SUPPLY CHAIN INTEGRATION

BY
SURYA PRAKASH.T
 SUPPLY CHAIN INTEGRATION

 Supply chain integration is the cooperation of buyers and sellers, with the goal that all parties benefit from
the relationship. The resulting supply chain partnerships result in improved quality, improved delivery, and
an improved bottom line for everyone involved in the supply chain—and in addition, the final customers get
better quality, reliable on-time delivery, and more responsive service.
 Supply chain integration often takes the form of integrated computer systems. For example, the
supplier's computer system may be set up to deliver real-time data to the buyer’s computer. This allows
the buyer to know:
• The current status of all orders.
• Which products are in the supplier's inventory.
• The status of products being manufacturer for the buyer.
• When an order or product is ready to ship.
• Tracking of the shipment
TYPES OF SUPPLY CHAIN INTEGRATION

 Two-Way Supply Chain Integration

 The next step in supply chain integration is for the buyer's computer system to send information directly
to the seller's, providing two-way communication.  For example, the buyer's computer system may
automatically monitor their incoming orders and production status, and use that information to issue
purchase orders directly to the supplier's computer systems.  With an automated, synergistic two-way
flow of information, the buyer's incoming orders might even directly trigger increased production by the
supplier, without any human interaction.  A buyer's computer system might even automatically check
with several suppliers to find needed in-stock items, and place the appropriate orders to ensure that the
purchased materials arrive when they are needed.
 Complex Supply Chain Integration
 The integration of the supply chain can be extended as far as is needed.  Partners in a supply chain can
include manufacturers, distributors, importers, consumers, banks, storage facilities, insurance
companies, and transportation companies.  Any organization that is a part of the supply chain can be a
part of an integrated and automated system for that supply chain.  The objective is improve efficiency
and quality, eliminate waste, and reduce costs in every part of the manufacture and delivery of a product
simply by working together.
 Supply chain integration can help to eliminate problems such as:
• High inventory costs.
• Overproduction and underproduction.
• Production slowdowns resulting from a lack of purchased materials or components.
• Unreliable delivery or quality of purchased  materials or components.
• Poor service from suppliers.
• High transportation costs from frequent use of expedited shipping.
• Confused purchasing processes.
• Inadequately managed supplier relationships.
• Supplier errors and order processing problems.
SUPPLY CHAIN INTEGRATION – A MULTI-ORGANIZATION
STRUCTURE

 The purchasing department usually takes the lead in establishing supply chain integration.  It begins
with a leader identifying supply chain problems and ways those issues can be resolved.  Goals are
established for improving the supply chain, and a plan is created that lays out what needs to be done. At
this point, the purchasing department begins to work with suppliers and vendors to implement changes
in the supply chain that will achieve the stated objectives.
 For supply chain integration to work, there must be benefits for both parties. This may take spending
time explaining the benefits of supply chain integration to vendors and suppliers, and working out
details so that both parties benefit. Keep in mind that this is a partnership, in which you are asking your
suppliers to make certain commitments to you. They'll expect that you also make some commitments
that benefit them.  There must be a shared interest in making supply chain integration work.
 There are four key components to a successful implementation of supply chain integration. These are known as
the Four C's of Supply Chain Integration.
• Communication
• As mentioned, communication is key. Everyone involved in the supply chain needs to be well informed, allowing
them to quickly adjust their operations to meet changes in demand and new business opportunities. This is often
done using integrated computer systems, but direct channels of communication between key people should also
be in place.
• Customers
• The focus should always be on the final customer's needs, and what the customer values and is willing to pay for.
This requires the lead organization to have a close relationship with their customers.
• The lead organization must make others in the supply chain aware of the final customer's needs, and how their
part of the supply chain impacts the ability to meet those needs.  Everything must be focused on the final
customer's needs; ultimately, they are the ones paying the bills for everyone else in the supply chain