This paper will look into how to operate an effective supply management chain by in cooperating a system integration system into its operations, a manufacturing supply chain management is an integrated set of business functions, that includes all activities involved in making a complete product that has essence or value that brings about customer satisfaction. For the above to be realized then the product being delivered should be right and should be delivered at the right time, in the right amount. Hence this supply chain management needs to have an integration system that will install an efficient and effective supply chain management process. What role will system integration bring about in introducing quality measures that can be used to improve and control a manufacturing supply chain as well as maintain and capture value of the end product of the process?
What is System Integration?
System integrator can be defined as the single sole contractor in an organization who has been delegated to design and integrate externally supplied product and service components into a system for an individual customer(Davies 2009)for example in the construction sector can be divided into two major sections. A system integrator takes the responsibility of setting up a network of various organizations and coordinates the activities within the organization. While for individual clients the system is developed by a network of various organizations (Rutten 2007) the system integrator chooses the organization s involved in the activity then he sets a coordination process to ensure efficiency is conducted in the network.
System integrators operate in two levels i.e.: the configuration system stage and innovating system stage. (Rutten 2007) the system integrator usually takes the role of coordinating product development this is because most of the product materials are assembled externally by different organization hence his main duty is that of configuring the parts to make a complete product. The second level of system integration involves the capacity development of meeting the consumer changing requirements. (Lakemond 2006) There are two types of integration which can be described as either long term or short term. The longer term innovation is essential in making the company to stay on top of its game competitively. The main role of a system integrator in an organization is that of offering innovation when it comes to produce development the consultation phase has been diminished by them integrating more innovation through research to create better products for the organization. product innovation is brought about by a need in the market for it, developing a new product needs a lot of capital thus investment input is considerably high this brings the need of integrating other firms with the same area of specialty to invest in new developments thus facilitating the production of new products or enhancing existing products. (Rutten 2007)
Innovation comes along with numerous benefits and also new products but also it poses real time problems relating to production and after care of the new product. When developing new products warranties and service rendering should betaken car of. In case where by the product needs multiple production copy right issues should be accounted for. The integrator should take full responsibility when it comes to designs available to the market especially the ones contracted to private public partnership. For efficient system integration product development, market innovation, and client relationship should be the main factors that should be over scored. (Rutten 2007)
System integrator is a specialist who manages a complex process, he asses the interaction between money, technology and spatial functionality. The supply management process has become complex the consumer doesn’t want to know this his main problem is accessibility to the end product. The manufacture will only produce his goods but the system integrator will ensure that all mechanisms (marketing; branding, designing, distribution and accounting) involved are well coordinated for maximum efficiency in the operating costs and end value of the product. Thus the role of a system integrator in this field is vital by the sense that he ensures that all components involved work together with the main aim of capturing and delivering value to the end user of the product. In this field of supply management the major players of soft ware makers such as ERPS and SSM modules are the main system integrators.
Although the need of in-corpora ting marketers, designers and branding team is also essential in the integration process which is aimed at improving and maintaining value. For one to contract a system integrator into his organization the main aspects to be ascertained are what are their vision and ambitions, their feasibility in the mode of design implemented, functionality of the design implemented and its technical aspect. (Rutten 2007) in conclusion a system integrator can be said to be the chief coordinator and innovator in a certain sector for improving services delivered, and efficiency implied. His main activity is adding value to the chain by making sure that production is heightened and accessibility also heightened thus increasing sales in the chain and making sure that the supply and demand rules are well adhered to meaning the cycle will not be curtailed due to lack of products due to lack of communication and information flow between the manufacturer and the retailer in the supply chain. (Rutten 2007)
This paper will discuss the importance of a system integrator in supply chain management, what gaps can be plugged by the incorporation of a system integrator in a firm and what potential he holds in adding value in the chain.
Supply Chain Management
This is a process that controls the flow of materials, information, and finances while on the other hand develops or, facilitates a network system through which retailers, distributors, transporters, storage facilities and suppliers are enabled to participate in the sale, delivery and production of a certain product to their customers’ net work system in supply chain management can be defined as a direct or un-indirect link that is interdependently serving the same consumer. Meaning a group of firms coming together to facilitate the offering of a certain service or good to reach its intended consumer in good condition and time. The art of managing the events in a supplying chain is known as supply chain Management. For effective management of the links the producer is supposed to be able to be as fast as possible in supplying his goods at the right place, right time, and in the right quantities, while maintaining the quality of his goods and trying to put his operating costs down, while increasing customer satisfaction. (Michael H. (2006)
Supply chain management has a role to play in coordinating and integrating these flows within a company and among companies. To make any supply chain management to be effective a reduction in the inventory has to be effected. For the producer to do the above he has to obtain a customer order, after which he is supposed to organize for production of the goods and services that the order implies. Storage facilities should be provided by taking in factor the durability of the product, the time it will be needed by the consumer and space that the product will need for ease in storage. Good coordination in all this activities is inevitable hence the need of having information service network. To keep track of these activities which at times may expand to a global market that needs adequate attention to avoid loosing business and aiming to decrease costs in relation to making more sales and maximizing profits. This creates the need, to enforce system integration, in supply management to enable a company to efficiently coordinate the flow of finances and materials in the supply chain. (Rutten 2007)
Components found in Supply Chain Management
This are factors that supply chain management need to consider in order for them deliver efficiently their services to the end user, they are five in number as follows;
Plan- this is the strategy used by the supply chain management. Each company needs a well laid down procedure that will result to accomplishing its service. In supply chain this consists of developing a set of metrics to monitor the chain so that it can be termed efficient, cost effective and ensures delivery of quality services and maintains the value of the services being offered. (Bill, Dean 2001)
Source- these companies are entitled with the responsibility of finding suppliers who will deliver goods and services that will be produced, hence making or establishing standard pricing, delivery and payment process thus they should also create methodologies that will be used for managing and improving relationships in the chain. The supply chain management is also delegated to manage the inventory issues which include receiving and verifying shipment, transferring them to the manufacturing facilities and arranging for payments
Make- this is the processing stage, they are entitled with the scheduling of activities necessary for production, testing for quality, packaging, and preparation of delivery this level is the most intensive because it compromises the measuring of work loads, quality and production output.
