Inter-Enterprise Integration:
For successful supply chain management, it is required that organizations shift from an enterprise-centric to a partnership-centric business model. Therefore, organizations require to integrate their operations and strategies with those of their trading partners, suppliers and customers. Wal-Mart and Procter & Gamble in the FMCG sector, and Intel and Dell in high-tech industry, have streamlined their supply chain using sophisticated method. As inventory increases the total cost of product, companies do not want to take excess inventory. But mismatches in the objectives of production and distribution divisions force companies to save excess inventory in the supply chain; this may be avoided through greater integration.
The distributors and retailers are the closest to customers; hence they required accurate consumption information. If this information is used with the appropriate replenishment optimization software, manufacturing company may estimate future demand and plan their production accordingly. As given in the section on e-logistics above, P&G and Wal-Mart collaborate extensively through interlinked networks to reduce inventory and order-processing costs.
With growing customer awareness about buying options, companies are facing the modifications of product customization. The customer order cycle has gone unpredictable and therefore, companies are forced to take zero inventory level and adopt build-to-order strategy. Dell is a company that has worked well with a build-to-order strategy related to e-business technology.
Responsive supply chains actives quick response to customer requirements. The most important factor to take is whether the inputs for the product are available, so that a commitment to deliver may be made. In short, this is known the available-to-promise (ATP) factor. Companies adopting the build-to-order strategy require to be aware of the material availability before they commit to any order. ATP tracking monitors material availability in the entire supply chain. This helps the company check on material availability, given delivery dates and meet deliveries on schedule.
Enterprising supply chain wants to bring about modifications in the supply chain in response to modifies in customer demand as quickly as possible. To compete effectively, companies could respond quickly to changing market conditions and customer preferences. This needs two-way integration (up and down) in the supply chain.
Intelligent supply chains keep fine-tuning the weak links (to make them strong) in the supply chain on the basis of changing market conditions to take competitive advantage over others.
The following situations are shown the lack of integration between planning and execution:
- Inconsistent customer service because of too high or too low inventory levels
- No demand forecast or the analysis of the impact of demand on production due to lack of trust between production and marketing departments
- Too many changeovers in production due to lack of coordination between production, marketing and customer service departments
- Too many stock-outs because of improper inventory management
The major problem that companies face in supply chain management is the lack of integration between different processes. Hence, companies should ensure efficient collection, structuring and sharing of information in the supply chain. They should also make use of enterprise-level software applications for collaborative planning and execution.
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