Supply Chain Management: Integrated Systems and Partner Benefits

This report examines the evolution from traditional to integrated supply chain management, highlighting the shortcomings of the former and the advantages of the latter. It explores the operational aspects of supply chain integration, focusing on how it addresses issues faced by manufacturers, wholesalers/distributors, and retailers. The report discusses key elements of modern supply chain integration, including manufacturing and distribution plans, and the importance of reducing communication gaps. It emphasizes the benefits of knowledge sharing and collaborative decision-making among partners, leading to improved customer service, reduced costs, and increased efficiency. The report concludes by emphasizing the importance of a fair distribution of benefits among all partners involved in the integrated supply chain to ensure long-term success and sustainability. The analysis is based on published articles and journals from the last 15 years.

integrated Supply chain as a solution to the traditional system practices and
its benefits for the partners involved in supply chain management
Supply Chain Management (200329)
Sheharyar Tahir
18129423

Contents
Executive Summary......................................................................................................2
Purpose.....................................................................................................................2
Scope........................................................................................................................2
Methodology..............................................................................................................2
Findings.....................................................................................................................2
Recommendations....................................................................................................2
1. Introduction...............................................................................................................3
2. Research..................................................................................................................3
2.1 Research Scope.................................................................................................3
2.2 Traditional Supply chain method........................................................................4
a. Issues at Wholesaler/Distributer End...........................................................4
b. Issues at retailer’s end.................................................................................5
c. Issues at Manufacturer’s end.......................................................................5
2.3 Modern Supply Chain Integration.......................................................................6
a. Manufacturing Plan......................................................................................6
b. Distribution plan...........................................................................................6
c. Communication gap.....................................................................................7
2.4 Sharing of Benefits..............................................................................................7
3. Conclusion................................................................................................................8
4. Recommendations....................................................................................................8
References...................................................................................................................9

Executive Summary
Purpose
The main aim behind this report is to analyse the process of modern supply chain
integration and to find out how supply chain address the issues of its traditional
operations. This report discusses the actual need of integration of supply chain and
limitations of the old style supply chain management. This report also describes the
benefits of modern supply chain shared by different partners involved in it.
Scope
This report is mainly aimed to describe the shortcomings of the traditional method of
supply chain and explaining the suggestions from the modern integration approach.
The benefits of the integrated supply chain method has also been discussed along
with the fair distribution of those benefits amongst all the work partners.
Methodology
This report is based upon the knowledge gained through the reviews of published
articles and journals on modern supply chain and its profit sharing. All the references
used for this research are from the last 15 years and the information used is still
practically up to date.
Findings
Traditional Supply system was not designed to work as a team in all departments of
the supply chain. It was more of individual based work to meet the customer
requirements. Modern supply chain integration emphasize to work as team to
provide the best level of customer service. Knowledge sharing and benefit sharing is
very beneficial for all the supply chain partners in maintaining long lasting relation.
Recommendations
This report reflects the knowledge towards the managers to work in a collaborative
manner in terms of their decision making and thinking globally. It also promotes the
message of information sharing towards the managers to allow better production
planning and control. This supply chain integration helps in promoting the open
supply chain culture by fair distribution of benefits amongst all the partners in work

1. Introduction
As the gap of trade between different countries in the world has been decreased, it
has opened new ways for the companies to learn and take advantage from the
variety of methods of work from different countries but on the contrary it has also
increased the complexities in terms of supply chain. Demand of the customers is
increasing day by day where the quality of the product along with its time of delivery,
place of the delivery, packaging and price of the product are the main concerns. This
make the process of supply chain bit harder than normal as the supply chain process
has to go through a qualifying process to meet the customers demand. This made
supply chain process efficient in terms of meeting customers demand. The traditional
methods of supply chain are getting old and the organisations are adopting
modernised integrated methodologies of supply chain. Integration of supply chain
can be applied at both strategic and operation processes (Frohlich and Westbrook,
2001; Zailini and Rajagopal, 2005).
The report is mainly aimed to describe the shortcomings of the traditional method of
supply chain and explaining the suggestions from the modern integration approach.
The benefits of the integrated supply chain method has also been discussed along
with the fair distribution of those benefits amongst all the work partners.
“For any given company, 95 percent or more of its integrative efforts focus on the
first-tier up or downstream” (Fawcett and Magnan, 2001)
“Moving to the second-tier has proven to be very difficult, requiring serious
adaptation of practices used at the OEM and first-tier levels” (Fitzgerald, 1996a, b)
The report discusses the journals and published articles on modern supply chain in
last 10 years. It discusses the different reasons to supply chain integration and
summarise the benefits attained by the partners involved.
2. Research
2.1 Research Scope
The research has been designed to explain the operational approach of supply chain
integration and will not discuss the strategic approach due to the word limitation. The
main aim of this research is to discuss the shortcomings of the traditional supply

