Integration is the act of combining into a
structural whole, it is about improving the co-ordination so that materials and information flow efficiently through the supply chain. Having an improved integration will lead to an improved performance across all stages, which is a factor that all businesses will want to achieve, as it will potentially make them a more competitive and successful business. But is it possible for all businesses to become integrated successfully?
There can either be internal or external integration, internal looks at how processes in he business can work more efficiently, such as can there be any improvements in technology, are there updated versions that work faster or can some processes become automated. Whereas external integration is how can relationships outside the business be improved, improving relationships with suppliers and partners could lead to faster lead times, discounts, and could mean a priority place over competition.
Integration can bring some positive business changes, including costs can be cut and waste can be reduced, one way of reducing waste is to use a pull strategy this is where a customer will pull the good for their needs and production is based on consumer demand, and is in response to a specific order. Minimal stock will be produced causing there to be less waste if not all is sold. The other way to move the product is the push factor, the supplier will push a specific good towards a customer, production is set at a level according to past patterns of data collected from other retailers. Products are likely to be coats coming into stores when summer ends, although risks include bottlenecks such as a supply overstock or delays in production.
Back to the advantages of being integrated, it is likely to improve your position in the market, it puts you ahead of your competitors as mentioned earlier. As well as better product quality and being able to negotiate prices with the supplier if the integration was based on external factors. However integration does pose some complications, as it is harder for smaller or independent businesses, for example they are less likely to buy in bulk than the larger businesses, trying to get a deal with a supplier may be difficult. Some businesses may find it hard to trust one another with information or being able to rely on each another, in this case the relationship would not work and is
Integrated vs Non Integrated, whos choosing which?
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