Integrating the supply chain

'What got you where you are won't keep you where you are.'
Charles Handy: The Age of Paradox.

The pace of globalisation and competition from the world market has been clearly identified as a major risk to many business strategies. The impact of the increased speed of technological change has further demonstrated that traditional business models and thinking may not be sufficient to maintain market share or growth.

'Globalisation and information technology are bringing about the most drastic transformation in the history of business.'
Tom Peters: Liberation Management.

The growth of internet technology has greatly increased the reach of organisations in the supply chain. Greater visibility - both vertically and horizontally - creates further pressures to be managed and opportunities to be exploited. Given the exponential growth of internet use and the increasing use of business-to-business applications, these competitive pressures will continue to grow over the next decade, increasing the need to maintain a flexible strategy.

However, through leverage and globalisation of supply most organisations have tried merely to contain their purchasing spend. As a result, despite an average 50-60 per cent dependence on supply cost, the internal culture of organisations has not changed. Companies have failed to recognise the untapped potential in the value chain. This lack of integration into mainstream business thinking and strategy is likely to restrict growth and limit market share. The strategies of successful organisations will focus on the creation of competitive supply chains. James Tompkins suggests that in future, competition will be based on 'my supply chain versus your supply chain'.

'The supply chain is really the cutting edge of contemporary re-engineering.'
Michael Hammer: Re-engineering the Corporation.

Differentiation will remain a major factor for marketing operations, but the cultivation of relationships and innovation should be a key constituent of all business strategies. This will remove duplication of effort, concentrate on performance-based value-added service and drive down total costs.

James Tompkins, in his book 'No Boundaries', advocates total integration of the supply chain through partnerships and alliances. He states: 'The more boundaries we encounter in today's business world, the greater the limits on our ability to move to the next level of performance excellence.'

up | previous | next