of lean and agile supply chain strategies have been much debated among practitioners and academics. While these strategies are often viewed as opposites, this research supports the view that they must not necessarily compete and can, in fact, be employed simultaneously through a so-called "league" approach. Lean, agile, and league strategies are illustrated by modeling their respective applications at a tier-1 supplier to the Heating, Ventilating, and Air-Conditioning (HVAC) industry. Simulation analyses indicate that the lean system excels in customer service performance while the league system results in lower enterprise-wide inventory levels under modeled circumstances. Subsequent analysis suggests that trade-offs exist among the systems in the base case and under varying cost conditions.

The views expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Air Force, the Department of Defense, or the U.S. Government.

INTRODUCTION

An unprecedented number of companies are pursuing lean management and agility to reduce costs, improve customer service, and gain competitive advantage. "Lean thinking" embraces the elimination of waste in its various forms. Activities that consume resources but generate no redeeming value in the eyes of customers are wastes that must be eliminated in the "lean" paradigm (Womack and Jones 1996). Agility, on the other hand, emphasizes flexible, timely action in response to rapidly changing demand environments (Christopher and Towill 2002).

Lean management has been the subject of best-selling business books over the past decade and the focus of many management training programs as managers seek to make the "lean leap." Agile management, meanwhile, has enjoyed its own share of attention as the mantra espoused by many leading consultancies and technology vendors. Academics have embraced both paradigms as well, with special issues commonly appearing in leading journals dedicated to each philosophy. Beyond indications of passing interest, entire journals are dedicated to the advancement of theory and practice in leanness and agility (e.g., Lean Construction Journal, International Journal of Agile Management Systems).

Though the "lean" and "agile" philosophies are anchored with relatively simple premises, their complexity becomes apparent during implementation. The very requirements and performance outcomes associated with the two approaches are often called into question. It appears that neither paradigm is particularly well understood - even by companies considering their respective adoption and implementation. The ambiguity of the paradigms raises the challenge of determining whether one approach or the other would serve as an appropriate basis for adopting a supply chain strategy. When should a company and perhaps an entire supply chain pursue lean management or agility, and must the question be an either/or proposition? Answering these questions is critical given the significance of aligning the company with its up and downstream supply chain trading partners support of business strategy and key supply chain objectives.

The purpose of this paper is to further the understanding of lean, agile, and hybrid (or socalled "league") supply chain strategies, with particular interest directed toward the dynamics and trade-offs associated with each of the strategies. This objective is achieved by operationalizing the three strategies in a real-world case setting. Simulation research is used to examine the operationalization of the different strategies and to measure the respective performance associated with each, identifying the similarities and differences among strategic inputs and outcomes. The application of simulation to supply chain settings is well established given the stochastic nature of supply chains, where decisions in one area have impact on the others (Bhaskaran 1998; Closs et al. 1998; Disney, Nairn, and Towill 1997; Towill 1996; Waller, Johnson, and Davis 1999). Simulation provides a basis for comparison among alternative strategies and, in turn, enhanced managerial decision-making.

This paper first describes the three supply chain strategies and introduces the research hypotheses. The paper then details the research setting and method, reviewing the operationalization of the strategies in the simulation models. Finally, the paper presents the results and implications for managers and researchers.

A REVIEW OF THE STRATEGIES

This section describes the three supply chain strategies of interest: lean, agile, and league strategies. Each is described in turn.

Lean Supply Chains

Womack, Jones, and Roos (1990) introduced the business world to the premise of lean production in their seminal book The Machine That Changed the World. The book chronicled the operations found in the automotive industry, capturing the dramatic differences in approach and ensuing performance found among the world's leading automakers. In particular, the book examined how the techniques employed by Japanese automakers, namely Toyota, outpaced the performance achieved by U.S. and European competitors. Much has been written in the academic and popular business press about Toyota's much envied competitive weapon, the Toyota Production System (TPS).