You may well ask, why the sudden urge to turn towards an integrated supply chain? Companies have slowly started to realize the very noticeable hand of an integrated supply chain in fostering lean principles and long-term, sustainable growth.
The coronavirus pandemic and the current post-COVID landscape is another major driving force in logistics companies investing in integrated supply chains. Supply chain professionals are faced with troubling questions like, “How can supply-chain leaders also prepare for the medium and long terms”—and “how to build the resilience that will see them through the other side?”
Since the modern supply stream consists of disparate production networks, complex partnerships, markets and customer pools spread out across the globe, the ability to efficiently coordinate and collaborate with people, processes, and products critical to effective supply chain management is key in such a closely-knit industry.
A fully integrated supply chain is the all-in-one solution for companies who aspire to have a competitive edge over other market players.
What does an integrated supply chain mean?
Having an integrated supply chain sounds impressive, but how does it differ from other kinds of supply chains, say, for instance, a non-integrated supply chain?
We all are aware that a supply chain is an interwoven collection of suppliers that are required to create one specific product for a company. Bringing each of these links, i.e., suppliers, together and ensuring that they stay connected with each other’s workflows is how an integrated supply chain works. The end goal is to improve productivity, make the supply chain more responsive and resilient and reduce costs.
On the other hand, as the name suggests, a non-integrated supply chain is disconnected and functions in silos. In a supply chain lacking integration, different stakeholders within an organization have little to no insight into one another’s plans and strategies, meaning that separate groups operate in silos, focusing only on the task at hand. This may drive cost savings to one area, but increase expenses in another and also limits the flow of information within the company, making it more difficult to measure and adjust operations.
Challenges faced due to a non-integrated supply chain
Before delving deep into the numerous benefits of an integrated supply chain, let’s first look at the problems that plague traditional supply chains.
- Restricted communication
Non-integrated supply chains consist of several suppliers and vendors who have limited insights into each other’s tasks. It is a disconnected workflow and with vendors concentrating on increasing their profits alone and suppliers focussing on reducing their costs, they will not be aware of bigger impending problems or greater opportunities further up or down the chain. This will prove harmful to your business in the long run.
- Unavailability of workers
Logistics companies provide quotes and production orders based on the expected capacity of the available workforce, and when workers are ill or unexpectedly absent, it can enormously affect a supplier’s capability to fulfil the demands of their clients.
Benefits of an integrated supply chain
The multiple advantages that come with an integrated supply chain make it much simpler to optimize the overall performance of your supply chain.
- Improved flexibility of supply chain operations
To be flexible and adapt to different situations is one important factor in the shipping industry. Having an integrated supply chain allows companies to do that much more quickly and fluidly than would be possible with a traditional supply chain model. Tight supply chain integration gives you the operational flexibility to respond instantly to external events such as changes in the market/customer demand.
- Seamless collaboration and visibility among stakeholders
An integrated supply chain facilitates centralization to ensure end-to-end visibility and easy accessibility to information. This way, all the related stakeholders are kept in the loop, their productivity is enhanced and any redundant supplier functions can be eliminated due to reliable communication. Not only do teams avoid working at cross-purposes, but also gain new insights into their position within the entire supply chain. Such transparency makes it possible to predict challenges in the supply chain before they occur, thereby taking a proactive approach.
- Reduction of waste in the supply chain
Maintaining a sustainable supply chain and meeting the latest environmental regulations only makes it all the more imperative to adopt an integrated supply chain. It will dramatically reduce waste in several areas like saving up on space in warehousing due to better route management, reducing greenhouse gas emissions and plastic production, and ensuring that you don’t have empty trucks driving around. All these measures will go a long way in identifying areas of waste and redundancies and make way for a better and more efficient supply chain.
- Higher profit margins
When a supply chain is a well-oiled machine, it’s easier for companies to capitalize on higher profit margins. Effectively managing an innovative, collaborative supply chain through the use of cloud-based supply chain management solutions can help businesses produce and deliver products at a much faster, more successful rate, and thus, attain that higher profit margin. Also, an integrated supply chain eliminates the need for middlemen, thereby lowering costs for the end-users.
Build integrated supply chains for greater resilience
An integrated supply chain is the most logical way to increase your productivity and the efficiency of all your supply chain operations. Instead of being stuck dealing with whatever challenge gets thrown at you, an integrated supply chain empowers you to take matters into your hands and be prepared to face the unexpected.
With more oversight, and predictability, and insight into areas that couldn’t have been seen previously, a supply chain can be controlled much more carefully.
Reach out to us here to learn about how we can help you build an integrated supply chain.