Integrated and Non-Integrated Supply Chains
Supply chain integration- A close arrangement and coordination within a supply chain, with the use of shared management information systems. A supply chain is made up of all parties involved in fulfilling a purchase, including raw materials, manufacturing the product, transporting completed items and supporting services.
Supply chain refers to all inputs required to produce an invention to fulfill a purchase. For example, a company such as SONY, which sells computers, would need to buy parts such as circuit boards. The circuit board firm would need to purchase materials from elsewhere to produce them. This then creates a chain, as everyone is reliant on someone/business. All of these materials and components form part of the company's supply chain of materials needed to produce the end result (a working computer.) Once the computer is manufactured, a shipping or trucking company could take it to a wholesaler warehouse, to where it will be delivered to a retail store or a direct consumer to buy. Every step - from sourcing of raw materials to final delivery to the customer - is considered part of the supply chain of the computer.
Advantages of using an Integrated Supply Chain
1.Integrated supply chains can raise profits and lower costs for a business. It can lower costs for a business as it means the business will not have to pay for the expensive raw materials, machines and workers to manufacture them the final product. Machinery is very expensive and so are raw materials therefore by not having to buy them directly the company is minimising costs.
2.A company will use a specific supplier for a specific material. It is very common for contracts to be created which set the price of an item. The fixed cost makes it simpler for the company to set a selling price for their item that ensures profit for the company.
3.By having close co-ordination and alignment with input providers it allows a company to order materials when needed, this prevents unnecessary purchases and wasting money.