Integrated Supply Chain

Benefits of Supply Chain Integration:

1. Increase in Revenue:

Integrated SCM 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 SCM, 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.

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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 SCM 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 own 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 Solutions (ISC):

These are the solutions that centralized the flow of goods within a company. Instead of dealing with multiple suppliers and logistics companies, ISC companies handle all aspects of the supply chain, including procurement, production, transportation, and distribution. Because ISCs eliminate many steps in the supply chain, 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 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.