INTEGRATION
Integration is about improving the co-ordination and movement of materials and information within the supply chain so it has maximised efficiency.
Internal Integration involves improving divisions within the company to ensure the customer demands are met in store. This involves improving networks between marketing, buying and distributing.
External Integration involves cooperation, coordination and collaboration and focuses on improving external relationships.
Integration aims to do three things. To be agile- responding quickly to sudden changes in the supply chain. To be aligned- aligning interests of firms and exchanging knowledge with suppliers; and to be adaptable- adapting with suppliers to meet customer demands.
Integration has many advantages. The more efficient the movement of materials in a supply chain, the lower the costs of the chain and therefore an increased profit, this can be done by companies and brands building relationships and trust with suppliers and negotiate better price which would reduce costs. Integration also reduces the stock holding and waste. If external integration is improved, then stock isn’t left in warehouses or overproduced which in turn saves the company money and products enter the stores quicker to meet customer demands. Integration finally helps a brand to stay ahead of competition. The faster the product flow and the faster a new product can land in a store, then the more ahead and current the brand stays which draws in customers and competitions or neighbouring stores are yet to land the latest trends.
However, some retailers choose to reject integrating their companies for various reasons. Often the size of the company has an impact. A small or independent retailer may find it difficult to integrate their chains and it can be costly and time consuming- independent retailers may not have the man power to do this. Also, building alliances and trusts with organisation takes time and some may not be willing to share sensitive information or negotiate better prices with a retailer. Some retailers may also decide that they are not willing to share their sensitive information as it makes them vulnerable to the competition. Finally, some retailers may choose to reject integration because retailers can often become over dependant on one source of production which could cause problems later on if there is manufacture failure etc.