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Having an integrated supply chain sounds impressive, but what does it actually mean and how does it differ from a non-integrated supply chain? A non-integrated supply chain department is disconnected and functions in silos. An example of this would be a company that uses their own Dedicated Milkrun route, LTL shipments, and the occasional Truckload Shipment. Each functions separately and favors activities that benefit only one aspect of the business (perhaps timing, cost, or the accuracy, but not all three). This may bring savings to one area, but costs to another and also limits the flow of information within the company, making it more difficult to measure and adjust operations.
Having an integrated supply chain sounds impressive, but what does it actually mean and how does it differ from a non-integrated supply chain? A non-integrated supply chain department is disconnected and functions in silos. An example of this would be a company that uses their own Dedicated Milkrun route, LTL shipments, and the occasional Truckload Shipment. Each functions separately and favors activities that benefit only one aspect of the business (perhaps timing, cost, or the accuracy, but not all three). This may bring savings to one area, but costs to another and also limits the flow of information within the company, making it more difficult to measure and adjust operations.
Companies that have an integrated supply chain increase their flexibility to adjust to client requests, competitors’ actions, and events within the industry. They also reduce waste and lower costs. Overall, with an integrated supply chain they are gaining an advantage over the competition and the whole business benefits. So how do these advantages play out in day-to-day operations?
Flexibility
The ability to be flexible and adapt to different situations is important in any competitive industry. Having an integrated supply chain allows companies to do that much more quickly and fluidly than would be possible with a traditional logistics model.
One example of this flexibility is just-in-time capability, in which just enough freight is used to meet daily demand. This limits the amount of warehouse space used and helps keep costs down. While very beneficial to a company’s costs and space, this method can be detrimental if the supply chain isn’t effective or responsive enough, limiting inventory and creating delays and ultimately costing more than the savings are worth.
Eliminate Waste
Reducing or eliminating waste is a constant goal for most companies, partly for the long-term cost savings, but also to meet increasingly numerous requirements for eco-friendly manufacturing.
Integrating your supply chain will dramatically reduce waste in several areas. You will save on space in warehousing due to better route management. This will also save on emissions helping you to meet low-waste environmental goals. Trucks will be filled on every leg of the route maximizing cube and ensuring that you don’t have empty trucks driving around. This means that you will be more efficient and save money.
Lower Costs
How can you be more effective and save money while doing it? Being flexible and getting rid of waste will help to lower costs. There are other things that can help such as the expertise of your team, the dependability of equipment and cost sharing. Having a dedicated, knowledgeable team will increase productivity and improve workflow.
Finally, cost-sharing by using Supply Chain Management providers instead of working independently is a great way to cut cost without losing any quality or deadline requirements whatsoever. A fully integrated supply chain is a requisite strategy for companies who wish to become or remain competitive.
Sources:
http://www.inspirage.com/2016/09/top-4-benefits-integrated-supply-chain/
