Although overall, integrated supply chains do work much more efficiently than non-integrated supply chains, not all companies are able to do so and this leads to rejection of integration and moreover failure of integration. It is difficult to integrate chains with a smaller business as they may not have the means to support each division and sharing of sensitive information with smaller businesses can make the retailer vulnerable to their competition. Potential changes in the global market may also causes rejection of integration with the demand of the product vs. the economy that the brand is situated within, if these do not match up then companies can be over or under stocked which can lead to a major decline in their turn-over. If a company has integrated, they need to be aware of these risks of rejection otherwise it can lead to the failure of integration. A lack of transparency and trust between the brand and each chain may cause a breakdown of communication and therefore a failed integrated supply chain. Communication is a key asset for any integrated supply chain and without it, whether it is caused by a lack of trust or something as simple as a language barrier, then integration will simply not work.
Failure and rejection of integration is also largely to do with the type of retailer that the brand is. For example, a non-integrated supply chain may suit a sole trader/independent retailer s as their business is likely to be small and will not have the means to support the integration of the chains. This may also be true of Specialist stores such as The Body Shop as all of their product is the same and therefore will not need to branch out as much as other brands. Also Specialist stores are usually smaller and therefore may not be able to support the integration. Retailers such as department stores, multiple retailers and online retailers like House of Fraser, John Lewis, Asos and Boohoo may be better suited for integrated supply chains due to the large amount of stock that they produce and sell and how the products stocked are not normally form one individual brand but from multiple brands. With integration, it may be quicker and easier to keep up with supply and demand through push and pull factors.
As an example of a brand, Zara is a company that would use an integrated supply chain. They work on the basis of producing fast fashion for the wants and needs of their customers that week. Within a week, the product within a Zara store can totally change. Moreover, it is necessary for Zara to have an integrated supply chain in order to minimise the time their product takes to get from the production line to the shop floor but maximise their profits in doing so. Using an integrated supply chain means that Zara can do this as well as adapting to their customers and suppliers but reducing waste in the process. For a large multiple retailer like Zara, it is essential that their supply chain flows efficiently in order to make a profit with heir turn-over.
DHL is a company that works within an integrated supply chain, the production department of their supply chain has been moved off-shore right back to the centre of production in countries such as China, Bangladesh and India. This is done to reduce cost and speed up the time in which the correct product/fashion speeds to market. DHL offer companies a smooth transition from the manufacturers to the warehouse to the shop floor by integrating their entities to make distribution and movement of the product easier by travelling through fewer stages. Their aim is to meet the customers’ demands and produce product as quickly as necessary.
Integrated and non-integrated supply chains are both useful for different companies. Integration is efficient and quick but can also come with risks if communication is not priority. Non-integrated supply chains may not work as a smooth operation but they do suit smaller retailers who do not need mass production. Both supply chains work well but it all depends on what the company needs.