Supply chain management is evolving. No longer is it seen as a simple support function, but rather a competitive advantage for the companies utilizing the advancements in available technology. This new and innovative supply chain process centralizes procedures, data, and human assets to improve overall functionality.
As companies are looking for ways to improve efficiencies, productivity, and profitability throughout their organizations, an integrated supply chain management model might be just what they need.
The Integrated Supply Chain Management Model
Integrated supply chain management is the idea of centralizing supply chain activities rather than managing them at a division, team, or project basis. Centralizing the supply chain allows for activities and initiatives to flow through a central management process and lessens the manual and repetitive burden on individuals.
A decentralized supply chain requires multiple teams and individuals to communicate with the main supplier – this multiples the amount of communication and people involved in just one process. Not only is it time consuming, the number of extra steps in a decentralized supply chain leaves room for errors. Without one centralized location to house important data, there could be missing details or repeat purchasing due to the disconnection.
Centralizing the process can help eliminate unnecessary steps and procedures and make sure everyone associated with the project knows what is going on with the project from start to finish.
Reduce Organizational Waste
Identifying areas of waste within your organization and current processes can help to identify areas of improvement for employee efficiencies and productivity. Integrated supply chain management helps you implement a Lean work environment by improving and eliminating unnecessary and repetitive processes, such as data processing and inventory management.
A few common business areas of waste include:
- Ordering processes
- Inventory management
- Payment processing
- Transportation and logistics
Merging activities throughout your organization can help to better improve day-to-day processes and eliminate redundant steps. With technology advances in integrated supply chain management, you can easily consolidate the manual steps employees are spending their time on to allow for a shift in focus to better serve your goals.
Reduce Total Cost of Ownership
An integrated supply chain management system can help to reduce the total cost of ownership (TCO) associated with a process or asset. TCO is much more than just the cost of making a product. When calculating TCO, you have to consider all costs that are involved – from warehousing and inventory fees to the freight costs.
Removing and reducing these costs can help reduce the overall financial burden on an organization. Integrated supply chain management offers a variety of ways to reduce costs associated with TCO. Three of the most common reductions include: overhead activities, physical assets, and distribution abilities.
Overhead activities: By consolidating activities such as sourcing and ordering, you can eliminate and reallocate overhead costs. By assigning one person to handle the process and utilize integrated supply chain technology to manage the process, the other employees can shift their focus to a new task.
Physical assets: An integrated supply chain system will help to manage inventory and stock levels in one central location. This will reduce excess material ordering and ensure that products are restocked as needed.
Distribution abilities: To further enhance the integrated supply chain abilities, you can opt to partner with a distributor. By aiding in managing everything from inventory and material levels to delivery and logistics, partnering with a distributor can improve your supply chain process.
Integrated Supply Chain Management: The Future of Cost Savings
Reducing waste and costs within your business are just the start of the benefits offered by moving to an integrated supply chain management approach. As we continue to see improvements in technology and with more companies looking for a more centralized process, integrated supply chain management will continue to be a trending topic.
To stay ahead of the curve, now’s the time to understand the benefits, applications, and drawbacks to moving toward a more centralized supply chain process.