Integrated supply chain management is the act of ensuring that your supplier provides the right items on schedule, built to the correct specifications, at the proper cost. This means that you, as the purchaser of the materials required to make your product, are the pivotal station within your supply chain. The application of the integrated supply chain starts when you streamline your general and administrative processes, and ends when your have achieved communication synergy between your company and your suppliers and customers. When completed, it provides a natural flexibility that is built into your processes which allow you to respond to your customer's needs. This responsiveness will drive customer satisfaction and repeat business.
The greatest benefits of the integrated supply chain are that production costs are shared between the supplier and the purchaser (eliminating duplicated effort and its associated costs), and the flexibility provided by having more than just your company aware of your customer's requirements. If they change, the supplier will be able to be notified about it in real-time.
The costs related to research and development, order processing, quality control, design, testing, and many more can be reduced by performing those functions where they make the most sense. If you are receiving raw materials to use in your production process, it only makes sense to have the supplier handle the quality control. The integrated supply chain concept describes the requirement to have a real-time feedback loop to the supplier. This loop allows the supplier to make changes much more quickly that traditional feedback loops.
The management team required to achieve a truely integrated supply chain generally come from the following functional areas:
Once you have achieved a lean operation, it is time to get your suppliers on board. Some suppliers are quick to adopt this initiative, while others need more convincing. It is best to have a champion team comprised of three or four key functional areas within your company work with them.
The key concept to remember is your suppliers will need to involve some of the same functional areas as your company, and they will probably come up with a list of action items that is similar to yours. By acting as advisors, you develop a bond with the supplier that is key to open communication and future problem solving.
Taking on the task of developing your integrated supply chain management system might seem like a daunting task. Those companies that have done it have realized significant improvement in customer satifaction, reduced lead times, and reduced inventory handling and storage costs (holding costs). TML Business Services has been helping companies develop integrated supply chain management systems since 1998 and we can help you too! Call us at (215) 280-9922, or Email TML today to discuss your unique needs.