PART 5—LOOKING TO THE FUTURE
Chapter 16—SUPPLY CHAIN PROCESS INTEGRATION AND A LOOK TOWARDS THE FUTURE
For those for whom integration is not happening, the future is bleak and getting darker.1
There is a lot of value that is “trapped” between the processes trading partners use to transact business, and when companies work together, they can unlock that value and share its benefits.2
After completing this chapter, you should be able to:
Discuss and compare internal and external process integration. Discuss the requirements for achieving process integration.
Describe the barriers to internal and external process integration, and what can be done to overcome them. Understand the importance of performance measurements in achieving internal and external process integration. Understand why it is important to align supply chain strategies with internal process strategies. List and describe the eight key supply chain processes, and how trading partners integrate these processes. Discuss a number of the latest trends in the areas of process management and process integration. CHAPTER OUTLINE
Achieving Internal Process Integration
Extending Integration to Supply Chain Trading Partners
A Look at Trends and Developments in Integration and Process Management PROCESS MANAGEMENT IN ACTION—An Interview with Zack Noshirwani, Vice President of Integrated Supply Chain for Raytheon
The Raytheon Company is a major defense contractor; its major customer is the U.S. Department of Defense. Mr. Zack Noshirwani, vice president of integrated supply chain, joined Raytheon in 2001, and prior to his current post served as vice president for operations for both the Air/Missile Defense Systems and for Integrated Defense Systems. Previously, he worked in operations and supply chain capacities with Honeywell Engines and Systems, Allied Systems, and Lockheed Martin Defense Systems. Q: How is operating a supply chain different when the Department of Defense is your major customer? Noshirwani: We need to adapt to the changing customer first. The focus within DOD has shifted from products to capabilities. And, second, they have raised the awareness of mission assurance within the defense business generally and the missile defense business, in particular. Within Raytheon, Bill Swanson, our CEO, has said we are going to take mission assurance to the next level across all our businesses. Putting that together, the challenge we have is: How do you make our supply base aware of our new expectations; and, what do mission assurance and our new business strategy mean to us? That change forces us to look at the historical supply chain in a different set of paradigms. Q: What was the shift of objectives?
Noshirwani: We went from operating traditional purchasing and supply chain organizations to what we today call an integrated supply chain. With that, we intend to link our engineering groups and our performance excellence groups with our supplier base as early as we can in the process when building relationships with our suppliers. We need our suppliers to be an extension of ourselves. The old routine, when dealing with our suppliers was focused on costs, quality, and schedule. Lack of performance in these categories generally provided a stressful exchange. That has changed. Now, it’s going to be more collaborative. We’ll be working together so that we’re building the right stuff on time, correct the first time. There can’t be three iterations before we get it out the door. Q: How do you do that? What is the task?
Noshirwani: One key thing: We used to be a very tactically oriented organization; we’re now shifting to become more strategic. For example, we are organizing more supplier conferences at which we can establish expectations with our supply base. This past June, we had 67 of our key suppliers participating in a supplier forum. The theme of the event, “Performance Matters,” focused on how mission...
References: Croxton, K., S. Garcia-Dastugue, and D. Lambert, “The Supply Chain Management Processes,” The International Journal of Logistics Management, V. 12, No. 2, 2001, pp. 13–36.
Daft, R., and D. Marcic (1998), Understanding Management, Harcourt Brace & Company, Orlando, FL.
Wisner, J., G. Leong, and K. Tan (2005), “Principles of Supply Chain Management: A Balanced Approach,” South-Western, Mason, OH.
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