Operations and Supply Chain

Management

Dr. Muhammad Saeed Shahbaz

Master in Business Administration

(Executive) (66) 3A and 6 A
 Supply Chain Integration
Supply chain integration: the degree to which an
organization strategically collaborates with its supply chain
partners and manages intra-organization and inter-organization
processes in order to achieve effective and efficient flows of
products and services, information, money, and decisions with
the objective of providing the maximum value to the customer
at low cost and high speed.

High visibility
Lower inventory
High capacity utilization
Short lead-time
High product quality (low defect rate).
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 Difference between integration
and collaboration

Supply Chain Collaboration: an activity pursued jointly

by two or more entities to achieve a common objective.
It can mean anything from exchanging raw data by the
most basic means, to the periodic sharing of information
through technology-based tools, to the structuring of real
time architectures capable of leveraging highly
interdependent infrastructures in the pursuit of complex,
tightly integrated functions ensuring planning, execution,
and information synchronization.
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 Types of Supply Chain Integration

1. Information sharing
• Supplier’s Integration
2. Joint decision making
• Internal Integration 3. Joint knowledge creation
• Customer’s Integration 4. Resource sharing
5. Risk and reward sharing

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Supplier’s Integration
• Sharing information with supplier
• Participating in the sourcing decision
• Establish common goals with supplier
• Supplier evaluation
• Performance metrics are shared
• Joint decision to improve cost efficiency

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Internal Integration
• Sharing information across departments
• Sharing common vision
• Effective communication within the firm
• Sharing Resources
• Conduct joint planning for problem-solving
• Establish joint objectives
• Utilization of cross-functional work teams for
managing daily operations

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Customer’s Integration
• Sharing information with customer
• Establish common goals with customer
• Establish long-term relationship
• Performance metrics are shared
• Follow-up for customer feedback
• Joint decision to improve cost efficiency

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 Arc of Integration
There is no supply chain that is strictly 100% integrated,
nor any one that is strictly 0% integrated. It is about how
much the supply chain is integrated from a focal
company’s point of view.

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Inward-Facing
• Low supplier integration
• Lower Customer integration
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Periphery-Facing
• Above lower Quartile for supplier or Customer
• Below Upper Quartile for Supplier or Customer
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Supplier-Facing
• Upper Quartile for supplier
• Lower Quartile for Customer
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Customer-Facing
• Upper Quartile for Customers
• Lower Quartile for Suppliers
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Outward-Facing
• Upper Quartile for Customers
• Upper Quartile for Suppliers
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Obstacles to Supply Chain Integration
• Silo mentality
Failing to see the big picture and acting only in regard to a single
department within the firm or a single firm within the supply
chain.
• Lack of supply chain visibility
The inability to easily share or retrieve trading partner
information in real time, as desired by the supply chain
participants.
• Lack of trust
Unwillingness to work together or share information because of
the fear that the other party will take advantage of them or use the
information unethically.
• Lack of knowledge
Lack of process and information system skills and lack of
knowledge regarding the benefits of SCM among management 14
and other employees, within the firm and among partners.
Obstacles to Supply Chain Integration

Activities causing the bullwhip effect:

Demand forecast updating
Using varying customer orders to create and update forecasts, production
schedules and purchase requirements.
Order batching
Making large orders for goods from suppliers on an infrequent basis to reduce
order and transportation costs.
Price fluctuations
Offering price discounts to buyers, causing erratic buying patterns.
Rationing and shortage gaming
Allocating short product supplies to buyers, causing buyers to increase future
orders beyond what they really need.

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Thank you very much

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