SCM Inter-Enterprise Fusion

E-Supply Chain Fusion: e-Supply Chain 301

How do you create integrated supply chain structures? How do you migrate from existing nonintegrated supply chain models to more effective integrated models? Before we address the process of fusion, note that many firms struggle to implement the integrated supply chain vision because existing supply chains are artifacts of the past. These legacy supply chains are clogged with unnecessary steps and redundant stockpiles. For instance, a typical box of breakfast cereal spends an incredible 104 days getting from factory to supermarket, struggling its way through an unbelievable maze of wholesalers, distributors, brokers, and consolidators, each of which has a warehouse. Unclogging these inefficient supply chains means changing the way links interact, and it could greatly affect leadership positions of some or all of the companies involved.

Diagnosing Root Causes of Supply Chain Problems

Before creating an e-supply chain architecture, such as that shown in figure, you have to diagnose what the problems are that prevent collaborative work. An old axiom says, “If you don’t understand the problem, it’s hard to fix it!” Fixing a business problem requires untangling underlying, symptomatic, structural trouble, such as:

  • A lack of knowledge about the end-to-end demand planning function. This often results in an unstable demand figure that changes frequently in he production schedule and can lead to expedited transfers and shipments.

  • Inconsistent or out-of-date, due to a lack of integration with ERP. This can result in reactive fire-fighting decisions based on inadequate information or poor decision-support tools.

  • A lack of process integration across partners. Retailers are demanding more sophisticated interenterprise purchasing, inventory management, and merchandizing tools that enable them to distribute and manage goods efficiently.

Inventory management has become more complicated as retailers, distributors, and customers seek to reduce costs and improve margins while replenishing inventory on a just-in-time basis. But until efficient SCM is in place, inventory management plans are hard to execute well.

  • Effective deployment of SCM requires structural change, because existing supply chains are sadly outdated in an era in which inventories and costs must be ruthlessly eliminated.