Integration is an act or instance of combining into an integral whole. Integration within a supply chain is concerned with improved co-ordination so material and information flows efficiently. There are two types of integration, internal and external. Integration can lead to improved performance at all stages of the supply chain especially when using advanced technology.
Internal integration is how processes within the brand can be made more efficient. Internal integration improves information flow between marketing, buying and distribution by using modern technology to ensure that customer demand if fulfilled in store. For example, the buying team will be able to access records to show them what is being distributed from the warehouse, so they know what is being ordered frequently and can respond accordingly to this. Some companies use EDI which enables automatic replenishment of stock and therefore avoids missed sales. Companies can introduce automated processes within the distribution centre to improve material flow and also cut costs because they will no longer need as many staff working at the distribution centre. Another form of internal integration is cross brand coordination within a company, for example, using the same transportation for multiple brands or having one distribution centre for multiple brands.
External integration is how external relationships can be improved. It is all about ‘the three c’s’, cooperation, co-ordination and collaboration. Companies could use a small number of strategic suppliers, as it will be easier to organise and keep track of a small number of suppliers.
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