What is Integrated Supply Chain? Key Benefits & Planning

Benefits of Supply Chain Integration

1. Increase in Revenue

Integrated supply chain management allows a company to focus on assets that would allow the organization to reap more rewards. There are always facets of a business that will have a more pronounced impact on the revenues and hence must be optimized as much as possible. It allows companies to prioritize and focus on the specialized assets that would improve their products, increase market share, or enhance operating profits.

2. Controlled Costs

An integrated supply chain will always reduce costs, especially transactional costs which are unavoidable among subsidiaries, partners, or vendors. Having a centralized or integrated supply chain management, a company is essentially doing away with frills that would have otherwise delayed the process and would have also incurred needless costs.

3. Quality Control

Supply chain integration helps in ensuring quality. When there is a concerted attempt to keep a stringent compliance check, it is immensely difficult to approve or pass along faulty products. There is only one authority overseeing compliance throughout the process, such as the procurement manager or purchasing manager.

4. Competitive Edge

With financial advantages, stricter compliance, and better products, a company will be able to fight its competition and emerge as the winner with integrated supply chain management.

AIMS develop supply chain and logistics skills through supply chain certification and an online diploma in logistics and supply chain management programs.

Dis-Advantages of Integrated Supply Chain

1. Excessive Regulation

Integrating all suppliers will pose challenges to a business trying to manage every internal and external supply. Not every supplier needs to comply with every regulation or norm. A company trying to have a generic supply chain management approach, which will be the case with integration, will needlessly compel all its suppliers to adhere to the same standards.

2. Needless Complications

Integrated supply chain management can easily lead to a complicated scenario where resources are shared and unnecessarily wasted. Not every supplier needs every system. Every supplier and department needs to operate according to its strengths while overcoming its witnesses.

3. Dearth of Compliant Suppliers/Vendors

There can be a shortage of suppliers or vendors that would choose not to renew contracts if the terms of supply chain integration don’t suit their business priorities. This can have an impact on the procurement and supply costs as those willing to comply with the new norms may have a steeper rate.

4. Vulnerable to System Collapse

There can be a collapse in the checks and balances if there is any lapse in the inspections or compliance checks. An integrated supply chain means one error somewhere can bring the whole system down.

Integrated Supply Chain Planning

Planning a supply chain integration involves a comprehensive approach to streamline the supply chain processes and enhance overall efficiency and responsiveness of the supply chains. The integrated supply chain planning involves the following ten steps:

1. Assess Your Supply Chain: Evaluate your existing supply chain to understand its strengths, weaknesses, and gaps. This this may be achieved by analyzing data, supply chain processes, and systems currently in your supply chains.
2. Define Supply Chain Integration Objectives: Clearly set the objectives of your integrated supply chain. The objectives of supply chain integration may include reducing costs, improving delivery times, enhancing product quality, or increasing customer satisfaction. Ensure that all stakeholders are aligned with the integrated supply chain planning objectives.
3. Develop Collaboration Across Departments: Foster collaboration among various departments such as procurement, manufacturing, logistics, and sales.
4. Develop a Strategic Supply Chain Integration Plan: Create a detailed plan that outlines your integration strategies. This plan should include: Process reengineering, technology upgrades, and resource allocations. Make sure that they comply with the objectives of your supply chain integration.
5. Implement Technologies Useful for Integration: Use advanced technological solutions like Enterprise Resource Planning (ERP) systems, Supply Chain Management (SCM) software, and technologies for real-time data sharing and process automation.
6. Optimize Inventory Management: Implement strategies for efficient inventory management of your supply chain so you can reduce logistics costs and stockouts. These techniques may include: Just-In-Time (JIT) and demand forecasting.
7. Streamline Communication Channels: Improve the communication channels across your supply chain to ensure that timely and accurate information flows between all parties.
8. Monitor and Measure Performance: Continuously monitor the supply chain performance using Key Performance Indicators (KPIs). Regularly review your supply chain processes and make necessary adjustments.
9. Manage Supply Chain Risks: Develop a robust supply chain risk management plan to identify potential disruptions and implement risk-mitigation strategies.
10. Continuous Improvement: Develop a culture of continuous improvement and regularly review and update your integrated supply chain planning processes. Based on feedback and performance data, also review the supply chain integration strategies.

By following these steps for integrated supply chain planning, businesses can effectively enhance their efficiency and competitiveness in the market.

Wrapping Up

It eventually boils down to how a company manages to extract the benefits and overcome the challenges or avert the complications. Should supply chain integration be effective and efficient, a company can reap long term multifaceted rewards. Students at AIMS develop these and many other SCM and logistics skills, during studying logistics and supply chain management courses, and diploma in supply chain management programs.