Supply Chain Integration + Collaboration = Success
Supply Chain Integration
The supply chain is highly reliant on a number of stakeholders who make the supply process successful and effective in order for the customer to receive the product as demanded and when demanded. As a part of the lean strategy, the partners must collaborate with the customers in order to open more opportunities in future and increase customer loyalty. The process of the integration in the supply chain pertains to the exchange and sharing of information between business partners and processes. On the other hand, supply chain collaboration is more than merely integration information between partners and the business functions. As such, achieving business integration is easier than achieving business collaboration due to the over reliance on technology and the failure to understand when and whom to collaborate with. However, executing collaboration and integration yields the success any business desires.
Programs such as Quick Response, Efficient Consumer Response, Vendor Managed Inventory help businesses in their collaborative efforts between partners and other stakeholders. These programs help give clarity of the strengths and weaknesses of the supply chain hence increasing the smooth flow of supply chain processes. Additionally, these programs also reduce the changes of retaining too much inventory against the decreasing consumer demand. Such time travel helps manufacturers forecast the future and only produce quantities that meet customer needs and reduce chances of loses occurring. An organization may use information such as point-of-sale data, the current and future events such as promotions, discounts, or advertising and distribution center inventory balances and withdrawals in order to get a clearer picture into the future ad what to expect in terms of customer demand.
According to the 80/20 rule, companies are always tempted to shy away from the processes of integration and collaboration despite being proven to achieve success in the supply chain. Also known as the Pareto Principle, the 80/20 rule argues that small numbers of products tend to generate large portions of sale. However, organizations may be able to forecast customer demand and produce quantities in a manner that reduces inventory cost while boosting service levels. Often, many businesses end up with dead stock and too much inventory than required due to failure of collaborating and integration information with the customers. Companies are always seeking and welcoming chances for fewer stock outs on store shelves, up-selling, and cross-selling despite having the initial budget or resources invested for the process.