Why Government Supply Chain Integration Standards Are Good

Supply Chain Integration

How Defining Supply Chain Standards Can Improve Integration and Performance

Supply chains by their very nature of often disorganized, lack a cohesive data model or taxonomy for sharing information and knowledge and over time can become exceptionally myopic and inward centered. When these conditions exist in conjunction with dominant firms who seek to create their own unique, proprietary supply chain integration standards, the fragmentation or balkanization of an entire industry and its value chain often occurs (Jayaraman, Rardin, Buyurgan, et.al. 2011). Nascent efforts to resolve this issue have been taken on by industry standards organization RosettaNet (Thibodeau, 2002), yet this organization's focus has only been on the high technology industry. The Enterprise Integration Act of 2002 (Thibodeau, 2002) looks to create a more unified series of integration standards so that the fragmentation of supply chains does not occur.

How Government-Defined Standards Will Improve Supply Chain Management

For many business and supply chain leaders, any intrusion of government entities in supply chain management is considered a threat to the ongoing profitable operations of industries. Were government intervention in the past has often led to greater complexity, cost and confusion of operations, the defining and adoption of government-defined standards shows significant potential for improving the performance of supply chains worldwide. In many supply chains there is a lack of clarity and specific role assignments of just who is going to handle which aspect of procurement, distributed order management and the complexities of Vendor Managed Inventory (VMI) for example. Government-defined standards alleviate any confusion as to these roles and most importantly, define a common basis for completing all transactions necessary to manage a supply chain efficiently. The greatest need in supply chains is to have clarity of roles, responsibilities and the analytics and metrics used to manage them over time (Li, Su, Chen, 2011). The definition of government-defined standards provides the necessary foundation for greater efficiencies and more clarity of roles throughout supply chains, leading to reduced costs, greater speed of response and ultimately greater revenue growth potential.

Government-defined standards for supply chains will deliver measurable gains in cost reduction, time-to-market in industries that have very rapid product lifecycles, and greater overall clarification and collaboration on complex product assemblies. Advances in supply chain integration throughout the healthcare industry are contributing to greater levels of order accuracy, less rework of orders and products, and most important, greater compliance to federal regularity requirements (Jayaraman, Rardin, Buyurgan, et.al. 2011). Analysis of the effects of government-defined supply chain standards in highly regulated industries illustrate the value of these uniform standards in including enterprise quality management and compliance for regulated industries (Li, Su, Chen, 2011).

With so many potential benefits to a unified, consistent series of standards for supply chain performance, their measurement can be accomplished using two well-known and heavily used frameworks in supply chain planning and management, the supply-chain operations reference-model (SCOR) (Li, Su, Chen, 2011) and the hierarchy of supply chain metrics first defined by AMR Research (Hofman, 2004). These two frameworks taken together can be used to clearly show the contributions of a more consistent and unified series of supply chain integration standards. The SCOR Model graphically illustrates the additive value of having a unified approach to sharing data and intelligence throughout a supply network (Li, Su, Chen, 2011). These benefits can in turn be measured with the specific metrics shown in the hierarchy of supply chain metrics shown in Figure 1 below.