Supply Chain Integration: Challenges and Good Practices

Supply Chain Integration: Challenges and Good Practices
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Abstract
Supply chain integration involves the optimization of performance by enabling each party to focus on specific aspects of the supply chain thus enhancing collaboration. Developing the appropriate integration strategies is both problematic and difficult for firms due to challenges such as costs and complexities, organizational culture, supplier incompetence and poor data integration and management. However, these may be remedied through the use of interventions such as of customer relationship management, vendor managed inventory and distribution requirements planning that directly link producers, suppliers, sellers and clients in the supply chain.
Key Words: Supply chain integration, supply chain management
Supply Chain Integration: Challenges and Good Practices
Supply chain integration refers to the association or partnerships by suppliers and consumers of products. This enables the optimization of performance by enabling each party to focus on specific aspects of the supply chain, thus enhancing collaboration. Key functions must thus be appropriately applied using management skills, technology, and processes essential to the businesses (Bak, 2018). Ultimately, the goal of such integration lies in increasing the profits and reducing potential risks to the parties involved. While supply chain integration offers several solutions to underlying problems in industries, it still faces challenges that can be overcome.
Integration involves four levels, including the internal level, chain level, dyadic level, and network level. Firstly, the internal level involves only aspects or activities crucial to a company and are entirely internal. In contrast, the dyadic level involves two parties that usually conduct business together, such as suppliers and manufacturers. On the other hand, the chain level involves several dyadic levels of relationships that build up to form a larger one, while the network level involves several networks of activities conjoined to work together efficiently (Tozan & Ertьrk, 2015). These varying degrees of integration, both internally and externally, can thus be leveraged by companies to improve supply chain performance.
Internal Integration
Integrating the internal function of an organization plays an essential role in developing the appropriate tools to enhance the working environment. More so, organizations with a wide variety of functions, including manufacturing, storage, and sales, must work efficiently to meet their targets. For example, the internal supply chain involves the process of buying raw materials, producing goods, storing goods, moving goods, and eventually selling them to clients (Pakurбr et al., 2019). Traditionally, these functions are usually managed in isolation; hence creating a company-wide focus approach can create seamless integration, improving performance.
External Integration
Companies with external links that require a supply chain involve a number of parties. Therefore, such chains are prone to failure when a party fails to complete its part as set out in the agreement. In this case, integrating the supply chain enables raw materials to flow through the line to final product, allowing money to flow back into the chain, benefiting each party (Pakurбr et al., 2019). The individual links in the chain thus form essential parts of the entire external cooperation allowing value addition and increasing the potential for revenue generation. Seamless operations thus form a significant part of the integration processes allowing multiple functions across different tiers of the system.
Challenges in Supply Chain Integration
Supply chain integration involves numerous costs and complexities that are required to have a fully functioning system. As a result, such issues limit the ability of most firms to develop a fully integrated supply chain. These costs include investments in appropriate systems to aid in collecting and monitoring information among the involved parties, opportunity costs, time required to train and support staff during transition, and the cover for potential risks of stoppage in production (Shukor et al., 2021). Consequently, firms without adequate capital may not have the capabilities to implement such integration.
Apart from that, organizational culture plays an important role in ensuring that new processes can be accepted and integrated efficiently. However, the lack of an appropriate culture leads to inappropriate use of available systems to efficiently provide results, Employees without the requisite history and experience that could help propel the institution towards a better future can ultimately side-line the efforts put in place to introduce supply chain integration (Tozan & Ertьrk, 2015). Furthermore, experiences play a crucial role in determining the suitability of the implementation of inter-organizational activities hence aspects such as governance structure may negatively affect supply chain integration in cases where two firms have incom...