The Benefits of Integrated Supply Chain Management

Supply chain management is one of the more fundamental concepts within the big, wide world of logistics.

This term simply refers to the management and flow of goods from the point of order to the point of delivery. In order to run a successful operation, products and goods must be monitored throughout each step of this process. All of the operations put towards this oversight is known as supply chain management.

Although supply chains will vary in their complexity, the management of these processes can be grouped into a few common steps; strategic, operational, and tactical.

The strategic level deals with the building blocks of the supply chain such as selecting suppliers, manufacturing partners, warehouses, and more.

The tactical side of the process involves the scheduling and planning required to meet customer demand.

Lastly, at the operational level, plans are executed to the highest level of success possible. 

The Difficulties with Managing a Non-Integrated Supply Chain

A non-integrated supply chain is one in which none of the pieces of the supply chain communicate seamlessly with each other.

With so many moving parts, it can be difficult to properly manage a non-integrated supply chain.  Each of the processes involved in your supply chain must need independent management while still remaining cognizant of the entire operation.

Teams in charge of each role in the supply chain must make decisions on their end. However, this could end up having negative effects on those other roles in the supply chain.

For example, cutting costs in one role could inadvertently raise operational costs in another. Without an integrated system, it is much harder to make decisions and changes that benefit the operation overall without sacrificing downtime and delays.

The Benefits of Integrated Supply Chain Management

In response to the difficulties of managing a non-integrated system, many companies convert their operations into integrated supply chains.

The advantages that come with an integrated supply chain make it much easier to optimize overall performance. Below are two of the most apparent benefits of integrated supply chain management. However, this is not an exhaustive list. As always, we recommend that you do your own research and experimentation before making a final judgment call.

Increased Flexibility

Flexibility is crucial for any operation that wishes to remain competitive in their industry. Operating a non-integrated supply chain makes it nearly impossible to make those types of decisions on the fly without causing minor interruptions. With an integrated supply chain, companies have the ability to monitor every step of their operation. This makes it much easier to make fluid decisions on short notice without causing any disruptions.

Just-in-time distribution is a great example of what is possible with this extra flexibility.  Through this management strategy, companies can use just enough freight to meet their daily needs. This greatly reduces the amount of warehouse space needed for storage and can reduce operational costs. Without the flexibility afforded by an integrated supply chain, companies would have to rely on a just-in-case strategy instead. 

Waste Elimination

A majority of companies have a goal to limit, reduce, or eliminate some of their waste production. This motivation derives partially from a desire for saving money in the long run. However, most companies are simply trying to meet growing environmental regulations. Whether a company is trying to reduce its greenhouse gas emissions or plastic production, an integrated supply chain can help accomplish these goals.

With greater oversight and cohesion of your entire supply chain, reduction of waste is a piece of cake.

First and foremost, companies can save a significant amount of space in their warehouse with improved route management and organization. Trucks will be used more efficiently and deadhead miles greatly reduced. With a reduction in the time that a truck is empty, you've successfully eliminated unnecessary emissions and lowered the amount of warehouse space required for storage.

Final Thoughts

An integrated supply chain is a great way to increase the overall productivity and efficiency of your operations. With more organization, oversight, and predictability, a supply chain can be controlled much more meticulously. This integration will provide insight into areas that couldn't have been optimized so easily in the past. Instead of trying to improve a supply chain piece by piece, you can finally treat the entire operation as one entity.

Still need some help? Reach out to the team here at Redwood Logistics and let us help you start building a more integrated supply chain!