Integration within a supply chain means using specific strategies and methods to co-ordinate all the different processes, meaning that everything runs as smoothly and efficiently as possible. The aim is to improve the performance at each stage of the supply chain and technology can be used effectively to achieve this.
There are two types of integration- internal and external. Internal integration is concerned with ensuring that divisions within the company run efficiently, for example, making sure that the information flow between distribution, marketing and buying divisions is as good as possible to make sure that customers are getting exactly what they want in store. As for technology, automated processes can be used within the distribution centre. This will help increase the speed of material flow and distribution.
External integration involves improving external relationships which are linked with the brand, for example partners or suppliers outside of the company. An example of good external integration is DHL and their service points at WH Smith. External integration means working with these partners or suppliers, sharing information, goals and potential risks. There must be trust between the companies and they must cooperate, co-ordinate and collaborate.
So, what are the advantages of supply chain integration, and why is it so important for some companies? Well, the main aim of an integrated supply chain is to organise and co-ordinate the processes within the chain which ultimately means that the supply chain will be as efficient as possible.
With an integrated system in place, companies will be able to respond quickly to customer demands which means that they could potentially be ahead of their competitors in the market. While this increases profit, having an integrated supply chain means that costs will be lower within the distribution centre and so more money will be made at the end of the process.
to intergrate or to not intergrate...