With the changing market environment like the one existing today, which is full of economic uncertainties, having a well-established supply chain isn’t enough to reach the business’s optimum level. You’ll need to take a different road to keep up with the increased technological changes and maintain the most value in business operations. There is need for an integrated supply chain management to make the utmost profits.
Most companies have switched to an integrated approach. While some processes may be under full control of one company, some have decided to have many partners coming together and having a total control over the integrated process. If you haven’t tried this approach yet, we’ll give you reasons why it’s something you should consider fitting in your business operations. This article will highlight 5 benefits of supply chain integration.
It strengthens the cooperation and partnership levels
Although having different sectors in supply chain to work independently may appear successful, it’s expensive in the long run. There’ll be a buildup of costs in the end of each operation, and may affect the production and response behavior. An integrated supply chain strengthens visibility and collaboration from different partners to ensure maximum surveillance in business operation regardless of the location. Each process involved, from the supplier to the buyer will be monitored, hence increasing the customer ‘s satisfaction needs. An organization that lacks this transparency will incur disruptions that’ll affect the whole process. Team work will ensure information sharing cross wide, and allow consultation of concerns regarding the performance delivered. As a result, there’ll be collaboration and this will optimize the overall service delivery.
It ensures there is balance in the supply and demand requirements
With the visibility offered by an integrated system in the supply chain, it’ll be easy to know if the supply and demand are equally met. Integration of supply chain, product innovation, financial plans and logistics increases the capacity to predict demands and provides opportunities to take relevant actions in providing effective services.
It increases flexibility in Supply Chain
Organizations that use an integrated supply chain management maximizes their flexibility to adjust to clients’ demands, competitors’ latest moves, and the changing events within the business field. Supply chain is a competitive industry, and that creates the need to be fully flexible and adaptive to different situations.
Using the integrated approach allows organizations to achieve more than those using the traditional methods. It provides room to meet daily demands, and this minimizes the space of warehousing and costs that comes with it. It’ll limit events of delays in delivery, and having delays as one of the major challenges in supply change, this will be a great quality to make your company emerge the best.
It helps in proper utilization of resources
It’s every organization’s goal to attain efficiency in the utilization of resources. Anything that’ll limit, reduce or get rid of waste production is worth taking the chance. The end result will be saving costs. Sometimes it’s difficult to achieve the goal of reducing waste especially for huge companies that involves complex processes. However, with an integrated process in the picture, reduction of waste is achievable.
Reducing waste production helps the company to perform effectively, even in unforeseen events. In the long term, the organization will have a reliable supply chain.
It makes the organization earn more profits
This last benefit is built by the other four listed above. Once companies have a strengthened collaboration and partnership, succeed in balancing supply and demand, increases flexibility, and eliminates waste, there’ll be a huge increase in the profit margins. The response rate will increase, delivery will have successful feedback, and eventually lead to high profits.
What Has Made Supply Chain Integration So Common in Businesses?
The need for cost reduction in Supply Chain
With this tough economy, most organizations are looking for all possible ways to reduce the costs without disrupting the efficiency. Integration in supply chain has proved to be the perfect way of cost reduction, and still improves effectiveness in operations.
To have a shorter processing stage
The traditional supply chain involves a long process before the end service is delivered. There is a great need to offer quick services to keep up with the competitiveness, thus calling for a quicker method. Integrated supply chain management has a shorter product cycle which allows a timely service delivery.
It has a faster product introduction process
The development cycle must be short for a company to outdo its competitors. Having an early introduction of the latest products earns a large market and helps to cut down unnecessary expenses.
The increased need for products
Customers’ demands worldwide are increasing rapidly. The demand rate is too high while the supply rate is quite low, which calls for an immediate solution that’ll make it possible to meet all the client’s changing needs within the shortest time and minimal resources.
The urge to offer higher quality services
There is a tough competition in the supply chain management. The increased pressure leaves only one option for organizations- producing higher quality services. With integrated supply chain management, managers have realized that they have managed to make more profits than those with non-integrated approach.
What are the drawbacks of supply chain management integration?
It requires extreme regulations
Companies that apply integration in supply chain may have a challenge in ensuring suppliers adhere to their standards. Both internal and external operations will require surveillance.
It comes with complications in Supply Chain
The integration approach may lead to complicated scenarios. Each supplier and department have to operate according to its assigned task. Still, not all suppliers need every system available. This may cause sharing of resources to the wrong people, and lead to wastage if not properly managed.
Shortage of personnel
In some situations, the suppliers or vendors would not reach the number needed. This insufficiency can affect the procurement and service delivery.
The whole system can collapse if one stage misbehaves
One error can bring the whole system down. The performance of each stage affects other phases too.
The Bottom Line
Should a company apply supply chain management integration, the organization will receive amazing benefits. It eventually makes the company experience impressive productivity. Although it has few disadvantages, the advantages that comes with it are way more rewarding. So, if you’re still deciding on whether non-integrated or integrated supply chain management is the most effective, you have it. The supply chain’s management integration is the one to go for!