Integration and performance optimization in supply chain warehousing

Optimizing Supply Chain Performance

Response

The greater the integration of products, processes, stages and systems across the multiple layers of a supply chain, the more effective an enterprise becomes at managing supply chain risk while streamlining new product introductions. The more disjointed the stages and systems of a supply chain, the greater the risk of financial and operational failure (Deshpande, 2012). These failures emanate from lack of product quality, focus on compel product procurement and sourcing strategies, and most of all, a continual lack of focus on meeting customer commitment ship dates. When stages of a supply chain are considered separately, they become disjointed and sub-optimization occurs rapidly (Kumar, 2002).

A secondary effect of each stage of a supply chain being considered or managed separately is how this strategy leads to sub-optimized metrics of performance. Too much focus on a single stage of the supply chain leads to myopic, inward-looking analytics, metrics and key performance indicators (KPIs) that blind organizations to the larger and more severe threats and greater opportunities (Deshpande, 2012).

Third, by focusing or considering just individual stages of supply chains, lack of process integrating and learning occurs, leading to an entropy effect on overall corporate efficiency. Organizations quit learning when each stage of the supply chain is disjointed or not integrated with each other. Sub-optimization of process, performance and long-term performance often result, with the long-term cost being a reduction in overall financial performance of the firm (Hofman, 2004).

Response to Question 2

As an integral component of the overall supply chain, warehouses enable organizations to make and keep delivery commitments to customers, shield them from stock-outs and allocation delays, and provide organizations with the ability to flex in meeting customer needs across their distribution networks. Warehouses are also essential to the overall supplier ecosystem of any organization. Managing warehouses to the ground-level metrics as shown in the Hierarchy of Supply Chain Metrics shown in Figure 1 (Hofman, 2004) is vitally important to the viability and continued growth of any business.