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What is supply chain integration?

Jan Tore Pedersen | 30. Apr 2018
4 minutes read

As you are probably aware of, a supply chain comprises all the individuals, organisations, resources, activities and technology involved in the creation and sale of a product, from raw materials to the final product ending up at end users. But what is supply chain integration?

 

The role of logistics in the supply chain

In order to define supply chain integration, we first have to take a look at the role of logistics in the supply chain. Essentially it concerns ensuring that goods are being moved between the appropriate stakeholders according to agreements regarding quality and timing.

Information about the goods being moved is as important as the goods itself in supply chains. Without information it is not possible to deliver the goods to the right receiver and it is impossible to plan operations properly. In times when sourcing was local, there was little pressure on lead times, and users had to be content with standard products. It was sufficient to have information on paper following the goods throughout the chain.

Today, few supply chains are local, most of them global. Customised deliveries are dominating, buyers want to decide where and when to have the product delivered, and they want to know the status of the delivery at all times. Buyers even want to change their mind about things after the product is completed and is under transport.

In order to meet these requirements, it is important that data is shared between all supply chain stakeholders so that everyone has the right information when they need it. To achieve this, information exchange can no longer be on paper. It must be electronic.

 

Supply chain integration defined

Supply chain integration essentially means that the information and communication systems of all stakeholders are able to seamlessly exchange information through all planning, execution and completion of transport and logistics operations throughout a product’s life time.

Supply chain integration is recognized as an important factor to attain superior supply chain performance, as it offers a host of competitive advantages – including complete transparency all the way from supplier to customer.

 

Going paperless

Over the last years several initiatives have been taken to facilitate the use of the same infrastructure for logistics. By connecting to this infrastructure, stakeholders may securely communicate with all others. The infrastructure also supports interoperability, as demonstrated in the European e-Impact project.

The result is that the previous barriers in the process of connecting stakeholders and facilitating interoperability have now been removed. The cost of connectivity and interoperability is now at a level that can be afforded also by small and medium sized companies.

Hence, today, companies of all sizes within the logistics industry have access to a full suite of innovative and cost-efficient Software as a Service (SaaS) solutions that enable full visibility and real-time sharing of information from end to end in their supply chain networks.

The shift to paperless workflows does not have to entail disruption of existing systems or work practices. Solutions already exist that offer the capability to tap in and immediately connect to an extensive network, allowing you to retain your previous investments.

We need to remember, however, that supply chain integration requires a shift in mindset that begins with an understanding that traditional processes and solutions are ill-equipped to meet the demands of today’s hyperconnected customers.

 

Conclusion

With integrated planning and visibility as a key priority for many logistics companies, supply chain integration has evolved from business necessity to one of the primary focus areas for enhancing competitive advantage. The benefits of doing so are substantial. Integrations and collaborations with carriers and supply chain partners produce a wealth of real-time information and the ability to see across supply networks to make better business decisions.

Seamless, cross-organizational integration of the supply chain is an inevitable business move in a time of heightened market volatility. By going paperless, operators can significantly reduce their costs, boost their efficiency and provide first-class customer service.

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