 An Integrated Supply Chain (ISC) is one that has full responsibility across the corporation (including different divisions, business units and geographies) for the planning and management of all activities involved in end-to-end supply chain processes, including direct sourcing and procurement, conversion/manufacturing, and all logistics management activities.

(Source : Supply Chain Digest, The Logistics Institute – Georgia Tech)


Reasons for ISC  Manufacturer’s Goals  Supplier’s Goals  Reduce costs  Reduce duplication of effort  Improve quality  Reduce lead time  Implement cost reduction program  Involve suppliers early  Reduce time to market  Increase sales volume  Increase customer loyalty  Reduce cost  Improve demand data  Improve profitability .

and downstream visibility into product. and affect change proactively Visibility You can’t manage what you don’t see: Up. . control.The 3 ‘V’s are the essence to good supplychain management Velocity Better management of variability results in an improved. more efficient and faster supply-chain Variability Visibility of these flows enhances the organization’s ability to manage. information and money flows Improving visibility is the first step to better supply-chain management.

Steps In Integrated Supply Chain Integrated SCM usually begins with the manufacturer integrating internal processes first. The company tries to integrate the external suppliers. . The last step is integrating the external distributors.

Vertical Integration Vertical Integration Raw material (suppliers) Backward integration Current transformation Iron ore Examples of Vertical Integration Silicon Beverage Steel Automobiles Integrated circuits squeezing Forward integration Distribution systems Circuit boards Finished goods (customers) Dealers Computers Watches Calculators Labelling .

distributors & lenders – „Partnerships‟ extend across entire supply chain . suppliers.Keiretsu Network Strategy • Japanese word for „affiliated chain‟. • System of mutual alliances and cross-ownership – Company stock is held by allied firms – Lowers need for short-term profits • Links manufacturers.

and promotions) .Issues in an Integrated Supply Chain  Local optimization .stable demand becomes lumpy orders through the supply chain .low unit cost but do not reflect sales  Bullwhip effect . quantity discounts. quotas.push merchandise prior to sale  Large lots .focusing on local profit or cost minimization based on limited knowledge  Incentives (sales incentives.

Opportunities in an Integrated Supply Chain  Accurate “pull” data  Lot size reduction  Single stage control of replenishment  Vendor managed inventory  Postponement .

Opportunities in an Integrated Supply Chain  Channel assembly  Drop shipping and special packaging  Blanket orders  Standardization  Electronic ordering and funds transfer .

Measures of integration – Access to planning system – Sharing production plans – Joint EDI access / networks – Knowledge of inventory levels – Packaging customization – Delivery frequencies – Common logistical equipment / containers – Common use of third-party logistics .

Managing supply chain relationships • How can broader-based relationships be formed between trading partners in the supply chain? .

Managing supply chain relationships • Creating closer relationships Arm’s length transaction R&D Logistics Information system Partnership Marketing Operations Information system Marketing R&D Logistics Operations Information Information system system supplier customer supplier customer .

Factors in forming supply chain relationships – The order winner – The method making sourcing decisions – The nature of electronic collaboration – The attitude to capacity planning – Price negotiations – Managing product quality – Managing research and development – The level of pressure .

Efficient consumer response How can collaboration be extended across the supply chain to focus on meeting consumer demand? .

Efficient consumer response Category management Establish infrastructure Optimize introductions Optimize assortments Optimize promotions Product replenishment Integrated suppliers Synchronized production Continuous replenishment Automated store ordering Reliable operations Cross-docking Enabling technologies EDI EFT Item coding and database maintenance ABC .

Efficient consumer response • Enabling technologies – Scanning data – Data warehousing – Data mining • The data should include – Demand / consumption / sales information – Cash flow – Stocks of finished goods / work in progress – Delivery and output status .

Efficient consumer response Category management management Demand management Required Multifunctional selling teams capability Price list restructuring Effective and customized promotions Account Continuous replenishment Joint Enabling technologies Effective inventory management Cross-dock operations Continuous replenishment Effective logistics and product flows Quick response information sharing Automated order generation Bar-coding and the use of other scanning technology .

transportgistics. 7e – Heizer /Render. Dan Reid & Nada • http://www.cessna. 5e.htm . and Operations Management.C & G International. Sanders • Principles of Operations Management.php .html • http://www. Prentice Hall • http://www.ceeandgee. Inc.References • White Paper on the Integrated Supply Chain – Aerospace Industries Association • Operations Management by R.

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