Supply Chain Management
Problems in non-integrated supply chains are legendary. Poor integration causes the classic boom-bust bullwhip of alternating excess inventory and stock-outs. Conversely, an integrated supply chain provides significant competitive advantage including the ability to outperform rivals on both price and delivery.
Although we've known about the theoretical benefits of supply chain integration for years, making it work in practice has been difficult. In pre-Internet days there were no satisfactory solutions to the trade-offs in supply chain integration between low cost, rich content, and long-distance using traditional supply chain management methods. EDI allowed expensive but limited exchange of content with remote partners, while just-in-time purchasing and vendor-managed
inventory provided lower cost yet rich connections with only nearby customers or suppliers.
Only recently has the Internet resolved these tradeoffs and afforded the potential to connect all supply chain partners. The most admired and feared companies today therefore have tightly integrated web-based supply chains. This broad upstream and downstream supply chain co-ordination using the Internet is what we call 'e-integration'. Real-time information travels immediately backwards though these supply chains and inventory flows swiftly forwards. Most importantly, products are delivered quickly and reliably when and where they are needed.
The more integrated the flow of data between customers and suppliers, the easier it becomes The more integrated the flow of data between customers and suppliers, the easier it becomes to balance supply and demand across the entire network. Where real-time demand information and inventory visibility were once impossible dreams, web-based technologies are now indispensable to demand forecasting, inventory planning, and customer relationship management. The game is therefore not only about synchronizing all actors and activities in the supply chain, but also about being driven by real-time demand information and thus being truly responsive to customers. This is why some observers are promoting the term demand chain management. Perhaps most importantly, this is not a passing fad like so many other trends of the past decade. Ever greater levels of e-integration will continue to be one of the most important strategic competitive weapons available to companies well into the foreseeable future.
