This is the article on Supply Chain Integration. Supply Chain Integration is the topic under Supply Chain Planning & Design. Mainly, this topic is utilised as the chapter two topic in the book of supply chain management.
1. Introduction to Supply Chain Integration
Because implementing SCM requires the integration of activities throughout the supply chain from sourcing to production to distribution, integration has emerged as a core concept in modern supply chain management. Supply chain integration encompasses not only the suppliers and customers, but also the core notion of internal integration, and its reach is not restricted to any of these parties. Value chain integration, collaboration, and coordination are the main tenets of supply chain management. Supply chain integration is successful when there is a high degree of trust between the manufacturer and the end-user as well as teamwork, shared decision making, open communication, shared vision, shared technology, and mutual respect. With SCI, you can efficiently provide your customers with the most possible value for the least amount of money in the shortest amount of time. A supply chain is a system of interconnected businesses and organisations that work together to create value for their company and their end customers at every stage of the production process.
2. The Relational View (RV) and Resource-Based View (RBV) Framework
The RBV technique and its expansions provide the theoretical foundation for the observed positive correlation between SCM and performance. According to the original RBV theory, a company’s own resources are its greatest competitive advantage since they are unique and difficult to replicate.
Supply chain integration, which involves integrating with both internal and external supply chain partners, is based on the Relational View (RV), which incorporates the transaction cost theory proposed by the Transaction Cost Accounting Research Group.
3. Literature Review on Supply Chain Integration
To what extent a manufacturer works strategically with its supply chain partners to optimise the flow of goods and services for the greatest benefit of the end consumer.
Supply chain integration seeks to improve efficiency and accuracy throughout an organization’s operations by centralizing the movement of materials, data, and money from producers to consumers.
There are three stages of facilitators in supply chain integration:
a. Synchronization of Data
b. Cooperation and pooling of assets
c. Connectivity between organisations
4. Supply Chain Integration Information
Every successful firm relies on a well-integrated supply chain, which in turn relies on the seamless integration of information. The integration of information systems across SC partners has been stressed for its potential to reduce inventory costs and remove potential performance bottlenecks.
Sales, market share, profitability, coordinated plan execution, and customer happiness are all positively impacted by IT because of the increased supply chain agility that results from its use.
5. Coordination and Resource Sharing
When two or more parties in a supply chain work together, they are said to be “collaborating,” whereas supply chain integration refers to the coordination and synchronisation of these operations. Integrating a company’s supply chain is a series of steps taken by that company to strengthen its connections with its suppliers and consumers. These steps are meant to improve the quality of the firm’s upstream supply chain operations and its downstream product offerings, respectively. Manufacturers and retailers are able to work together more effectively thanks to supply chain integration, which is built on a foundation of close cooperation, meticulous planning, a unified point of view, a common understanding of the big picture, and a commitment to open communication and the exchange of relevant data and technical resources. Competitiveness in the milk supply chain may be achieved via a combination of an efficient logistics system, the use of process technology, and the exchange of information, according to studies of cooperative relationships between buyers and sellers in the dairy industry.
Transport integration in the UK’s supply chain system has been worked on, and our model of logistics design interaction with external partners can accommodate this (distributors and suppliers). There are a variety of tools available for integrating transport into the supply chain system based on their cost and benefit analyses; however, in our model, all that is required is close collaboration between customers and suppliers. This is because modern manufacturing is increasingly transporting intensive.
Studies of the difficulties inherent in making supply-chain choices while facing the prospect of significant disruptions. Decisions about which suppliers to work with and when to ship products to customers must be coordinated closely in the face of natural disasters or other potential disruptions. In the end, this will boost efficiency in the face of disruption threats.
Researchers have shown that outsourcing some aspects of a company’s supply chain allows it to devote more resources to its core operations, which in turn improves the quality of its supply chain management and, by extension, its SCI.
In order to facilitate better SCM, it was suggested that SCM techniques have a substantial effect on the integration of dairy farmer suppliers with the firm and that this results in a high degree of mutual trust and cooperation between the dairy farmers and the organisation.
Milk processors are re-aligning themselves in the supply chain with their internal and external partners due to HSE concerns and de-regulation policies in developed nations like Australia, according to research given at the international farm management congress. According to (Issar, Cowan, & Wegener, 2003),
6. Organizational Relationship Linkage
From a place of internal cohesion, SCI spreads outward to include other parties both upstream and downstream. Extensive study of supply chain integration in China’s industrial industry, with a model based on both internal and external integration. External organisation paves the way for tight strategic partnerships with consumers and suppliers, whereas internal integration measures how well departments and functions inside a company operate together. The Supply chain strategy should be integrated into the overall company plan.
Considerations for both internal and external integration in the context of supply chain research. It was clear that integrating all internal functions is a major step toward reaching SCI and reaping its benefits of it in terms of improved organisational performance. Supply chain participants benefit from quick lines of communication when it comes to formulating corporate rules, aligning goals, and completing jobs on schedule.
According to studies on SCI and performance evaluation, businesses cannot succeed in their missions without first mastering and then perfecting their internal and external customer-facing procedures.
