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Definition
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 involvedin 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)
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Reasons for ISC
Manufacturers Goals Reduce costs
Reduce duplication of effort
Improve quality
Reduce lead time
Implement cost reductionprogram
Involve suppliers early
Reduce time to market
Suppliers Goals Increase sales volume
Increase customer loyalty
Reduce cost
Improve demand data
Improve profitability
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The 3 Vs are the essence to good supply-
chain management
Improving visibility is the first step to better supply-chain management.
Velocity
Better management of
variability results in an
improved, more efficient and
faster supply-chain
Visibility of these flows
enhances the organizationsability to manage, control,
and affect change proactively
Variability
You cant manage what you
dont see: Up- and down-
stream visibility into product,
information and money flows
Visibility
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Steps In Integrated Supply
ChainIntegrated SCM usually begins with the
manufacturer integrating internal processes first.
The company tries to integrate the externalsuppliers.
The last step is integrating the externaldistributors.
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Raw material(suppliers)
Iron ore Silicon Beverage
Backward
integration
Steel
Currenttransformation
AutomobilesIntegrated
circuitssqueezing
Forward integration
Distribution
systems Circuit boards
Finished goods(customers) Dealers
ComputersWatches
CalculatorsLabelling
Vertical Integration
Vertical Integration Examples of Vertical Integration
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Japanese word for affiliated chain.
System of mutual alliances and cross-ownership
Company stock is held by allied firms
Lowers need for short-term profits
Links manufacturers, suppliers, distributors & lenders
Partnerships extend across entire supply chain
Keiretsu Network Strategy
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Issues in an Integrated Supply
Chain
Local optimization - focusing on local profit or cost
minimization based on limited knowledge
Incentives (sales incentives, quantity discounts,
quotas, and promotions) - push merchandise prior
to sale
Large lots - low unit cost but do not reflect sales
Bullwhip effect - stable demand becomes lumpy
orders through the supply chain
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Opportunities in an Integrated
Supply Chain
Accurate pull data
Lot size reduction
Single stage control of replenishment
Vendor managed inventory
Postponement
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Channel assembly
Drop shipping and special packaging
Blanket orders
Standardization
Electronic ordering and funds transfer
Opportunities in an Integrated
Supply Chain
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Access to planning system
Sharing production plans
Joint EDI access / networks Knowledge of inventory levels
Packaging customization
Delivery frequencies
Common logistical equipment / containers
Common use of third-party logistics
Measures of integration
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Managing supply chain relationships
How can broader-based relationships be formed
between trading partners in the supply chain?
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Creating closer relationships
Managing supply chain relationships
R&D
Logistics
Informationsystem
Marketing
Operations
Arms length transaction
Informationsystem
Marketing
OperationsInformation
system
Partnership
Informationsystem
R&D
Logistics
supplier customer supplier customer
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The order winner
The method making sourcing decisions
The nature of electronic collaboration
The attitude to capacity planning
Price negotiations
Managing product quality
Managing research and development
The level of pressure
Factors in forming supply chainrelationships
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Efficient consumer response
How can collaboration be extended across the
supply chain to focus on meeting consumer
demand?
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Efficient consumer response
Establish
infrastructure
Optimize
introductions
Optimize
assortments
Optimize
promotions
Integratedsuppliers
Synchronizedproduction
Continuousreplenishment
Automatedstore ordering
Category
management
Productreplenishment
Reliable
operationsCross-docking
EDI EFTItem coding
and databasemaintenance
ABCEnabling
technologies
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Enabling technologies
Scanning data
Data warehousing Data mining
The data should include
Demand / consumption / sales information
Cash flow
Stocks of finished goods / work in progress
Delivery and output status
Efficient consumer response
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Efficient consumer response
Categorymanagement
Continuousreplenishment
Enablingtechnologies
Required
capability
Accountmanagement
Demandmanagement
Multifunctionalselling teams
Price listrestructuring
Effective andcustomizedpromotions
Joint inventorymanagement
Cross-dockoperations
Continuousreplenishment
Effectivelogistics andproduct flows
Quick response
Effectiveinformationsharing
Automatedordergeneration
Bar-codingand the use ofother scanningtechnology
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References
White Paper on the Integrated Supply Chain Aerospace
Industries Association
Operations Management by R. Dan Reid & Nada R. Sanders
Principles of Operations Management, 5e, and OperationsManagement, 7e
Heizer /Render, Prentice Hall
http://www.cessna.com/index.html
http://www.ceeandgee.com/index.php - C & G International,Inc.
http://www.transportgistics.com/index.htm
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