Each student must prepare a formal 5-page paper on a topic of their choice related to supply chain integration techniques and ways they are being used in today’s complex business environment. For example, the influence of supply chain integration techniques on business process agility or how they can improve business performance.
Supply chain integrating is an incremental process, with priority typically given to the highest potential returns on investment. Based on strategies, needs, and potential returns, different priorities and approaches may be assigned to the supply chains of different segments of a business. The integration process can be expensive and is, in many respects, an exercise in resource allocation.
Many companies adopt an approach that begins at home and gradually works outward through the supply chain. The first step is to make in-house improvements, such as inventory reductions that can reduce working capital, warehousing, and transportation costs. An analysis of in-bound logistics can often reveal opportunities for savings. From there, the integration effort expands outward.
Approaches to integration include: management of the integration process, identifying management tools that are becoming available to support this effort, identifying critical success factors, metrics for evaluating progress and performance, supplier selection and development, integration by function, and integration by process.
SUPPLIER SELECTION AND DEVELOPMENT
Supplier selection, development, and integration is a strategic initiative that is undertaken as a part of a company’s overall competitive strategy. This strategic approach to outsourcing combines internal core competencies with externally available capabilities and technologies in an attempt to maximize overall corporate and supply chain competitiveness. To achieve these objectives a company must first determine its current and future capability, technology, and capacity needs, map them against its current capabilities, and then assess whether the resulting gaps can best be filled through internal development, acquisitions, or outside suppliers.
If the decision is made to use outside suppliers, the next step involves a worldwide search for competitive suppliers based on the identified capability needs. Company needs should be mapped against the capabilities of potential suppliers. Performance metrics should be established at this stage as a means of assessing candidates and tracking future supplier performance. Suppliers should be carefully selected because the company’s commitment, in many cases, will be to a long-term, intimate business relationship. Although some suppliers are selected over other qualified suppliers based on the need to fill government-mandated quotas, most are selected based on combinations of the following factors:
- a track record of demonstrated cost competitiveness and on-time delivery
- possession of proprietary capabilities
- demonstrated management capabilities
- customer support and logistics capabilities
- in-depth quality performance
- willingness to develop jointly seamless processes and eliminate non-value-added activities at the interfaces between customer and supplier
- compatible corporate cultures
- demonstrated financial strength and profitability
- competitive technology and process capabilities
- demonstrated compliance with government regulations
- senior management interest in achieving a sustainable competitive advantage for the supply chain
- willingness to share benefits achieved through supply chain integration
After the pool of potential suppliers has been reduced by a preliminary assessment, the remaining candidates should be subjected to in depth, on-site risk assessments conducted by a cross-functional team to identify strengths, weaknesses, and deficiencies. Following the final selection, a joint program should be initiated to solve supplier problems, eliminate deficiencies, and establish an open relationship that includes timely feedback and information sharing. This program should include ongoing, systematic supplier development and integration, including joint projects, training, inventory coordination, incentives, and penalties.
Links should be established with second-tier and third-tier suppliers; their key capabilities should be mapped; and their deficiencies should be identified and addressed. Investments in targeted supplier development and integration can result in substantial reductions in product development and order cycle times, as well as improvements in quality and on-time delivery.
Substantial benefits can be realized by including suppliers in the product design process, which may involve new and uncomfortable relationships for many companies. Overcoming these problems will require strong executive support and employee training. Strong, active supplier roles and open sharing of information on the development team will be essential for achieving project goals. Concerns about protecting proprietary information can be addressed by formal confidentiality or nondisclosure agreements.
With increased reliance on sole-source suppliers and expanded levels of supply chain integration, the pressure on each supply chain participant to consistently meet its commitments increases. Replacing unreliable members of highly integrated supply chains and rebuilding required levels of trust and knowledge can be an expensive and painful process.
INTEGRATION BY FUNCTION
Many companies approach integration on a function-by-function basis, focusing first on functions for which integration offers the highest returns. Although the focus differs from industry to industry, inventories, procurement, inbound logistics, manufacturing operations, and distribution of products and services are the functions most frequently integrated. All-inclusive approaches encompass functions ranging from raw materials extraction through manufacturing and distribution to the customer and back. A ”closed loop” approach includes asset stripping and the rework or recycling of products returned by customers.
A well integrated supply chain must be open to “functional shiftability” (i.e., the assignment of functional responsibility to members of the supply chain best positioned to perform those functions at the lowest overall cost or in the shortest cycle time). Realignment of such activities within the supply chain should be reflected in a commensurate shift in benefits and risks.
INTEGRATION BY PROCESS
The effort required to identify key functional activities and their interrelationships has caused many companies to change from integrating and managing supply chains by functions to integrating and managing them by process (process management). These companies typically use a business process architecture to analyze processes and supply chain relationships in successive levels of detail. Viewing the supply chain as a set of integrated process capabilities rather than as separate corporations and functions can provide critical insights that can be used to improve performance. In this way, complex activities can be coordinated to great advantage between functions and redundant or non-value-added activities, such as administrative or multiple entries, can be eliminated.
Integration is most beneficial when it occurs across multiple processes that have significant effects on supply chain performance, such as information technology, marketing, and finance. Integration across multiple processes can enable customization of the supply chain according to delivery channels, manufacturing requirements, or market segments.
Your instructor must approve specific topics in advance. Your paper, which is worth 300 points will be submitted through SafeAssign, an originality detection service, and will be evaluated based on the criteria in the rubric linked in the submission activity and includes the following:
Your paper should include the following:
Demonstrating quality and depth of content
Organizing the report properly
Following formatting requirements: Demonstrating correct grammar and evidence of proof-reading, i.e., no spelling errors
Times New Roman, 12 pt. Font
Double Spaced
Use of Page Numbers
Title Page
Table of Contents
Appropriate labels on figures and tables
Including a variety and documentation of references used; format for references follows APA Guidelines