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Supply
chain's strategic importance in today's global business
can't be over emphasized. From supplier's supplier to
customer's customer, it's all about a chain spreading over
continents, cutting across the barrier of nationhood ,
language and currency.
The ultimate objective of satisfying
the customer and retaining him over a period of time has
given rise to an agile and lean supply chain.
Integration of
Supply chain in the back drop of it is basically a strategic
alignment of partners such that the requirement of |
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providing the
right material , at the right price, of right quality
and measure to the ultimate customer is fully met.
The
seamless integration should also ensure , ideally, no
wastage or unnecessary hold up of material across the chain.
Compulsions for integrating supply chain:
Organizations are seeing many compelling factors that are
responsible for emergence of integration of supply chain.
Some such factors are :
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Competition is becoming fiercer by the day. To remain
competitive is a necessity than a desirability today
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Customers are demanding better quality at reasonable
price
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There is qualitative change in the supply chain now. The
partners too are demanding and need customized chains
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Free trade is growing ,compelling organizations to have
international outlook
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New concepts are emerging and ruling. Lean manufacturing,
just-in-time, vendor managed inventory (VMI), mass
customization, flexible manufacturing, virtual integrations
are order of the day
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Product focus is giving way to process focus , enabling
firms to improve operations
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Communication is improving by the day. Electronic data
interchange, electronic fund transfer, e-commerce etc are
faster , reliable and strategic
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Tendency to outsource peripheral activities and concentrate
on core activities is now the accepted norm worldwide
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Mergers, acquisitions and all kinds of business alliances
are changing the economies of scale
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Modes of transport too are changing
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Meaning of
Supply Chain integration :
In a typical, extensive supply chain there could be many
sub-supply chains extending over a number of independent
organizations to produce the final result, that is of reaching
out to the customer as the customer wants.
If each organization involved in the chain looks only at its
operations , ignoring others' the boundaries do exist resulting
in inefficient movement of materials and incurring of higher
costs.
External integration removes such boundaries
resulting in smooth operations |
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between them.
In general, there are three levels of integration. One that is a
recognizable separate set of activities within an
organization. Second , an integration within the
organization
and the third one an external integration, with an outside
organization. |
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How to foster integration ?
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Cooperation :
While integration within an organization can be
understood considering that an organization is under
one roof , it is integration with outside
organization that needs careful planning and
handling. Basically, it amounts to resolving
conflict of interest between the organizations.
Based on cooperation and understanding of mutual
interest the integration takes place. Such
integration may affect the way the partners work.
For example, electronic data interchange, change in
packaging design of material, lists of preferred
suppliers etc. However, better integration takes
place if it is informal and non binding. |
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