Improving the Supply Chain

¶ … supply chain integration important to organizations?

Proper supply chain integration allows organizations to save both time and money. A "totally integrated supply chain enables an end-user to more efficiently and cost-effectively manage manufacturing, inventory, and transaction costs" through streamlining (Sims 2013). With an integrated supply chain "every aspect of the supply chain process -- including acquisition, storage, logistics, installation, post-shipment support, and information systems" is focused upon "eliminating redundancy of effort and cost, and improving service levels" (Sims 2013). For example, by having the manufacturing department in constant dialogue with the companies providing inventory and providing up-to-the-minute information on the parts that are needed, companies can reduce the need for high levels of inventory and thus contain costs. Lower inventory reduces the risk of product obsolescence and waste (which occurs when too much inventory builds up) or, conversely the company losing revenue if it is under-stocked.

However, effective supply chain integration requires considerable technological sophistication. "When eBusiness is integrated with ERP [enterprise resource planning], the whole extended system provides a vision of business processes that span multiple businesses and enterprises. In the most ideal case companies should be able to connect disparate platforms, applications and data formats across the value chain, including not only suppliers but customers as well" ("What does supply chain integration mean?" 2010). A good example of a company which has accomplished this to great effect is Wal-Mart. "Wal-Mart embraced technology to become an innovator in the way stores track inventory and restock their shelves, cutting costs and passing the savings along to customers. In the process the company became synonymous with the concept of successful supply chain management" (Traub 2012). Wal-Mart has developed a technology known as Retail Link. "Retail Link is connected to analysts who forecast supplier demands to the supplier network, which displays real-time sales data from cash registers and to Wal-Mart's distribution centers" (Traub 2012). Thus forecasting is based upon actual, up-to-the-minute information, rather than last year's data. "The company has begun using smart tags, read by a handheld scanner, that allow employees to quickly learn which items need to be replaced so that shelves are consistently stocked and inventory is closely watched" (Traub 2012). Even the ways in which goods are shipped by Wal-Mart minimizes delays and additional costs. "Wal-Mart developed the concept of 'cross docking,' or direct transfers from inbound or outbound truck trailers without extra storage. The company's truck fleet and corps of non-unionized drivers continuously deliver goods to distribution centers (located an average 130 miles from the store), where they are stored, repackaged and distributed without sitting in inventory" (Traub 2012).