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.

Students at AIMS develop supply chain and logistics skills, by studying supply chain certification, and 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 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.

How to Plan an Integrated Supply Chain?

Planning an integrated supply chain involves a comprehensive approach to coordinate and streamline processes across various functions to enhance overall efficiency and responsiveness. Here are the necessary steps for effective integrated supply chain planning:

1. Assess Current State: Evaluate the existing supply chain to understand its strengths, weaknesses, and gaps. This step involves analyzing data, processes, and systems currently in place.
2. Define Objectives: Clearly set the objectives for the integrated supply chain planning. These objectives could include reducing costs, improving delivery times, enhancing product quality, or increasing customer satisfaction.
3. Collaborate Across Departments: Foster collaboration among various departments such as procurement, manufacturing, logistics, and sales. Ensure that all stakeholders are aligned with the integrated supply chain planning objectives.
4. Develop a Strategic Plan: Create a detailed plan that outlines the strategies for integration. This plan should include process reengineering, technology upgrades, and resource allocations to achieve the defined objectives.
5. Implement Integrated Technologies: Use advanced technological solutions like Enterprise Resource Planning (ERP) systems, Supply Chain Management (SCM) software, and Internet of Things (IoT) for real-time data sharing and process automation.
6. Optimize Inventory Management: Implement strategies for efficient inventory management to minimize carrying costs and stockouts. Techniques like Just-In-Time (JIT) and demand forecasting can be beneficial.
7. Streamline Communication Channels: Enhance communication channels across the supply chain to ensure timely and accurate information flow between all parties.
8. Monitor and Measure Performance: Continuously monitor the supply chain performance using Key Performance Indicators (KPIs). Regularly review the processes and make necessary adjustments to achieve continuous improvement.
9. Risk Management: Develop a robust risk management plan to identify potential disruptions and implement mitigation strategies.
10. Continuous Improvement: Foster a culture of continuous improvement by regularly reviewing and updating the integrated supply chain planning processes and strategies based on feedback and performance data.

By following these steps, businesses can effectively plan and manage an integrated supply chain, leading to enhanced efficiency and competitiveness in the market.

Integrated Supply Chain Solutions (ISC):

These are the solutions that centralize the flow of goods within a company. Instead of dealing with multiple suppliers and logistics companies, integrated supply chain companies handle all aspects of the supply chain, including procurement, production, transportation, and distribution. Because SCM integration eliminates many steps in the supply chain, so they can save time and money.

Examples:

• An ISC could reduce a company’s need for warehousing space by shipping smaller quantities of products to customers.
• An ISC could also increase profits by providing more accurate forecasts and improved quality control.

Drawbacks:

ISCs have several drawbacks as well.

1. First, they can be expensive to implement;
2. Second, they can create a bottleneck if not coordinated with other departments;
3. Third, it can be difficult to integrate legacy systems with new technologies; and;
4. Fourth, they can become outdated because of rapid changes in technology and market conditions.

Conclusion:

It eventually boils down to how a company extracts the benefits and overcomes the challenges or averts the complications. A company can reap long-term multifaceted rewards if supply chain integration is effective and efficient.