Supply Chain Integration

Topics: Supply chain management, Supply and demand, Marketing Pages: 4 (898 words) Published: May 19, 2013

Supply Chain Management revolve around efficient integration between suppliers, manufacturers, warehouses, and stores. The challenge is on how to coordinate all the activities, in order to: * Improve performance

* Reduce cost
* Increase service level
* Reduce Bullwhip effect
* Better utilise resources
* Respond effectively to changes in market places

Not merely coordinating production, transportation and inventory, but also integrate front end to back end of SC. Various SC integration strategies:
* Push, pull, push–pull strategy.
* Matching products and industries with supply chain strategies. * Demand-driven supply chain strategies.
* The impact of the Internet on supply chain integration.

Push-Based SC

* Production and distribution decisions based on long-term forecasts. * Manufacturer demand forecasts based on orders received from the retailer’s warehouses., leading to: * Longer reaction time to changing marketplace

* Inability to meet changing demand patterns.
* Obsolescence of supply chain inventory as demand for certain products disappears. *
* Variability of orders received from retailers and suppliers are much larger than the variability in customer demand due to the bullwhip effect, this leads to: * Excessive inventories due to the need for large safety stocks * Larger and more variable production batches

* Unacceptable service levels
* Product obsolescence

* Bullwhip effect: occurs when the demand order variabilities in the supply chain are amplified as they moved up the supply chain , will leads to inefficient resource utilization because planning and managing are much more difficult.

* Push Based SC usually results in:
* Higher transportation costs
* Higher inventory levels and/or higher manufacturing costs * More emergency production changeovers

Pull- Based...
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