Supply Chain mapping and Integration
•Processes and strategies
Supply Chain Management
Supply Chain mapping and Integration
Processes and strategies
Prep. By. Manana Peter
Lecturer
9/14/2013
Supply chain integration
• An approach that seeks to coordinate and harmonize all
elements of a supply chain from raw material to finished
product in order to achieve higher levels of overall
performance and reduced cost.
• An Integrated Supply Chain (ISC) is one that has full
responsibility across the corporation (including different
divisions, business units and geographies) for the
planning and management of all activities involved in
end-to -end supply chain processes, including direct
sourcing and procurement, conversion/manufacturing,
and all logistics management activities. (Source : Supply
Chain Digest, The Logistics Institute ±Georgia Tech)
Integrated supply chain management
• Integrated supply chain management implements a
coordinated total supply or value chain from
determination of external customer needs through
product/service development, manufacturing
/operations and internal/external distribution,
including first, second and third tier suppliers. The
objective is to provide the highest customer service
and satisfaction levels and make the most effective
use of competencies of all organizations in the
supply chain.
The Biggest Challenges in Supply Chains
Before bothering with the specifics of integration, it’s important to understand what problems
plague supply chains in the first place:
Order Changes and Cancellations: This happens at the end of the supply chain, and sends
reverberations throughout. The retailer is stuck with excess product, the wholesaler deals with
fewer orders and backing up inventory, and every other supplier feels the waves. Plus,
consumer whim dictates changes and cancellations, meaning there’s little way to predict it, and
every case could have different reasoning.
Workers Unavailable: Companies provide quotes and production orders based on expected
capacity, and when workers are ill or otherwise unexpectedly absent, that can dramatically
affect a supplier’s capability. This scenario is especially true in the age of automation, where
fewer workers are required but each is responsible for overseeing the smooth production of
many more units.
Production Facility Failure:
Late Delivery of Materials:
Suppliers’ Conflicting Obligations: Independent suppliers all have one honest goal - make as
much money as possible by taking on as many orders as possible. In non-integrated chains, this
means they might have some tolerance for overlap between different customers’ orders.
Should one customer decide to increase production, another suddenly might be out of a
production facility because the supplier overcommitted.
Adversarial Relationships:
Transactional Relationships:
Limited Communications:
Horizontal Integration vs. Vertical Integration
Horizontal integration involves any moves related
to the same “level” of the chain as the organization
making them. Integration could include merging
with or purchasing firms that supply similar
products, such as a central processing unit (CPU)
manufacturer buying another in order to serve a
larger swath of the CPU market. This type of
relationship could help the firm gain many more
customers, and give them greater control over the
price and supply of CPUs.
Vertical integration refers to any moves that include
different levels of the chain. It could involve merging or
buying out a link ahead of or before your organization, or
possibly developing your own capabilities for handling the
entire supply chain, front to back. For example, if the CPU
manufacturer mentioned earlier also purchased a
smartphone product development firm, they would control
more levels of their supply chain - the major parts and the
product. This type of acquisition could gain the firm greater
control over their costs, net them a larger share of profits,
and reduce waste and time spent in production.
Challenges of Supply Chain Integration
Creating a shared vision of how integration will improve both financial and intangible results
Building an organizational culture that incentivizes people to support the supply chain vision
Establishing end customer-centric metrics throughout the chain to improve quality control
Organizing multiple supply chains to meet the needs of different customer segments
Making product and service design decisions based on broader shared supply chain
considerations
Maintaining consistency in relationships with suppliers and customers, even during downturns
Joining sales and operations into one effective process, preventing miscommunications
Implementing reliable databases and keeping all partner suppliers on the same IT infrastructure
Revision Question!
Assuming a typical manufacturing company like
‘Uganda Breweries limited (UBL) in a busy and
competitive industry;
- Imagine the Supply Chain in which the Organisation
can be placed (try sketching the SC with adequate
justification).
- Identify and explain the relevant drivers involved.
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• Question 2.
- With reference to Question 1, examine
the factors
that may influence inventory levels in the
supply
chain.
- Evaluate the metrics that may be used
inventory
performance.
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