chain method and defining the benefits of the modern integration of supply chain
method.
2.2 Traditional Supply chain method
Study of the traditional supply chain method gives the knowledge of shortcomings at
different levels of supply chain method. According to traditional method it was
necessary to keep the safety stock throughout the supply chain due to lack of
forecasting management in the system. The inaccurate calculation of forecasting
leads to over production or stock outs which leads to the loss to the company in both
manners. Meeting the customers demand was difficult to manage and creates
imbalance between demand and supply (Crack Mba)
This problem effect the partners of supply chain system at different levels which
includes the following
a. Wholesaler
b. Retailer
c. Manufacturer
a. Issues at Wholesaler/Distributer End
Wholesalers have a certain set of limitations which they have to face while meeting
the retailers demand on time which are given below.
 Poor forecast of the stock by the retailers results in either extra stock or not
enough stock.
 Retailer’s sales and promotions were not shared with the wholesaler which
causes strange pattern of demand of the product.
 Extra stock results as a loss for the distributer in terms of short date or expiry
issue.
 Stock allotment to distributers by manufacturers never proved out to be right
due to different order pattern.
These are the few of the issues at wholesaler/distributer’s end which made
them stuck between the manufacturer and the retailers which required a new
system to be implemented.

b. Issues at retailer’s end
Retailers being the very first to meet the customers in the supply chain cycle had
following issues with the traditional system.
 Extra stock of unavailable product is always being lying in the retail store.
 Customers required stock is not available when needed.
 Time of delivery from the distributer and limitation of order quantity results in
the wastage of the product.
 Short dated stock is one of the hardest job to sale.
 Customer service was being effected directly due to shortage or unavailability
of the required stock.
 Retailers were failed to provide the receiving of the unavailable stock.
Retailers franchise was earning them a bad name due to non-balanced availability of
the stock. (Kumaravel Thangamuthu, 2008)
c. Issues at Manufacturer’s end
Manufacturer’s being the very first in supply chain cycle are the very first to rely on
for the availability of the product. Following are were issues being faced by the
manufacturer’s due to traditional supply chain system.
 The frequent changes in the distributer’s demand in every order was very
hard to meet.
 Poor forecast of the stock required doesn’t let to set a market trend.
 Addition of stock at the eleventh hour results in the delay.
 Sudden sales and promotions cause disturbance in the production of the
stock.
 The short and expired stock results in the loss at manufacturer’s end.
These are few of the main issues of traditional supply chain system at
manufacturer’s end.
Summarising the issues at different partner’s end it was obvious that there is a
requirement of an integration of the new supply chain model which can meet the
modern way of business commitments.

2.3 Modern Supply Chain Integration
Integrated Supply chain is discussed as a main characteristics of meeting the
partner’s requirement (Supply Chain Mgmt Literature). Integration is the only
possible solution to meet the Supply chain (Pagell, 2004; Stock and Boyer, 2009).
Integration is meant to be more productive in terms of the output and make it
effective for all the members of the supply chain cycle (Lambert et al. 1998). Supply
chain integration is applicable at either of operational and strategic levels (Zailani
and Rajagopal, 2005)
The main aim of supply chain integration is to promote transparencies among all the
Supply chain partners. Integration promotes working as a team and sharing
knowledge among all the partners. There are many of the solutions which has been
addressed by the new integration of supply chain management but the most
important ones are as follows.
a. Manufacturing Plan
b. Distribution Plan
c. Communication Gap
a. Manufacturing Plan
The plan of the new integrated system is based on the innovation which cuts down
the cost and time and compatible enough to meet the customer’s requirements.
Strategies has to set to reduce cost per unit. Reduction of cost of each unit leads to
rise in cost of storage or total wastage of stock due to reduction of stock in demand.
Reduction of wastage of stock is handled properly by fair stock and delivery
management. The main aim is to emphasize push pull strategy amongst the
manufacturers. This will help in reducing wastages which means increasing profits.
b. Distribution plan
Stock distribution from manufacturers to the distributions centres must be according
to the demand of the retail stores rather than economy of distribution scale. This way
leads to better stock rotation and helps in sending and the correct amount to the
retail departments. Paying extra cost per unit for receiving the right quantity of the
stock is much better than sending bulk orders to save delivery cost. Supply chain

