People world over enjoy different games. I enjoy football and I bet you too do. Now visualize a scenario whereby there is no corporation among the players with everyone hitting the ball anywhere. The goalkeeper keeps leaving the goal post and plays in the midfield.
The defenders kick the ball directly onto their goal post, scoring an on-goal for the opponent team! That will be detrimental to the team – won’t it? Well, that analogy best describes what happens on a non-integrated supply chain system. Successful investors adopt an integrated supply chain.
This is whereby the system is made cohesive through increased connectedness at every stage of supply chain management (SCM). The process is expensive, but you can trust it for the benefits are worth the cost. The five major benefits of an integrated supply chain are discussed below.
a. Heightened visibility
In an integrated supply chain, procurement, production planning, and logistics are made transparent to all the entities involved. The creation of logs, taking orders as well as making deliveries are controlled from a central point in the system. This increases visibility in the entire operation. With increased visibility, all the parties involved collaborate easily. Increased collaboration in turn leads to the reduction of or no strain at all in functionality. This will have a fruitful implication in the entire value chain of the SCM. In case decisions have to be made, they do not have to cost the company a fortune. Courtesy of the connectivity that already exists, communication is easily done and the decision effected. This is unlike a non-integrated supply chain whereby all stages occur in a siloisized manner yet remain dependant on the main system. In such value chains, making a single decision may take forever because of ineffective communication. They then remain bound to face the repercussions that could turn out perilous. To avoid such consequences, many investors seek supply chain integrations and never regret this decision.
b. Assured flexibility
Because an integrated supply chain makes processes transparent, flexibility is no issue in this course. Why is flexibility crucial for a supply chain? Myriads of logistics companies have incurred major losses and lost the competition because they lacked flexibility. Yes, flexibility is that significant if you wish to remain on demand and beat competition in the supply chain market. Like visibility, flexibility greatly affects decision-making and ultimately modes of operation in the entire system. For instance, a non-integrated supply chain that lacks flexibility will have to lie low and adopt a ‘just-in-case’ strategy of operation. What is the implication of such a decision? Opportunities will elope at their very sight. With opportunities gone, losses follow. In many cases, the company ends up running bankrupt and can no longer sustain itself, leading to closure. On the other hand, because of assured flexibility, an integrated supply chain adopts a ‘just-in-time’ strategy for its distribution. For its every demand, it meets it with supply. Such a company accrues benefits and sustains itself over time.
c. Eliminated waste
With an integrated supply chain, wastes are greatly reduced. A fundamental principle of a sustainable system is waste cut down and that is what you achieve by making your supply chain integrated. How is this waste reduction achieved? Well, because procurement, production planning, and logistics are all inter-connected, there is great cohesion. With such increased cohesion, communication is smooth. Cases of redoubling tasks and efforts are reduced. Redoubling of roles usually causes redundancy in a system, which ultimately generates waste. Integrating your supply chain will not only reduce wastage of efforts but also time, space, and pollution. Due to the continued network in the system, drivers of trucks and operation managers keep communicating. This reduces wastage of time since the hours during which a truck remains empty are cut down. While driving back, a driver ferries other goods with him, hence not driving back empty. Now because this truck did the job that would have otherwise been assigned to another truck, fuel combustion is halved, reducing the pollutants being emitted to the air. Fuel is also saved; meaning money is not wasted unnecessarily. Courtesy of an integrated supply chain, a warehouse is well organized and its components fit in a limited space yet neatly arranged. This saves on the space and the unneeded can be rented out to generate extra income.
d. Well-met demands
An integrated supply chain easily stays on top of the game- it meets demands in real-time. Using past data in its centralized database, it can predict future returns. Such a system subjects the stored data to models and enhances the response of future occurrence. With this agility, the system meets demands as they come and with prior information at hand. That is unlike a non-integrated supply chain that will be ignorant about future occurrences and out of paranoia, will either let go of an opportunity because it looked scary or take chances with a promising demand that turns out worthless. With such turns of events, a supply chain that lacks integration does not meet its demand as necessary.
e. Increased competitiveness
A supply chain that has integrated its operations will increase its competitiveness in the market which in turn widens its profit margin. All processes are visible to the system. Stages are made flexible and dance to the demands. Wastes are reduced as much as possible at all stages in operation. The chain is quite agile and able to predict future likelihoods by subjecting past data to system models and algorithms. Steps are strict and environmentally conscious. What do you think all these will sire? The system will beat the competition as it comes. It will sustain itself as required and become long-term. The investors will enjoy the widened profit margin courtesy of Supply Chain Integrations.
Making Supply Chain Integrations are the only way to withstand the waves of losses that supply chain companies are bound to face in the course of operation. An integrated supply chain is quite an expensive venture but worthwhile. The benefits are numerous. The article has discussed increased visibility and transparency, assured flexibility, well-met demands, reduced wastes, and a widened profit margin. Recent studies have established that supply chain is a highly risky investment but if made integrated, the risks are reduced if not cut down at all. Thinking about Supply Chain Integrations? Wonderful, it is a brilliant idea but first, secure it by making it integrated.