-Supply chains

-Supply chain management

-Supply chain integration

[SLIDE 1]

To compete in a modern world that involves the internet and ecommerce, and where production is often global, companies must focus on supply chains. In the mass product era, products were pushed at consumers, but today consumers are pulling and the ability to adapt the full supply chain to support that demand is critical.

Supply Chain

The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics function

Supply Chain Management

A management system that coordinates and integrates all the activities performed by the supply chain members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value

Supply Chain Agility

An operational strategy focused on creating inventory velocity and operational flexibility simultaneously in the supply chain.


Agile companies can quickly communicate up the supply chain so that changes in demand can rapidly be reflected in supply. Even more importantly, predictive analysis can help modify the supply chain before the demand changes to ensure that the supply does meet demand. For instance, Butterball has begun shipping cases of turkey meat to a central distribution center in advance of customer demand.

[SLIDE 2]

The supply chain is critical to performance. Walmart grew to its global status, in large part, by focusing on having an extremely efficient supply chain that controlled costs.

The supply chain provides a key method of differentiation for firms, providing the following benefits:

-Lower inventory, transportation, warehousing and packaging costs

-Greater logistical flexibility

-Improved customer service

-Higher revenues

Air conditioner manufacturer Lennox International, for many years, shipped all products out of two centralized warehouses. That led to long wait times as they grew. By decentralizing to 19 distribution centers around the world, Lennox reduced average customer wait times to less than two days. One way customer satisfaction was indicated was by the 25% market share growth and higher company value.

[SLIDE 3]

Supply chain integration is the ability to improve efficiency for companies in the supply chain that are working together. That is achieved through a supply chain orientation: a system of management practices that are consistent with a “systems thinking” approach.

Leading supply chain-oriented firms, such as Amazon, McDonald’s, and Unilever, share five characteristics:

-Credible: They have the capability to deliver on the promises they make.

-Benevolent: They are willing to accept short-term risks on behalf of others, are committed to others, and invest in other’s success.

-Cooperative: They work with rather than against their partners when seeking to achieve goals.

-Top management support: Management possess the vision required to support the entire supply chain.

-Effective: They conduct and direct effective supply chain activities.

The result is that they have long-run financial performance that is better than those of competitors who are not as focused or successful at implementing strong supply chains.

[SLIDE 4]

Demand-supply integration (DSI) is an operational philosophy focused on integrating the supply management and demand-generating functions of an organization. The goal is to have all departments, whether demand (marketing, sales, R&D) or supply (purchasing, logistics, manufacturing) communicate regularly in order to better support a marketing mix that matches real world demand.

The result of the DSI philosophy is a company that can deliver to the market what has been promised and can ensure that raw materials directly lead to sales.

[SLIDE 5]

As has been noted, a supply chain is made up of multiple companies. As each has its own markets and stakeholders, the supply chain challenge is to get multiple companies to work towards a common goal.

There are five types of external integration sought by firms working to provide top-level service to customers:

-Relationship: Two or more companies develop social connections that serve to guide their interactions.

-Measurement: Performance assessments should be transparent and measurable across the firms.

-Technology and planning: The creation and maintenance of information technology systems that connect firms in the supply chain.

-Material and service supplier: Work with materials and service providers to create a common vision of the total value created.

-Customer: Offer long-lasting, distinctive, value added offerings to those customer who represent the greatest value to the firm and supply chain.

Highly-integrated supply chains have been shown to be better at satisfying customers, managing costs, delivering high-quality products, enhancing productivity, and utilizing company or business unit assets.