Libyan International Medical University

Faculty of business Administration

(Logistics and Supply Chain Management)

Submitted by: Mariam Mahmoud 2602

Submitted to: Mr. Neral Bughrara

 Introduction
A SUPPLY CHAIN consists of the series of activities and organizations that
materials move through on their journey from initial suppliers to final
customers.

The core elements for supply chain managements are

• Logistics
• operations
• Supply
• Integration

Supply chain integration is a process where all the parties

involved with the fulfillment of a product are integrated into a
single system.
This requires significant coordination and alignment in order to
ensure everyone is effectively working toward the same goal at all
times.

 Supply chain process integration

The ultimate goal in supply chain management (SCM) is to create value for
the end customers as well as the firms in the supply chain network. To
accomplish this, firms in the supply chain network must integrate process
activities internally and with other firms in the network. The term process
integration means coordinating and sharing information and resources to
jointly manage a process. Integration is a process of redefining and
connecting parts of a whole in order to form a new one (Craft, 2006).

Process integration can sometimes be a very hard task, because it involves

proper training and preparedness; willing and competent trading partners;
and, potentially, a change in one or more organizational cultures.
However, the benefits of collaboration and information sharing can be
significant: reduced supply chain costs, greater flexibility to respond to
market changes, less supply chain safety stock, higher quality levels,
reduced time to market, and a better utilization of resources
(Chopra and Mendhl, 2001).
According to Juanqiong et al, (2007), a successful SCM requires a change
from managing individual functions to integrating activities into key supply
chain processes. Shared information between supply chain partners can only
be fully leveraged through process integration.
According to Brown (1998) operating an integrated supply chain requires
continuous information flow.
Lawrence and Lorsch (2000) defined integration as, “the quality of the state
of collaboration that exists among departments that are required to achieve
unity of effort by the demands of the environment”. While this definition
refers to integration internal to a firm or organization, our emphasis here
goes beyond the firm and encompasses external entities that are players in a
supply chain.
Bowersox, Closs and Stank (2001) have classified integration in a supply
chain context in six different types. These are
 customer integration.
 internal integration.
 material and service supplier integration.
 technology and planning integration.
 measurement integration and relationship integration.
The supply chain integration model, starts with the identification of
key trading partners; the development of supply chain strategies;
aligning the strategies with the key process objectives; developing
process performance measures; internally integrating these key
processes; developing supply chain performance measures for each
process key; externally integrating key processes with supply chain
trading partners; extending process integration to second-tier
supply chain participants; and then, finally, reevaluating the
integration model periodically.
The key processes and the methods used to integrate and manage
process links among supply chain partners will vary based on the
internal structure of the firm, the prevailing economic conditions in
the market place and the nature of existing relationships within the
supply chain. (Lambert, 2008).
Successful supply chain integration occurs when the participants
realize that supply chain management must become part of all of
the firms’ strategic planning process, in which objectives and
policies are jointly determined based on the final customer’s needs
and what the supply chain as a whole does well (Wisner et
al.2006).
The range benefits that can accrue to companies that are able
effectively manage and work in their supply chains includes:
 Increased market share and sales growth
 Reduced inventory levels
 Reduced SCM costs
 Decreased order cycle/fulfillment time
 Increased asset and capital utilization
 Improved delivery performance
 Flexibility in meeting/responding to customer requirements
 Improved return on assets and sales
  Increased forecast accuracy
 Reduced cash-to-cash cycle time

 The Obstacles to Supply Chain Integration

According to Chopra and Mendhl (2001), a number of factors can
impede external process integration along the supply chain,
causing information distortion, longer cycle times, stock-outs, and
bullwhip effect, resulting in higher overall cost and reduced
customer service capabilities.

1. Silo Mentality
Failing to see the big picture and acting only in regard to a single
department within the firm or a single firm within the supply chain.

2. Lack of supply chain visibility

The inability to easily share or retrieve trading partner information in real
time, as desired by supply chain participants.

3. Lack of trust
Unwillingness to work together or share information because of fear that
the other party will take advantage of them or use the information
unethically.

4. Lack of knowledge
Lack of process and information system skills and lack of knowledge
regarding the benefits of SCM among management and other employees,
within the firm and among partners.
 5. Activities causing the bullwhip effect
The variability increases in moving up the supply chain from consumer
to grocery store to distribution center to central warehouse to factory is
known the bullwhip effect.
Lee et al (1997), identified four major causes of bull whip effect, these
causes and methods used to counteract them will be discussed in this
section for the purpose of getting deep understanding of this obstacle to
process integration along the supply chain.

 Demand forecast updating: Using varying customer orders to

create and update forecasts, production schedules, and purchase
requirements.
 Order Batching: Making large orders for goods from suppliers on
an infrequent basis to reduce order and transportation costs.
 Price Fluctuations: Offering price discounts to buyers, causing
erratic buying patterns.
 Rationing and Shortage Gaming: Allocating short product supplies
to buyers to increase future orders beyond what the really need.

 Performance measurement along supply

chain.

Supply chain performance measure can be defined as an approach to

judge the performance of supply chain system. Supply chain performance
measures can broadly be classified into two categories −
 Qualitative measures − For example, customer satisfaction and
product quality.
 Quantitative measures − For example, order-to-delivery lead time,
supply chain response time, flexibility, resource utilization, delivery
performance.
we will be considering the quantitative performance measures only. The
performance of a supply chain can be improvised by using a multi-
dimensional strategy, which addresses how the company needs to provide
services to diverse customer demands.

In conclusion, The advent of advances in Supply Chain Management

has helped businesses to compete in both domestic and foreign markets
effectively and efficiently. It is eminent that information technology has
surfaced as a key instrument to help organizations achieve greater
coordination and collaboration among supply chain partners and mechanize
the supply chain process. This has created competitive pressures as
manufacturers and distributors are forced to become more responsive to the
retailer's and consumers' needs.
References:
 Waters Donald (2003). Logistics.
( file:///C:/Users/pcx21/Downloads/Documents/logistics-
an_introduction_to_supply_chain_management[palgrave.macmillan]
[2003].pdf )

 Creative. (2018). Supply chain integration.

( https://www.creativesafetysupply.com/articles/supply-
chainintegration/#:~:text=Supply%20chain%20integration%20is
%20a,integrated%20into%20a%20single%20system.&text=All%20of
%20the%20materials%20and,easier%20for%20effective%20product
%20creation.)
 Tumaini Mujuni Katunz. (2011). Obstacles to Process
Integration along the Supply Chain: Manufacturing Firms
Perspective. ( file:///C:/Users/pcx21/Desktop/10433-31524-1-
PB.pdf )