The supply chain management is the important aspect behind the success of the business as it affects several other operation activities (Buurman, 2002). The current essay critical evaluates one of four practices covered in study of Soares, Soltani and Liao (2017). These practices are customer focus, supplier focus, Supply Chain Integration (SCI) and leadership. In this regard, supply chain integration practice has selected and critically evaluated by referring related studies and frameworks. This study proves SCI is highly required for enhancing the company’s control over the processes of supply chain management.
There are several drivers of SCI including increasing global competition, uncertainties associated with the demand and supply, rapid changes in technology and novel opportunities in the market (Lummus & Vokurka, 1999). In this context, Chen & Paulraj (2004) asserted that uncertainty with the demand affects the organizational performance to a great extent because of huge loss of excess stock or stock out. It is also because of the uncertain supply of raw material wherein companies suffer from poor integration with the key partners. In this context, Prajogo & Olhager (2012) technological innovation can be used by businesses so as to ensure better connectivity with suppliers, customers and other mediators to maintain integrated supply chain. However, Fletcher and Wright (1996) argued that it is not necessary that every business is capable of understanding the suitable IT system for SCM. For this purpose, Rai, Patnayakuni & Seth (2006, p.225) management of the businesses needs to focus on the integrated IT infrastructure so that it can create the process capabilities for the collaboration of resources flow among supply chain partners and firm. Therefore, SCI is imperative for enhancing the capability of the business to cater requirement of customers and provide the right products and services as per their requirement. For example, in the case of Wal-Mart, it uses advanced IT infrastructure for information sharing with other strategic partners like Proctor and Gamble (Attaran, 2007). This facilitates corporation to integrate all related resources so as to accomplish long as well as short term objectives.
According to Buurman (2002) supply chain includes activities as purchase goods, transportation of product and manufacturing process. They also stated that the coordination between these activities is known as supply chain integration. In this regard, Stevens (1989) asserted that SCI is integration of all process which starts from raw material to finished product to the customers. They also mentioned that supply chain integration is combination of all the phase starting from purchasing of raw material to deliver at manufacturing company for production then quality control and packaging further distribution to retail or other seller companies to offer streamline delivery to end user. This way, it frames the integrated system for the effective management of products and services in an organization so as to enhance the customers satisfaction to a great extent.
Many companies apply forward integration for effective control over the supply chain and quality of products (Fawcett & Magnan, 2002). In this context, Soares, Soltani & Liao (2017) asserted that SCI takes positive part to reach the superior performance of organization. Thus, controlling all the phase of supply chain SCI increases the firm’ performance. On the contrary, Simchi-Levi Kaminsky, Simchi-Levi & Shankar (2008) argued that supply chain integration has some complexity in terms of trust, long lead time and cost comparisons. Similarly, Lee, Padmanabhan & Whang (1997) asserted that information transfer in supply chain from the lower stream to upstream is important for taking the crucial decision related to inventory management. However, Scholtz (2004) argued that supply chain management performance is highly affected by the supplier chain integration in the context of supplier commitment, trust and coercive power. Therefore, it is most effective for controlling whole supply chain activities and increase firms’ performance by enhancing synergy and competitive advantages.
According to Prajogo (2006), it is important for firm to focus on innovation aspect of product development because it attracts customer for frequent buying. In this regard, Rai & et al (2006) asserted that SCI creates systematic communication between organization, supplier and buyer. This helps firms to understand customer requirement and forward the same to supplier. This helps company to improve their product by bringing certain level of innovation and fulfill customers’ need. In this context, Homburg & Stock (2004) asserted that customer integration involves improving the standard of product and create them valuable and more innovative. They also stated that customer integration solves the problem of salesperson and customer satisfaction. Therefore, SCI helps to point out the changes in customer demand in the market and find the way in which company can effectively increase the satisfaction level of buyers. Similarly, Soosay, Hyland & Ferrer (2008) explained that SCI helps company to focus on such factors which enhance its financial output through consistency in production. Therefore, SCI is helpful for organizing all the implementations of the supply chain and made them advanced to give a better result.
