Surprisingly supply chains are not there yet in terms of supply chain integration. In a posting from SupplyChainDigest earlier this year, Strategies for Integrating Supply Chain Planning and Execution, a key takeaway from a survey of 400 supply chain managers was that supply chain integration is a major problem. The survey sited that only 10% of companies said they currently had a strong/high level of integration between planning and execution across their supply chains.
The Problem With Supply Chain Integration. The key challenge with supply chain integration is it is hard to define and get your hands around it. It is easy to define a car or a flat-screen TV, but what is supply chain integration? It is that word “integration” that embodies all the challenges with supply chain integration. A definition of integration is “the act of combining or adding parts to make a unified whole”. This is the crux of the problem. A supply chain is a bunch of distinct activities and influences that multiple businesses attempt to manage in order for it to work as an unified whole.
The Origins of Integrating Supply Chains. In the ’80s people started to use the term supply chain management and supply chains “to express the need to integrate the key business processes, from end user through original suppliers” (see ref. 5 from Wikipedia/Supply_chain). At this time businesses were starting to use computers within their supply chains to automate administrative tasks. As a by-product of automating supply chain tasks and storing electronic records, businesses began to exchange electronic documents between their trading partners. This level of supply chain integration and information exchange continues today.
From Supply Chains to Supply Networks. Thanks to information technology many businesses now have complex supply chain networks where they connect directly and indirectly with many suppliers and 3rd parties to bring goods to market. This phenomenon has increased the importance and the complexity of supply chain integration. See posting, From Supply Chains to Supply Chain Networks., Many supply chain “links” now have dependencies to far-distant links in a network. These dependencies and risks may not be known to many businesses in the supply chain network. Supply chain information flows between direct trading partners, but what about the rest of the supply chain network?
New Factors Affecting Supply Chain Integration. As our supply chains become more complex, “the act of combining or adding parts to make a unified whole” (integration) of our supply chains continue to be elusive. Coupled with this, our world is changing. Globalization continues and decision-making cycles continue to reduce or even disappear thanks to information technology and the abundance of near-real-time data. Lastly, energy costs are becoming more volatile and global resources are shrinking in comparison to demand.
Next Steps In Supply Chain Integration. Supply chain integration is more and more a business problem. For example:
- Cross-Functional Business Integration. See SupplyChainShaman posting, Make Money. Turn your Supply Chain on its Ear. Go HORIZONTAL!. This article advocates focusing supply chain integration on cross-functional processes such as margin management, contract management, demand shaping programs, working capital management, Sales and Operations Planning (S&OP), supplier development, and new product launch.
- Transportation Functional Integration. LogisticsViewPoints posting, Differing Viewpoints on the Need for a Holistic TMS advocates breaking up transportation management silos such inbound and outbound; domestic and international; private fleet and common carriers.
- Supply Chain Integration Technology. As for a technology solution, I would tend to not believe the technology marketers that there is a technical “silver bullet” right around the corner to solve all supply chain integration problems. The technology is here today to integrate supply chains. Businesses just need to provide a flexible, viable business model that can address their evolving and ever changing supply chain networks. Technology can then be applied in a cost-effect manner to meet the business need of supply chain integration.
See postings: B2B eCommerce Resources | B2B eComerce & EDI Trends for more information.
