Following on from our last article outlining what supply chain integration is, this time we set out why it should be of interest to your business.
Companies using supply chain integration have to overcome a number of complicated obstacles in order to recognise their goal of a unified management system. Significant planning and investment of time, as well as money, are required for the transition to be successful. Because of these initial demands, many smaller businesses shy away from taking the leap, choosing instead to do things they way they always have.
It is well known that in order to create efficiencies and cost savings within a company’s own processes, they usually need to invest in infrastructure before they are able to reap the benefits. Once a business has successfully streamlined in-house processes, it is then necessary to work on those which affect the company but which are not necessarily owned by them.
At this point, the second hurdle of inter-company politics raises it’s ugly head. In order to reform the wider supply chain, a company needs to convince the other businesses involved of the benefits of doing so. Tradition and ignorance are both significant obstacles which will need to be overcome in order for the merging of processes.
So with so many hurdles to implementation, why should a group of companies seek greater supply chain integration? Simply put, the efficiencies which can be recognised by defining and integrating systems along the supply chain result in significant cost savings for each partner. By creating a way by which the ERP and accounting systems of each supplier in the chain can communicate, each immediately benefits from a reduction in duplicated effort.
Instead of having to manually pass purchase orders and invoices between companies, the accounts system at the supplier can automatically present invoices to the buyer’s account system for payment. Both companies are no longer held back by delays in the post as they trade endless pieces of paper. Nor are accounts clerks required to enter those same pieces of paper into each of the systems up and down the supply chain.
De-duplication and streamlining of processes inside and outside the enterprise, yields significant savings. And that is why Supply Chain Integration is a worthwhile investment.