Trade & Industry Advisory
29 April 2020 • 9 min read
Need of the Hour - An Integrated Supply Chain
Why is an integrated supply chain important? An integrated supply chain will help streamline the business process and provide the following benefits
Businesses are becoming increasingly global and complex in nature. In such an environment, a supply chain that is complicated, lacks transparency, and operates in silos is no longer viable. Today, to win and have a competitive edge, organizations need to build an integrated supply chain.
How Will Supply Chain Integration Benefit Organizations?
An integrated supply chain will help streamline the business process and provide the following benefits:
- Improves collaboration: Integration will connect various stages of the supply chain into a single process. This, in turn, will create an environment that will help improve collaboration among the stakeholders of the different processes in the supply chain.
- Reduces cost: Complicated and disconnected supply chains increase the operating costs without adding any actual value to the product quality. Integrating various processes and systems in the supply chain enables organizations to identify and remove unnecessary costs without affecting product or service quality.
- Adds agility: An integrated supply chain is agile. It is more flexible and responsive to unscheduled demands made by the business or changes in the industry. Collaboration among all the functions of the supply chain and timely sharing of data gathered at each touch point is critical to achieve agility.
- Simplifies the process: Large supply chains are known for their cumbersome and varied processes. This is not only time consuming, but also creates confusion among the different departments. Integration brings the entire supply chain on a single platform, thus simplifying the systems and processes.
- Increases transparency: Integration allows for easy access and verification of information and data. It also lets relevant authorities within the system keep track of how the information is being used and monitor critical functions of the supply chain.
- Saves time: Integration saves time spent on the follow up one process-stakeholder needs to do with another process-stakeholder to get the required information on time. This saved time can be used productively by employees in other important work.
In addition to the above benefits, in the long run, integrating the supply chain can enable organizations to analyse and understand future needs of the business and start building capacity and business strategy over time.
Is this Enough?
No. To get exponential benefits of integration, in addition to connecting an organization’s supply chain, it is also necessary to bring external service providers into the system - i.e. integrate the entire ecosystem in which your business operates.
The following sample case study will highlight why it has become an urgent need to integrate not only your internal but also external supply chain system.
ABC Auto Parts Pvt. Ltd., manufactures automobile spare parts. They have state of the art manufacturing facilities. Over time, the company has also managed to integrate and create a uniform process across its sales, administration, operations and manufacturing facilities. Within the company, information and processes flow seamlessly and without any hindrances.
ABC sells to the local market and also exports its products around the globe. Since the scope of their business is large, they have a separate department for handling the transportation and export formalities.
Despite the dedicated manpower, more often than not, there is some glitch or another that creates a delay in their shipments. Issues like - the contracted trucking company’s trucks not arriving on time, spending a lot of time searching for best ocean freight rates in the market, negotiating with forwarders or shipping lines, collecting documents from various vendors, delay in getting customs clearance, extensive follow up with various vendors, conducting a reference check every time a new vendor is added, monitoring the shipments till it reaches the final destination, etc., are common and take up a lot of time of the employees without adding any real value to the organization. Resolving these problems sometimes needs intervention from senior management, thus creating a bottleneck and adding to the delay.
ABC Auto Parts is a classic case of a company that is suffering not due to its own inefficiency but that of the ecosystem that it operates in.
While as a single organization, the different service providers in the ecosystem may not be inefficient but the diverse platforms used, varied processes, business language, timelines, and priorities make one organization seem inefficient to another.
It is in such situations that we realise how important and urgent it is to bring all the participants in the supply chain - organizations and vendors who provide services like transport, customs clearance, packaging, insurance, and tracking of shipments till delivery to destination - on a single platform.
Can it Be Done?
Yes, it can and it is being done by using technology to create a digital supply chain.
New and advanced technology has made it possible to build a single platform where all the players in the ecosystem can connect, collaborate, and complete the supply chain cycle.
The supply chain ecosystem (manufacturers, marketers, logistics, and other service providers) too has started to realise the benefits of collaboration, communication and real-time exchange of data and information among themselves.