To ensure that the ultimate goal of satisfying customers and adding value to the company’s value delivery network is achieved in this age of globalisation, supply chain connections and processes must be aligned with and incorporated into business strategy. We looked at three primary types of SC integration: intra-organizational process integration; inter-organizational collaboration; and operational excellence. Organizations with high levels of first-form coordination are better able to integrate their supply chain (SC) operations with their customers and suppliers, and those with high levels of operational excellence are better able to compete on the basis of their low costs and high quality of service.
7. Supply Chain Performance
Research into the relationship between supply chain practices and customer satisfaction in the developing world pharmaceutical industry found that SC practises are built on three pillars: communication and cooperation within the supply chain, logistics planning and management, and the company’s overall culture and values.
Partners in the supply chain work together toward shared goals and pool their resources (assets, expertise, and talents) to achieve operational excellence and a strategic edge.
Information integration, coordination and resource sharing, and organisational connection linkage were identified as the three key pillars of SCI based on the literature review study on supply chain integration framework. It’s more than just a method; it has to become ingrained in the fabric of the company. Therefore, businesses need to foster an environment where employees feel comfortable working together with suppliers both within and outside the company in order to achieve optimal operational efficiency and sustained development. SCI includes information integration, operational integration, and relational integration, and has been shown to improve company performance. These days, the key to making it in the face of fierce competition is a well-functioning supply chain.
Quality management approaches within the realm of SCM have been argued to be most prominent in the areas of Supplier Quality and customer focus. Improved quality management procedures both within and outside the supply chain have been shown to boost a company’s quality, financial, market, and inventory management performance.
The studies focused on just in time, quality management, and supply chain management to boost business operations. The findings indicated that a greater focus on quality and supply chain integration leads to improved operational excellence.
To better understand the impact that supply chain agility has on a company’s bottom line, we built a theoretical framework. Cost-effectiveness serves as a mediator between SC agility and enhanced performance, with technical elements (IT capabilities) and coordinated resource sharing (Information sharing, work cooperation, trust, etc.) serving as antecedents.
Working to determine the effect of supply chain collaboration on business results, we found that the size of the company had a mediating effect on the link between SC cooperation and business results.
Present SCM methods have a substantial beneficial influence on not only business performance but also on acquiring competitive advantage among the companies since competition in the modern era is not only between enterprises but across multiple supply chains.
Studying the correlation between a company’s SC integration plan and its competitive stance. In this study, we observed that SCI acts as a mediator between SCM practices and business performance. In addition, there is a mutual influence between SCM techniques and SCI, which acts as a mediator between the two and company performance.
Internal and external advantages of SCI on manufacturing performance in China were investigated, including lower inventory costs, shorter lead times, more precise demand forecasts, and a more streamlined movement of materials and finished items across supply chain partners.
8. Barriers to Supply Chain Integration
There are a number of obstacles that may be seen in the supply chain literature.
a. Data and computer system deficiencies
b. Disconnect in communication
c. A failure to trust
d. Bullwhip effect on demand
e. Problems with interoperability across systems
f. The result of a lack of education
g. Value of integration
Inadequate understanding of the other function, poor communication, a bad working relationship, competing objectives, and a lack of guidance from upper management are the five primary causes of SCI failure.
Lack of trust, inadequate knowledge, internal politics, mismatched goals and objectives, insufficient management information systems, short-term goal orientation, and other supply chain complex challenges have been described as hurdles to supply chain execution.
It has been reported that there are obstacles to SCI at the tactical, operational, and strategic levels of the organisation.
Learning about these obstacles is vital, but identifying ways to overcome them is crucial for advancing SCI.
Misalignment of information systems, lack of trust, and improper inventory management are just a few of the obstacles that must be overcome for the efficient supply chain management.
Adoption of E-business into supply chain function is slower than predicted, as shown in the study on hurdles to supply chain information integration. Poor strategic alignment of information strategies, insufficient knowledge of the potential advantages of IT adoption, a lack of management leadership, and a lack of financial resources are all factors that work against the widespread use of IT.
The investigation of the challenges of SCI and methods for addressing them. It states that the goal of SCI is to achieve operational excellence and economies of scale via state-of-the-art cooperation among all relevant parties. The goals of SCI won’t be met if we just use cutting-edge tools; we also need to establish policies and procedures that promote collaboration and a unified direction for the company. Additionally, SCM incorporates both internal and external integration in this way.
Information integration within SCI provides many advantages, but it also presents a number of obstacles, including concerns over privacy and security, the high cost of IT, anti-trust rules, the need to ensure data is up-to-date and accurate, and the lack of a standardised infrastructure to facilitate efficient use of integrated data by different businesses.
9. Conclusion
Despite the existence of obstacles to integration, the literature and theoretical knowledge support the Supply chain performance of organisations governed by facilitators of integration. As a result, businesses may be able to keep their internal focus, unity, and dedication across the whole value delivery chain. However, in a supply chain setting, this can only be achieved if the companies are aligned, communicative, jointly organised, quantified on supply chain metrics, and open to partner dependency. Consistent with the aims of a strategic supply chain, significant improvements in service performance and cost-efficiency may be achieved by careful management of this delicate balancing act. The fact about integration is that it is difficult and takes a lot of effort to break down old obstacles.
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