4 Compelling Reasons Why Supply Chain Integration is Important
Supply chain integration refers to the use of shared management information systems for closely aligning and coordinating activities within a supply chain. More and more companies are now looking at adopting supply chain integration to keep up with slimming margins, increasing competition, and a decreasing amount of differentiation between brands. Integrated supply chain solutions help companies to compete better on cost, by eliminating wasted time and materials. They also allow for shorter life cycles by having fewer links in the supply chain from back to front, and tighter coordination between delivery, warehousing, and transportation.
Key benefits of supply chain integration
Better demand prediction
supply chain integration solutions help companies to better predict customer demand and align their strategies accordingly. Organizations that have a global supply chain must be capable of accommodating shorter product life cycles, emerging markets, and fluctuating economies. Having an integrated supply chain ensures that the business is adequately responding to the changes in demand and other market trends.
This is one of the key perks that companies gain by adopting supply chain integration. Flexibility is the end result of integrating all of a business’s functions. It acts as a catalyst for the management to gain operational flexibility and respond rapidly to external events, including the actions of competitors and changes in customer demands. It also helps organizations to gather intelligence through their supply chains, allowing them to be aware of what their competitors are up to and plan their strategies accordingly.
Elimination of wastage
Organizations often face difficulty in successfully maintaining a sustainable supply chain. However, companies can overcome this problem by incorporating lean practices which help identify and eliminate waste in the supply chain. This also helps them gain increased agility which allows organizations to respond effectively to unpredictability. So, it is ideal for companies to have a combination of agile and lean supply chain practices. In order to ensure that the supply chain is sustainable and successful in the long term, it is advisable for businesses to integrate data from across operations in the organization.
Higher profit margin
When the supply chain of a company functions smoothly, it’s easier for them to maintain and even increase their revenue, resulting in higher profit margins. Companies can ensure an innovative and collaborative supply chain by using product and portfolio management software and SCM solutions. This will help them produce and deliver products at a much faster, more successful rate, consequently resulting in higher profit margins.