According to Stevenson & Spring (2007) company faces some issue in inventory like stock-out or over-stock due to bad inventory management. It affects firm in terms of increasing customer switching. Thus, it is important for the company to manage their storehouse and avoid these circumstances. In this regard, Toivo (2010) stated that SCI prevents to the issue of stock-out through free-flow of communication and better coordination between supplier and firm. These resulted quick respons and companies can effectively get the stock on the basis of requirement. At the same, Yao, Evers & Dresner (2007) also asserted that SCI helps a company for better optimization of inventory. For example, Zara makes their inventory to lean with the help of better integration of supply chain. It has lead of two weeks but still customers do not face issue of stock out and get the desired products every time (Gorrepati, 2016). Therefore, SCI helps organization for managing their warehouse effectively from well-balanced stocks. It is helpful for customers, suppliers and company itself because the issues related to excess stock and stock out are reduced to a great extent.
According to Toivo (2010), SCI assists to decline the cost of production by applying several techniques in SC, e.g. fleet truck. At the same, Fisher, Hammond, Obermeyer & Raman (1997) asserted that effective integration of SC has reduced the cost of transportation and avoid that frills which increase the delay in process. They also mentioned that SCI route management decreases the hazard emission in environment and does financial saving also. Similarly, Narasimhan & Kim (2001) asserted that internal integration of SCI leads to decrease the cost of the product through increased visibility of extensive information in SC. They also asserted that it contributes in gaining competitive advantages. In this context, Walton, Handfield & Melnyk (1998, p.2) asserted that the involvement of suppliers in the SC help in addressing the environmental issues and assist business in maintaining the eco-friendly supply chain. Therefore, SCI helps in cost reduction through the proper management of routes and contribution to environment protection
Braunscheidel, Suresh & Boisnier (2010) stated that firm’ culture has major impact on SCI because it leads management practices and these management practices are connected to the supply chain. Similarly, organizational culture plays important role in SCI by affecting operational performance (Anjum, Kashif & Riaz 2016; Diaconu & Alpopi 2014). Therefore, company’s culture influences the operations of SCI. In this context, Chen, Daugherty & Landry (2009) asserted that for enhancing quality collaboration between the departments, the internal integration of SC is required. In this context, Cao & Zhang (2011) mentioned that supply chain integration helps in maintaining the collaborative culture through which company stimulates business performance. Thus, inappropriate culture creates obstacles for integration of the supply chain and affects its performance because non-cooperative management does not take part in SCI.
Tse & Tan (2011) stated that the product quality is a major issue in the supply chain because if it compromises with quality then customer satisfaction gets affected to a great extent. However, the quality related issues again have impact on the brand image of the business. For example, horsemeat scandal of Tesco affected its brand image to a great extent because suppliers mixed beef with horse in burger (Lawrence, 2013). This reflects company did have integrated supply because and accordingly control on suppliers was also poor. In this context, Kannan & Tan (2005) asserted that SCI enhances the product quality because integration with suppliers enables company to inspect the quality, ensure that it is best suitable on the basis of requirement of buyers. Similarly, Soares & et al, (2017) asserted quality management is possible with the help of integrated supply chain whereby companies get all the issues resolved with the interconnected department. Thus, quality management is important aspect for organizations to maintain their good brand image for which SCI contributes to a great extent.
At the same, Kroll, Wright & Heiens (1999) mentioned that product suality plays a vital role in creating competitive advantages. By offering quality product to the customer, company gain customer retention. Thus, it has positive impact on firms’ performance. In this context Li, Ragu-Nathan, Ragu-Nathan, & Rao (2006) asserted that SCI increase competitive advantages for a company through providing consumers with better quality product and services. Similarly, Ellram (1991) stated that SCM is combinations of many routes of obligation contract which gives protection from competitive hazards and enhances competitive advantages. Therefore, supply chain integration is helpful aspect for the competitive edge of the business because through this, company ensures better productivity with the related parties including supplier, manufacturer and others.
Conclusion:
The essay concludes that that SCI is helpful for organization in increasing coordination of every supply chain’s activities as it promotes centralized control and enhances collaboration among supply chain partners. It can also be concluded that SCI facilitates in easy handling of inventory and enhances the production, quality and services through innovation and technical aspect. Apart from this, integrated supply chain proves to be effective in increasing brand image and increase the retention rate of buyers. Thus, an organization can improve their supply chain by implementing SCI in management practices.
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