integration approach is according to the pull system the inventory will be pulled by
the customer when and where needed (Kumaravel 2008)
c. Communication gap
Supply chain integration approach emphasize more on working in a collaborative
manner and emphasize on knowledge sharing and to reduce the communication gap
between the partners of supply chain cycle. This way will leads to the better
management of the stock and reduce the wastage due to the poor management of
communication gap between the partners. Communication among the members
brings up the ideas like EDI (Electronic Data Interchange) which links and send the
point of sale back to manufacturers. This helps the manufacturers to plan their
production accordingly. This will lead to reducing wastage of stock and having a
better idea of stock to the manufacturer. This way manufacturer can control the
production according to the demand. It helps in collaborative decision making
between the supply chain partners. Customer’s feedback and demand has been
directly transferred from retails to the manufacturers which helps in providing better
customer service.
2.4 Sharing of Benefits
Modern supply chain integration after achieving financial and operational benefits
emphasizes on enjoying greater success among each partner involved. As the
success is the result of collaborative effort of each member so the benefit should be
fairly distributed. The main emphasis in supply chain integration is to reduce cost by
optimising production, transportation and inventory management. To achieve the
target partners unite to achieve maximum profits expected on the customer demands
and reducing operation cost. (Chauhan and Proth, 2005).
Reducing communication gap between the partners and sharing information
regarding the product demand and sales to make supply chain cycle beneficial is
measured by the value of shared information and coordination throughout the
strategies, the study shows that channel savings are not equally allocated among
channel members, and differentiate across supply chain processes (Sahin and
Robinson, 2005). It is clear that manufacturers get the most of the benefit out of the
supply chain process as they have to lead the process and to take it to the position

to get profit. The benefits can be shared in terms of technological support, good will
or cash bonuses.
3. Conclusion
After the whole research it can be concluded that the traditional supply chain has to
be replaced by the supply chain integration which is beneficial for all the partners
from manufacturer to the customer. The customers demand being the top of the
priority is taken care of by the supply chain integration with the support of better
customer service. The relationship between the partners have been taken to the next
level by reducing the communication.
Sharing information from retailers to the manufacturers is helpful in reducing the
stock wastage and in attaining more profits. In short the integration of supply chain
emphasize on spreading a nice relation among all the partners by fairly distributing
among the partners.
4. Recommendations
From the issues discussed in the traditional and their solution research in the
journals and literature, integrated supply chain found as a solution to these issues. It
is recommended that organisations looking forward to improve and strengthen the
customer service and market position should apply learning outcomes through this
study in their practice. The knowledge sharing benefits and its fair distribution among
the partners lead to a better and long lasting relation.

References
1. Zailini, S. and Rajagopal, P. (2005), “Supply chain integration and
performance: US versus East Asian companies”, Supply Chain Management:
An international journal, Vol. 10 No. 5
2. Frohlich, M.T. and Westbrook, R. (2001), “Arcs of integration: an international
study of supply chain strategies”, Journal of Operations Management, Vol. 19
No. 2
3. Chauhan, S.S., Proth, J.-M,,(2005.). “Analysis of a supply chain partnership
with revenue sharing”. International Journal of Production Economics 97
4. Sahin, F., Robinson , E.P, (2005), “Information sharing and coordination in
make to order supply chains” Journal of Operations Management 23
5. Kumaravel, T, (2008), “Issues with Supply Chain and RFID in the Retail
Industry” Web, 28 May 2015.
(www.support.sas.com/md/papers/sgf2008/RFID.pdf)
6. Crack Mba, (2012), “Traditional supply chain vs new supply chain models”
Web, 28 May 2015. (www.crackmba.com/traditional-vs-new-supply-chain-
models/)
7. Stock and Boyer (2009), “ Developing the consensus definition of supply
chain management a qualitative study,” International Journal of Physical
Distribution and Logistics Management Vol. 39 No. 8, pp. 690-711
8. Fitzgerald, K.R, (1996), “Keys to getting past the first tier”, Purchasing ,
Vol.121 No. 2, p. 64