Supply Chain Integration

A fundamental aspect of smooth workflow is collaboration. Multiple industries, including warehouses, manufacturing facilities, and even corporate sectors, develop a system of an integrated supply chain to ensure optimal results. This means building a relationship of cooperation between the buyers and sellers to achieve a seamless workflow. 

 Supply chain integration is an essential tool that can be used to achieve better quality products, improved delivery time, and customer satisfaction. Read on to learn all you need to know about supply chain integration and how it can make a difference for your business.

What Is Supply Chain Integration?

An integrated supply chain  (ICSM) is a systematic process where all the parties- customers and suppliers- who are involved in the development and distribution of a product work together to optimize the results of the final product.This requires significant coordination and alignment in order to ensure everyone is effectively working toward the same goal at all times.

Having the parts required for a product show up where they are needed, when they are needed, helps to not only prevent delays in the manufacturing process but also eliminates a lot of wasted time, storage space, and more. When done properly, supply chain integration will bring parties that are often at odds together with a single focus.

All of the materials and components from along the supply chain are needed, and by integrating everything into a single system, it is much easier for effective product creation.

This process works by streamlining all aspects of the supply chain, including procurement, production, distribution, and customer service. The implementation of an integrated supply chain offers various benefits, including improved product quality, improved distribution, and, ultimately, improved delivery time, which results in customer satisfaction. 

Despite its benefits, supply chain integration can be a challenge to implement. However, there are various types of supply chain integration that can help organizations design their strategies accordingly.  

Types of Supply Chain Management Integration

Horizontal Supply Chain Integration: 

This form of integration involves a combined approach to cooperation and procurement from fellow competitors. Essentially, horizontal integration is designed to assist your company in reaching new heights in areas of technology, business expansion and reduce production costs. Overall, this involves moving horizontally in cooperation with companies of the same business levels.

Vertical Supply Chain Integration: 

A vertical supply chain integration management involves closely working with vendors or distributors of other businesses at different levels in the supply chain. However, in the case of vertical integration, it allows perpendicular movement of moving up and down the production chain. This grants the company to claim ownership over the internal production process with reduced costs. 

Cross-Functional Supply Chain Integration: 

When an organization implements cross-functional supply chain integration, multiple functions, such as procurement, inventory management, logistics planning, etc., are unified as one process. This system allows better communication and collaboration between different departments within the organization, leading to better decisions in the long run. 

Based on the areas of integration in supply chain management, six types can be categorized:

Relationship Integration

Measurement Integration

Technology Integration

Material and service supplier Integration

Internal Operations Integration

The Integration Process in Supply Chain Management

The integration process within a supply chain management system involves a disciplined approach, which can be broken down into three key factors: 

Identify Potential Problems:

The first step in implementing an integrated supply chain system is to identify potential areas where changes can be made to enhance existing processes. 

Develop Improvement Strategies:

Once areas in need of change are identified, it’s important to develop an action plan to eliminate potential issues like increased lead time and bottlenecks. This step often challenges organizations to develop new systems or refine existing procedures to build the foundation for smooth workflow. Employers may have to train employees based on new guidelines and instructions to help develop an understanding of the newly established communication system. 

Utilize Technology: 

Besides making manual changes, the supply chain integration process urges the use of technological tools, such as: 

• Inventory tracking software: used to streamline processes by providing real-time data about inventory stock levels within the facility and distribution centers. 

• Cloud-based solutions: This automation tool provides accurate information across different organizational departments, allowing them to keep track of the progress along the value chain. 

• Analytical tools: Mostly reserved for managers or floor supervisors, this tool provides performance metrics to make prompt decisions at any point along the value chain to ensure efficient delivery. 

How To Implement The Supply Chain Integration Process? 

When it comes to practicing supply chain integration within a company, there are quite a few things that need to come together. The following are some of the key steps that most companies will need to take during this process:

• Choosing Vendors: Choosing vendors is more than just finding one that can provide the necessary parts. In addition to that, the vendor must be able to supply their piece at the needed time and place based on the overall supply chain.

• Internal Teams: Working with the internal teams of a company to work based on the needs of the overall system rather than just their department. Having set procedures based on the big picture can help eliminate waste and improve efficiency.

• Waste Elimination: While often overlooked, waste elimination should be an important part of an effective supply chain integration. This can happen when either a vendor or an internal team will physically relocate in order to more efficiently complete the work that needs to be done.

There are many other things involved with effective supply chain integration. This can seem like a very complex process, and in many ways, it really is. Once the initial integration is completed, the system should run very smoothly for years to come.

In most cases, the initial integration of the supply chain will require that all parties get together to discuss their abilities, as well as their needs. Going over all the logistics in an open environment will help provide everyone the opportunity to make suggestions, express concerns, and overcome obstacles before it is ever implemented into a production environment.

Stages Of Supply Chain Integration

The four stages of supply chain integration are designed to enable logistics managers to quickly assess and diagnose complications before they progress into costly issues. The stages of supply chain integration can be categorized as follows: 

• Planning: In the initial phase, the logistics managers assess previous strategies and design changes based on different sectors such as distribution, production, and sourcing. 

• Delivering: The secondary stage of supply chain integration consists of the outsourcing of goods, including raw materials and shipping of finished goods.

• Information Integration: Open communication is exercised concerning real-time data on the current market shares and increasing market stocks. 

• Internal Integration: The final stage of an integrated supply chain involves incorporating and conjoining logistics activities with the residing functional sectors within an organization.

