How Supply Chain Integration Can Benefit Organizations of All Sizes and Types Essay

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Supply chain integration has become the focus of a growing body of research in recent years, a trend that can help fill the gaps in the body of knowledge about what critical success factors characterize fully integrated supply chains and how organizations can leverage this process to achieve and sustain a competitive advantage. It is important to note, though, that there is no universally accepted definition of supply chain integration nor is there a consensus concerning the types of outcomes that can be achieved using this supply chain management approach. This paper provides a review of the relevant peer-reviewed and scholarly research concerning supply chain integration, including a definition and overview of the process, a discussion of some real-world examples of supply chain integration in action and a summary of the research and important findings concerning supply chain integration in the conclusion.

Developing and Maintaining Effective Supply Chain Integration Practices

Today, there is growing recognition that supply chain integration represents a valuable and timely enterprise for companies of all sizes and types because of the efficiencies the process provides as well as the ability of the process to identify constraints in the supply chain as well as other opportunities to eliminate waste and delay. By fully integrating a supply chain, companies can achieve and sustain a competitive advantage over their counterparts that do not, but the process is not without its challenges. To determine the facts, this paper reviews the relevant literature concerning supply chain integration, including a definition and overview of the process, followed by a discussion of some real-world examples of supply chain integration in action. Finally, a summary of the research and important findings concerning supply chain integration are presented in the conclusion.

Review and Analysis

The value of an integrated supply chain has been well documented in the supply chain management research (Amue & Ozuru, 2014). For example, Thun (2010) reports that, "Cooperative relationships between the firms within a supply chain can be regarded as the foundation for every effort in supply chain management. A firm can realize cooperation by integrating and collaborating with its supply chain interfaces, that is those with its own suppliers and customers" (p. 31). To date, however, there has been no universally accepted definition of the process (Lummus & Vokurka, 2008).

Some indication of what the process involves can be discerned, though, from the various definitions contained in the supply chain integration literature. For instance, according to the definition provided by Amue and Ozuru, supply chain integration is "the integration on information, knowledge, processes and through which different functions within and outside of the sector can work together to enhance the level of efficiency as well as reduce the cost of operation to increase organizational effectiveness" (2014, p. 128).

By contrast, Afshan (2013) describes the supply chain integration process in terms of its ability to identify constraints and opportunities for improving the supply chain management process. In this regard, Afshan defines supply chain integration as being an "attempt to elevate the linkages within each component of the chain, to facilitate better decision making and to get all the pieces of the chain to interact in a more efficient way and thus create supply chain visibility and identify bottlenecks" (2013, p. 323). Finally, Lummus and Vokurka (2008) offer a fairly straightforward definition of the supply chain integration process as follows: "[Supply chain] integration is a process of interaction and collaboration in which manufacturing, purchasing, and logistics work together in a cooperative manner to arrive at mutually acceptable outcomes for their organizations" (p. 58).

The concept of supply chain integration also includes the elements of "supply chain collaboration" and "supply chain coordination" (Leuschner & Rogers, 2013). In this context, the term "supply chain collaboration" is used to refer to the supply chain process that "begins with customers and extends back through the firm" (Leuschner & Rogers, 2013, p. 35). By contrast, the term "supply chain coordination" is used to describe "the forward physical flow of deliveries and the backward coordination of information technology," making these two elements fundamental aspects of supply chain integration (Leuschner & Rogers, 2013).

Although the definitions vary, the supply chain integration process can be conceptualized graphically as shown in Figure 1 below.

Figure 1. A representative integrated supply chain

Source: http://image.slidesharecdn.com/ch15mod-140109094438-phpapp02/95/market-logistics-supply-chain-management-13-638.jpg?cb=1389260807

Irrespective of its precise definition, an overarching theme that quickly emerges from the supply chain integration literature concerns the numerous benefits that can accrue to the integration of supply chains.

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It is noteworthy, though, that the research to date concerning supply chain integration has identified mixed outcomes concerning its impact on organizational performance. In this regard, Leuschner and Rogers (2013) report that, "Until now, only a few qualitative reviews of the supply chain integration literature can be found. While such studies have a substantial contribution to the field, they do have inherent drawbacks because it is challenging to objectively tie together primary research" (p. 35).

A summary of the research concerning supply chain integration is provided in Table 1 below.

Table 1

Summary of the results of supply chain integration research to date

Research Focus and Theme

Type of Studies

Number of Studies and Date Range

Positive relationship between supply chain integration and firm performance

Empirical

10 (2001-2011)

Negative relationship between supply chain integration and firm performance

Empirical

5 (2001-2006)

Investigations of antecedent and barriers to supply chain integration

Conceptual

3 (2004-2008)

Investigations of mediators and moderators in the relationship between supply chain integration and firm performance

Empirical

11 (2001-2012)

Source: Adapted from Afshan, 2013, p. 323

As can be seen from the breakdown of research set forth in Table 1 above, not only has there been a relative paucity of timely and relevant research concerning supply chain integration, the results of the research to date have been mixed, with many researchers failing to identify a relationship between supply chain integration and improved firm performance while others found the opposite. More troubling still is the dearth of relevant research concerning those critical success factors that characterize optimal supply chain integration practices.

Notwithstanding the mixed findings that have emerged from the supply chain integration research to date, many researchers have identified substantial benefits that are associated with an integrated supply chain. For example, based on their analysis of the impact of supply chain integration on firm performance, Lummus and Vokurka (2008) identified the following key improvements in organizational performance among companies using this approach:

Reduced production costs;

Lowered total product costs;

Reduced supply chain costs;

Improved order fulfillment;

Increased reliability in deliveries promised;

Flexibility to change output volume and product mix; and,

Reduced manufacturing throughput time.

All of the foregoing outcomes can be further enhanced by the use of supply chain information technologies, especially for multinational organizations with far-flung supply chain partners. In this regard, Kutner (2009) points out that, "Supply chain integration is made possible by the electronic business, or e-business, and Internet revolution. Electronic data interchange allows both the public and private sectors to make business transactions online and ultimately reduce customer wait times" (p. 53). The use of information technologies can also streamline the supply chain in other ways as well that serve to integrate the process. For instance, Thun (2010) reports that, "Internet-based applications foster supply chain integration by enhancing the efficiency of information transfer, the timeliness of information availability and the openness and transparency of relevant business information" (p. 31). It is important to point out, though, that it is difficult or even impossible to achieve effective supply chain integration without already having established effective relationships with supply chain partners (Thun, 2010).

In addition, it is also important to note that in order for supply chains to achieve successful integration outcomes, the process must be monitored and evaluated for effectiveness. For example, Swamidass (2002) cites the need for the following types of performance measures to be implemented as part of any supply chain integration initiative because they:

Provide insight into the real needs of important customers;

Yield understanding regarding the value-added capability of supply chain members;

Influence behavior throughout the supply chain; and,

Provide information regarding the results of supply chain activities (Swamidass, 2002, p. 338).

Despite the mixed findings from relevant literature to date, the results of a more recent study by Leuschner and Rogers (2013) concerning the effects of the process on real-world companies found that supply chain integration has a positive impact on organizational performance. Likewise, Swamidass (2002) identified the positive effects of an integrate supply chain on firm performance. In this regard, Swamidass concludes that, "Overall, an increasing number of today's firms appear to recognize the importance of performance measurement and have actively sought to enhance their ability to use measurement to direct and mold their supply chain integration efforts" (p. 338).

Moreover, there are some real-world examples of how the process can benefit public and private sector organizations (Lummus & Vokurka, 2008). For instance, Kutner (2009).....

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