What Is Integrated Supply Chain Management and Why It Matters?


What Is Integrated Supply Chain Management and Why It Matters?

Customer preferences have changed significantly over the years. For instance, customers want to customize their delivery experience by deciding when they want the product to be delivered and at what time. They need to know the status of the delivery at all times and request last-minute changes.

Also, as customers can now afford more, they’re demanding a wider variety of products to suit their needs, forcing the supply chains to become global.

However, the above events are making the supply chain more complex and harder to manage. To meet the above requirements and get an edge over competitors, businesses must opt for supply chain integration.

An integrated supply chain connects all the stakeholders, offers better operational visibility, and allows businesses to make data-driven decisions. According to reports, companies with a fully integrated supply outpower other businesses by 20%. Moreover, companies that switched to integrated systems experienced a 25% gain in productivity.

This blog discusses what supply chain integration is, the benefits it brings, the challenges in supply chain integration, and how businesses can overcome these challenges. 

What Is Supply Chain Integration?

Supply chain integration is the process wherein all stakeholders involved in creating, distributing, and supporting an end product or service are seamlessly connected. The motive of an integrated supply chain is to ensure everyone is working towards the same goal while optimizing performance.

A supply chain is like an actual chain where all the links represent the stakeholders like OEMs, suppliers, customers, shippers, etc. The entire supply chain will weaken if these links (stakeholders) aren’t seamlessly connected.

Supply chain integration helps strengthen the supply chain by improving relationships among all stakeholders and by bringing in more transparency and visibility. This empowers businesses to make data-driven and well-informed decisions that positively impact a business’s bottom line.

What Are the Different Levels of Supply Chain Integration?

There are three levels of supply chain integration:

  • Operational: The first level of supply chain integration is the operational level, wherein stress is laid on the optimization of individual processes. Businesses focus on individual processes without considering their impact on other processes.
  • Planned/Tactical: Planned/Tactical phase of supply chain integration lays stress on integrated responsibilities and authorities. The primary focus is on controlling and designing material flow at an organizational level and the application of information systems across the company.
  • Strategic: The strategic level of supply chain integration is about fostering better partnerships, alliances, and relationships among the stakeholders or supply chain members. It also involves designing and integrating inter-organizational information systems, processes between different companies, and collaboration at a supply chain level.

Building Integrated Supply Chains: Barriers to Overcome

Lack of Information Technology

Information technology plays a crucial role in building integration in supply chains. It helps connect stakeholders and ensure a smooth flow of information, finances, and materials among suppliers, manufacturers, and other stakeholders, enabling effective communication and collaboration.

Despite the benefits, information technology is not being implemented and utilized in the best manner in most businesses. As a result, it becomes hard for businesses to integrate different aspects of the supply chain.

Lack of Information Sharing

Information sharing is essential for the integration of supply chain. It offers the stakeholders in-depth insights and information which can be used to make important decisions leading to low costs and better resource utilization.

However, unfortunately, there is a lack of information sharing in the traditional supply chains. This prevents the stakeholders in the supply chain from coordinating with each other leading to poor decision-making.

Lack of Trust

There’s a widespread lack of trust among the supply chain members because of a lack of visibility and transparency. Because of this, the stakeholders refrain from communicating and collaborating effectively, which makes supply chain integration a tough task.

Members in the supply chain, be it customers, suppliers, or manufacturers, need to develop mutual trust, share information and collaborate effectively. This is crucial for creating an integrated supply chain.

Demand Distortion-Bullwhip

Another barrier in the supply chain interaction that businesses need to deal with is the demand distortion-bullwhip. It’s basically an unpredicted or unexpected demand that travels upstream in the supply chain. The source is the customer who cracks the whips and ripples are felt across the supply chain leading to operational inefficiencies and impacting the product quality.

System Incompatibility

Supply chain integration involves integrating different systems within an organization or a supply chain. However, to ensure seamless integration, the systems need to be compatible with each other. Unfortunately, as most businesses rely on obsolete individual solutions for different processes, it leads to incompatibility, and integration becomes a challenge.

Businesses need to opt for end-to-end supply chain management solutions that allow businesses to handle all the operations from a single dashboard. This way, system compatibility won’t become a hurdle in supply chain integration.

Lack of Knowledge

Supply chain integration is a tedious process that requires a well-laid-out plan. However, most businesses don’t have professionals who’re skilled enough to pull this off. Businesses often try to launch supply chain integration strategies without much research and end up wasting time.

Companies need to either hire industry experts or opt for automated supply chain management tools that ensure easy integration to fight the lack of knowledge.

Cost of Integration

While supply chain integration brings massive long-term financial benefits, there can be a decent upfront cost. For instance, businesses might have to hire new resources or scrape off different individual tools and invest in an end-to-end supply chain management solution. And this can be costly.

Nevertheless, the long-term benefits of supply chain integration outweigh the upfront expenses by a huge margin. Therefore, businesses must invest in supply chain integration.

Challenges In Supply Chain Integration

Information and Operational Silos

Supply chain members often follow a management style wherein different departments or business units don’t interact, creating an operational silo. And as they don’t interact, communication, collaboration, and information sharing are also limited, which creates an informational silo.

This silo-based way of operating often leads to conflicts and negatively impacts an organization’s productivity and revenue.

Higher Reliance on Manual Effort

The majority of businesses shy away when it comes to introducing a change in their organization. And because of this, several processes in the supply chain still rely on manual elements. 