How Does Information Sharing Benefit Supply Chain Integration? 

When looking at the information sharing of supply chain integration, most companies go through a series of stages once they begin working toward a full supply chain integration. These stages are as follows:

• Baseline: This is the first stage, and it is when every department or system within a company manages its own supply chain and related issues. Companies also refer to this as a siloed approach, and while it can have some benefits, it is quite inefficient.

• Functional Integration: In this next stage, all the different departments within a company will work together to help improve efficiency and reduce cost. This could be done by combining orders, scheduling jobs together, or other important steps.

• Internal Supply Chain Integration: All the departments within a company are connected using the same systems. This will almost always involve using some type of IT infrastructure solution that allows the departments to work efficiently together, share their needs, and identify collaboration opportunities.

• External Supply Chain Integration: The final stage involves external vendors as well as all of the internal departments. Providing a vendor with system access and encouraging them to function almost as another department helps to generate the best possible results.

Elements of Supply Chain Integration

There are four essential components, commonly known as the “Four C’s,” that play an essential role in supply chain integration. Here’s a rundown of the elements of supply chain integration: 

Communication: 

The core of a successful supply chain integration system is effective communication. When different departments involved within the supply chain of a product are well informed, they can predict potential changes and implement effective solutions to address bottlenecks. This can be done using integrated computer systems that provide real-time data on the progress of a product. 

Customers:

The success of a supply chain integration is dependent on the customer. This means that the focus should always be on the customer's needs and producing high-value products. This involves the organization understanding ongoing trends and predicting changes to satisfy customers' needs. 

Collaboration:

The key driver behind a successfully integrated supply chain involves a good relationship among different departments. While it’s common to have a good understanding between team members, it's essential to develop a collaborative nature among the involved participants. The essence of supply chain integration is based on collaborative partnership. 

Cooperation: 

Sharing information related to the supply and demand of a product is highly critical to the success of an integrated supply chain. Whether the success of a product is high or low, it’s essential for an organization to keep up with potential changes to introduce and refine products. 

Benefits of Supply Chain Integration

Integrating various levels of the supply chain can provide a series of advantages that can be observed in the growth of the organization. 

• Cost-Effective: Businesses can advance in the market as leading competitors by the reduction of supply chain costs.

• Prompt Delivery: Integration can eliminate possible delays in the procurement of raw materials, manufacturing products, and distribution.

• High-Quality Products: The manufacturing of high-quality products can be attained by meticulous planning caused by an integrated supply chain.

• Improved Efficiency: Businesses can come together and streamline their processes, ultimately leading to increased efficiency.

• Reduced Waste: Elimination of ineffective practices or policies in the levels of supply chain management.

Tools for Making Supply Chain Integration Easier

Implementing supply chain integration can be overwhelming. Trying to bring all the parties together to perform as needed can be very difficult. Fortunately, there are many types of tools that can make many things easier.

• Wall Signs 

• Floor Marking Tape 

• Automation Tools 

These types of things not only indicate to the vendor where things need to be but also help to remind employees not to put other objects in that area since it is reserved for the supplies.

Partner With CSS For Successful Supply Chain Integration 

The benefits of an integrated supply chain are vast. Multiple organizations and start-ups are beginning to recognize the impact of supply chain integration, highlighting the need for the right tools. At Creative Safety Supply, we offer a range of industrial, long-lasting, reliable tools such as wall signs, floor marking tape, guides, and ample resources to help you design the best way to implement your supply chain integration strategy. 

With us, you can build an effective integrated supply chain strategy to take your business to the skies.

 

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Additional Supply Chain facts:

• Supply chain integration is a large-scale business strategy that brings as many links of the chain as possible into a closer working relationship with each other. The goal is to improve response time, production time, and reduce costs and waste. Source: https://www.smartsheet.com/integrated-supply-chain-management-vertical-and-horizontal
• Supply chain integration can be classified into two types: horizontal and vertical. Horizontal integration involves any moves related to the same level of the chain as the organization making them, such as merging with or purchasing firms that supply similar products. Vertical integration involves any moves related to different levels of the chain, such as acquiring or developing capabilities for upstream or downstream activities. Source: https://www.smartsheet.com/integrated-supply-chain-management-vertical-and-horizontal
• Technology and automation play a vital role in enabling supply chain integration, as they facilitate information sharing, process coordination, and performance measurement among supply chain partners. Some of the technologies that support supply chain integration are enterprise resource planning (ERP), radio frequency identification (RFID), blockchain, artificial intelligence (AI), and cloud computing. Source: https://research.aimultiple.com/supply-chain-integration/
• Supply chain integration can provide many benefits for logistics managers, such as improved visibility into operations, better forecasting capabilities, reduced lead times, increased efficiency in order fulfillment, lower inventory levels, improved collaboration between partners, enhanced customer service levels, and higher quality products/services delivered on time at competitive prices with minimal waste or disruption along the way. Source: https://scmedu.org/what-is-integration-in-supply-chain-management/
• Supply chain integration also poses some challenges and risks, such as increased complexity, dependency, and vulnerability of the supply chain network, potential loss of control or flexibility over operations, cultural and organizational barriers to collaboration, and security and privacy issues related to data sharing. Source: https://inspirage.com/2022/09/the-importance-of-an-integrated-supply-chain/

Resources

• https://www.supplychainopz.com/2013/09/supply-chain-integration.html
• https://study.com/academy/lesson/what-is-supply-chain-integration-definition-lesson-quiz.html