SCM's purpose is to create value for end customers and businesses in the supply chain network. Process integration requires organizations to implement process activities both internally and with other companies. Process integration is a difficult process that necessitates readiness and training, as well as skilled and committed corporate partners and maybe cultural changes. The benefits of association and knowledge sharing can be significant.
When information obtained via process integration is re-entered several times yet is not available in real time, silos inhibit this process. For efficient implementation, process integration relies on real-time updates. In silo environment, relevant information is not generated from the various pockets of an organization. This hampers decision making as the involved parties are underinformed. Also In a silo environment, few selected employees have access to information. Other parties including employees, partners, suppliers, and customers depend on few individuals to provide solutions to issues.
Internal and External integration
Increased internal integration leads to a high external combination. Therefore, domestic integration should come first. Internal integration practices affect the level of international integration as displayed by supplier product integrations, supplier process integration, and customer integration. The external combination, on the other hand, influences modest abilities like product improvement performance and quality performance.
Importance of ERP system for both internal and external integration
Most companies apply enterprise resource planning systems. Due to its integrated network, ERP can manage both national and internal integration. Importances of ERP include the following;
Wide coverage
The unified system architecture is the main component of ERP. The combination consents a corporation to apply the same scheme in many topographies. For example, an organization that employs ERP scheme can have consumer service epicenter in Texas, a silo in Houston and the central office in Baltimore. All these places see and apply same information despite their geographical locations. ERP removes the requirement for keeping redundant information in many physical sites. It also eradicates the need for each area to upload information to dominant storage sites.
Increased productivity
ERP system increase output which assimilates information and processes across many places. It permits an organization to process orders quickly; invoice customers fast, settle shipment sooner and move products faster.
Efficient Cash cycle
ERP decrease the command to cash sequence because they integrate all features of a firm's operations. The speed of order-to-cash cycle control how soon a company is paid for the properties and services after sales. Naturally, organizations with quick order-to-cash cycles get increase cash flow. Non-integrated software system mostly needs many information extracts from different spreadsheets programs. These breaches in data flow cause sluggish response since the order is received and the time payments paid by the customer. The more prolonged the client earnings to emolument, the more money a company has outstanding which leads to less cash flow.
Quick and effective information access
ERP organizations allow firms to access data quickly regardless of the physical location or branches involved. Formerly, data found with other systems then compiled to a single report, or it is stored on a computer in a different location. The report also tends to be more accurate and relevant due to it comes from the same source. Generating time is made more sensitive, updated information which is user-friendly because ERP provides companies with several reporting tools.
Reliable information storage
Although employing ERP structure does not give a company instant benefits, most ERP system pursues to update business operations by integrating the information and refining the process needed to operate the company. It provided the relevant information needed at that time using queries and filtering techniques. Most organizations that apply an ERP organization learn their corporation has much useful storage power (Hamlett, 2017).
Bullwhip effect
Bullwhip effect is a distribution channel occurrence in which forecasts produce supply chain inadequacies. It refers to aggregating strikes in inventory due to shifts in customers' demands as they increase the supply chain (Wisner, Tan, K.-C, & Leong, 2015). The Bullwhip Effect in Supply Chain
Impacts of bullwhip in supply chain integration
Bullwhip effect improves the supply chain beginning from the vendor, trader, supplier, producer and raw material trader. It helps in the following:
Forecasting errors
Companies approximate the demand for the goods when they enter new products into the market based on existing market conditions. Most of them command more than they can trade, try to avoid scarcities and reduce the sale of properties. This additional measure may raise or lower during normal market variations of supply and demand.
Behavioral causes
Front-end companies of the supply chain are affected by management of behavior which leads to bullwhip effect. Retail management dislikes having stock-out on general good resulting in high demand from wholesalers. This idea finally congests every company in the supply chain and lowers inventory.
Operational causes
The primary functional purpose of bullwhip outcome results from single request estimates from every business in the supply chain. This results in a high ultimatum from corporations but not real customers who will buy the goods. The absence of statement is also predominant for effective reasons. Firms may not source data concerning present market conditions causing inappropriate levels of inventory (Vitez, n.d.).
Corrective measures
Applying a point-of-sale with just-in-time inventory system will manage the variations in consumer demand. This strategy consents every firm in the supply chain to develop data electronically concerning personal goods. Considering consumer demand can be assessed based on the order info from the POS system and lets managers to order more products if required.
Risk and security management in supply chain
Risk management in the supply chain is the harmonized organization's efforts which recognize monitors, detects, and lessen extortions to supply chain continuity and profitability. On the other hand, security management is a system that brings together traditional supply chain management practices with security actions enabling a company to protect their business against pressure like terrorism, piracy, and theft.
While both risk management and security management are essential, risk management is most important because a company takes risks, lays a foundation sees potential issues and adapts to those risks.
Reducing supply chain risk and increase security
Shedding a tier
Many companies advance practical vendor masters to evade the need to manage every supplier to every nut and bolt. This consist of part of what they are outsourcing, suppliers' ability to manage' suppliers risk and suppliers and related or severe tier-2 suppliers. The similar process a producer may apply to manage constituent supply risk used in other industries.
Check the indicators
Many logistics experts are worried about the next St. Johns bury in their career network. Service provider's dependability is one supply chain risk factor they are struggling to cover. Some financial indicator and carrier performance can aid foresee possible problems (Trunick, 2011).
Know the law
The legal systems in countries where parties are engaging in business can also affect agreements. In an interactive- law system, contracts tend to be longer. In places where the public law is the system, free codes are usually more general. Deals can only go so far in mitigations.
References
Hamlett, K. (2017, November 21). Why implement an ERP? Retrieved from http://smallbusiness.chron.com/implement-ERP-4486.html
Trunick, P. A. (2011, December 15). Mitigating supply chain risk - Inbound logistics. Retrieved from http://www.inboundlogistics.com/cms/article/mitigating-supply-chain-risk/
Vitez, O. (n.d.). The Bullwhip effect in supply Ch. Retrieved from http://www.cbpp.uaa.alaska.edu/afef/bullwhip_effect_in_supply_ch.htm
Wisner, J. D., Tan, K.-C, & Leong, G. K. (2015). Principles of Supply Chain Management (4th ed.). Boston, MA: Cengage Learning.
