Integration in the supply chain

All of these principles involve integration - both internal and external. Integration in the context of the supply chain is concerned with coordination establishing the rules of the road whereby material and information flows work in practice. 

Evidence that improved integration (both upstream and downstream) leads to improved performance for the supply chain as a whole has been found by survey research for firms in fabricated metal products, machinery and equipment manufacturing (Frohlich and Westbrook, 2001). Integration was measured across eight variables as follows  

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Frohlich, M. T (2002). E-integration in the supply chain Barriers and performance. Decision Sciences, 33(4), 537-555. 

Devara], S., Krajewski, L. and Wei, J.C. 2007. Impact of eBusiness technologies on operational performance the role of production information integration in the supply chain. Journal of Operations Management, 25, 1199-1216. 

What is the purpose of integration in the supply chain, and why should it lead to value-added from the end-customer perspective ... 

Commodity-oriented models focus more on the market interfaces in sales and procurement and consider less complexity in the supply chain determining volumes and values in the value chain integration with production planning and chemical-specifics often not modeled... 

This comprehensive approach allows for efficient integration between processes, different phases of product life cycle, and integration between different sites in the supply chain. This integration provides opportunity for efficiency in that process owners are integrated with each other s needs and expectations. Duplication of effort is avoided and efficiencies gained. Quality outputs from one process become reliable inputs into the next process. Management and leadership will have access and insight into compliance, infrastructure, and performance metrics of all processes on a comparable basis. This provides leadership the opportunity for risk-based resource allocation to appropriate areas of the enterprise. 

Regulators and customers require assurance in consistency of pharmaceutical and biopharmaceutical manufacturing operations. Today s manufacturing supply chains require multiple sites in varying locations to produce a product. Quality systems must be perceived as an integral part of the value chain. This requires that all sites be compliant in their operations and systems. Strong areas in one location do not make up for weak or absent systems in another location. Fines are levied and business is made or lost based on the individual site or weakest link in the supply chain. Management must have a mechanism to measure its processes, and a comprehensive QMS is the mechanism to demonstrate capability. 

In the pharmaceutical industry, distributors fall under intense scrutiny, as critical players in the supply chain. From the early development of many drug products to production and commercialization, distributors are integral parts of the entire process— supplying equipment, active pharmaceutical ingredients (APIs), and excipients—the focus of this chapter. 

Focus groups will be conducted In the next wave of interviews to investigate the modes in which actors are integrated into the supply chain, in order to devise new development strategies and scenarios. 

Supply chains that burst to many tier 1 customers/suppliers will strain corporate resources and limit the number of process links the focal company can integrate and closely manage beyond tier 1. In general, managers in companies with immediately wide vertical structures actively manage only a few tier 2 customers or suppliers. Some companies have transferred servicing small customers to distributors, thus moving the small customers farther down in the supply chain from the focal company. This principle, known as functional spin-off, is described in the channels literature (Stem et al. 1996) and can be applied to the focal company s network of suppliers as well as to its customers. 

Mastery of these four logistic drivers ensures optimum customer service without out-of-stocks or overstocks under the best economic, social and environmental terms. It requires a structure, an organization and a process to be set up plus an integrated cross-cutting information system as demonstrated in the Supply Chain Wheel (Figure 4.6). 

The retail environment continues to increase in competitiveness, offering new formats such as e-retailing and mass customization. As competition increase, pressures for increased in stock without the corresponding increased prices have created the need for careful integration of the supply chain operation with the marketing divisions. 

The major focus in the supply chain is to increase operational efficiency in each functional process, but not in an integrated way (e.g., functional optimization instead of supply chain optimization). 

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