Route planning, freight procurement, documentation, compliance management, and invoicing are some examples of processes that rely on manual elements. And this leads to huge productivity losses and inaccuracies as humans are prone to making errors.

Lack of Right Automation

While the market is full of automated supply chain management solutions, businesses fail to embrace them. For instance, a report says that fewer than 10% of the suppliers embrace automation solutions. And this inability to opt for automation solutions leads to inefficiencies impacting all supply chain members.

No Status Standardization

Different supply chain members operate differently and use different terms to address the same processes. For instance, a courier company might use the term ‘courier’ to address the order, while the shipper might use ‘shipment.’ This can create confusion and make it hard for different supply chain members to collaborate and access information costing them a lot of time.

supply chain integration challenges

Lack of Process-Specific Metrics

Businesses need to closely monitor all their processes, from procurement, product design & development to distribution, to track inefficiencies and work on them. However, because of a lack of smart supply chain management solutions, businesses are unable to track individual processes that prevent them from growing.

No Real-time Visibility

Real-time visibility into the operations, processes, and assets (drivers and vehicles) is essential. Because with real-time visibility, the managers can always have an awareness of how every part of the supply chain is moving. This way, even if there’s any contingency, it can be dealt with smoothly, ensuring seamless process flow no matter what.

However, unfortunately, the majority of businesses lack real-time visibility over supply chain operations. This minimizes the control they have and leads to operational inefficiencies and higher incidental costs. 

Lack of Unified Data Analytics & Reporting

Most businesses lack data analytics capabilities. Because of this, they’re unable to draw insights from the tons of data they generate regularly. Even if they can analyze the data, the process is highly inefficient and time-consuming as data is highly fragmented and comes from different sources.

Businesses need unified data analytics wherein all the fragmented data sources are merged into a central view. This way, a business can visualize the data and draw useful insights from the same to make better predictions and data-driven decisions.

Poor Collaboration and Communication

Active communication and collaboration are necessary for creating a supply chain that is more robust, efficient, and resilient. However, supply chain members often operate in a siloed fashion, making it hard for them to communicate and collaborate. And this leads to operational efficiencies, waste production, inaccurate predictions, and an impacted bottom line.

​​What Are the Benefits of Supply Chain Integration?

Promotes Visibility and Helps Deal with Information Silos

Supply chain integration aims at creating better connectivity and cohesion across the value chain, from procurement and production planning to logistics. This way, businesses can connect different processes and promote collaboration instead of letting different processes exist in their own silo. 

When different processes are connected, operational visibility is enhanced. This makes all supply chain members aware of each other’s duties and thus helps optimize their operations.

Enables Data-Driven Decision-Making

With supply chain integration, a business can connect different processes, integrate all data sources, and analyze important data. This further helps them draw useful insights from data and make data-driven decisions. Such decisions are often more accurate and positively impact the business’s bottom line.

supply chain integration benefits

Reduced Reliance on Manual Elements

Effective supply chain integration is only possible via smart supply chain management solutions that offer automation. After all, businesses cannot integrate and connect so many different departments or stakeholders using manual elements. These automated solutions help reduce reliance on manual elements and increase efficiency and accuracy.

Improved Collaboration & Communication and Reduced Waste

Supply chain integration is about connecting stakeholders, improving communication, and promoting collaboration. When stakeholders can communicate and collaborate better, they can always remain in sync and reduce waste. 

For instance, multiple teams might have their LTL (less-than-full truckload) shipments scheduled recurringly. This can lead to multiple LTL shipments on the road, which is wasteful. However, with supply chain integration, businesses can club those shipments and send out a single FTL (full truck load) to reduce waste.

Standardized Information

When businesses opt for an end-to-end integrated supply chain solution for achieving an integrated supply chain, accessing, understanding, and managing the information becomes a breeze. Everything is standardized as such solutions are crafted keeping in mind all the stakeholders. This way, whether the supplier or the shipper tries to access the information, they can easily do that using the same terms or queries.

What Is Integrated Supply Chain Management?

Integrated supply chain management is an enterprise resource planning approach wherein businesses can manage and control all the operations and stakeholders via a single unified interface. They can also plan, track and manage distribution and logistics activities via a centralized system. Everything can be managed from a single dashboard without having to invest in multiple systems, making management easy.

Therefore, opting for an end-to-end integrated supply chain management solution is the best way to ensure effective supply chain integration.

How Can Shipsy Help in Integrated Supply Chain Management?

Shipsy offers an end-to-end integrated supply chain management platform that acts as a complete supply chain integration solution.

Businesses can effectively connect and integrate all the stakeholders in the supply chain and allow access to all the operations via a single dashboard. The stakeholders can access information and monitor the operations in real-time, which demolishes operational and informational silos.

Using Shipsy, businesses can automate redundant operations, standardize all the information, reduce reliance on manual elements, store, analyze and view crucial data to draw useful insights and finally successfully integrate the supply chain.

Along with the above benefits, Shipsy’s supply chain management solution can help with the following:

  • 32% increase in mid-mile vehicle utilization
  • 12% reduction in freight costs
  • 64% increase in customer experience
  • 37% decrease in ETA SLA breaches
  • 23% decrease in last-mile delivery costs
  • 40% reduction in customer query calls per order
  • 34% decrease in incidental expenses 
  • 18% increase in delivery net promoter score
  • 12% reduction in line haul logistics costs

Book a custom demo to learn more about how Shipsy works and how we can help you integrate the supply chain effectively.


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