Deliver-this part considers logistics this where coordination of order receipts from customers are handled, issues of renting out a network of warehouses is also incorporated at this stage, arrangements of having carriers to deliver goods to customers and setting up invoicing structures that will be used to receive payments.
Return- this is the most problematic part in all the components it handles all the returned products due to customer un-satisfaction or other defects. For an effective supply chain management this component is in its court for it to be able to establish a flexible and responsive network system that will respond to the above issue. (Bill, Dean 2001)
Current Gaps in the Supply Chain
The main problems are the issues of the blaming culture and the lack of co-ordination in the supply chain and other affiliated companies. For instance; in the distribution sector the distributor can blame the manufacturer for the late delivery not wanting to take responsibility of the delay. Again lack of support from the start of the supply chain when the producer finishes he relaxes thinking his job is done its up to the distributor to take lead. Apart from these two major problems the following are also some sighted problems
Distribution has its own managerial concern that it poses in consideration that it compasses different kinds of channels for instance it can take the direct route or the longer route in order to satisfy the end user. The managerial concerns comes into play into the issue of number of channels involved, most manufacturers can never justify their cost incurred when they sell their products to the consumer, many suppliers assume that once goods are dispatched into the channel the problem doesn’t affect them any more this should not be the case because they need to extend their management into it until the end product reaches its end user that is the consumer. This may force the supplier to come to major decisions such as implementing channel membership this can be done through three ways intensive distribution where majority of resellers are allowed to stock the products, selective distribution, where suitable resellers stock the products, exclusive distribution, where by only authorized dealers are the ones with the right to stock the products.
Motivational factors should also be implemented by the senses that the supplier can add incentives to the distributors who own the channels this will motivate them into pushing the products along the channel. The third implementation is through monitoring and managing channels this will be done by working closely with all factors or members of the distributing chain until the product reaches its final user. The problem in distribution also affect elements such as transport to be offered a supply chain management can decide to take a distribution strategy such as having a shared delivery scheme mode of transportation this measure should be taken to place taking the fact that some form of transport are expensive which may lead to increase of total logistic costs and inventory costs. (William, 2008)
Information is another crucial problem that faces supply chain management their should be a method of integration of information flow through the chain which will enable the chain to share important information such as implications on demand signals, forecasts into the market, inventory status, and transportation options plus other business partnerships that can be achieve. (Bill, Dean 2001)
Inventory is another problematic area its management should compromise of quantity of stock available, location of the stock which should include accounting of raw materials and what quantity of products are still being worked on and the amount of finished goods. The above should be well documented to enable proper management of the inventory and the supply chain management as a whole.
Cash flow management is yet another area of concern when it comes to supply chain management. Their should be an established way in which payment is done across the entities involved in the supply chain this methodologies should be well arranged and executed to decrease the cases of inefficiency caused due to lack of payment being done on time or the issues of bounced cheques. (William, 2008)
Role of systems integration and Responsibilities of a systems integrator/systems integrating role in plugging the gaps
System integration can be defined as the act of making all functions and elements found in supply chain management to work together simultaneously with the aim of achieving a common goal in this case customer satisfaction. How can system integration be implemented in supply chain management to make it more effective? This can be done through usage of soft wares that will help in plugging the gaps mentioned above in problems affecting the supply chain management. Most companies have the need of tracking demand, supply, manufacturing status, logistics and distribution, they also need to share information among themselves this solutions can be catered for by big software companies such as ERP vendors who use the SAP or the advanced planner and optimizer to solve these highlighted problems in the supply chain. (Rutten 2007)
Though the company should go for the best option when it comes to choosing a software to answer its common problems depending on the industry it involves itself in. the information entered into a software program should always be accurate in order to realize an effective management Programme incase of wrong details being entered into the systems then the wrong forecasting will be given giving higher costs to the management systems of supply chain. Accuracy then should be applied when these integration systems are being applied. The use of an ERP system (Enterprise Resource Planning) software is essential in the capabilities that it offers the supply chain management its main role is that of integrating of all information about a company in one single application other than having them in different excel spreadsheets that poses the problem of inaccessibility when it comes to specific information needed by the management that deals with all the six elements found in the chain. Hence there is need to integrate the supply chain management modules to work together with CRMS and EPRS for an effective management system. (William, 2008) While adding marketing practices, branding and designing of the brands to increase sales while adding value to the same.
Warehousing –This stage in supply chain management consists of storage after products have been produced there is need to have a place where they can be stored in as they wait for distribution to the whole seller or retailer or consumer depending on the length of the supply chain. This stage has numerous gaps that it tends to pose in the effective management of a supply chain take for instance when goods are brought into the warehouse there is need for the foreman to instruct the forklift operator on where to put in the pallet this poses a time wastage error that can be avoided. (Rutten 2007)The above inconvenience can be evaded by using a supply chain management soft ware to improve the warehousing management this can be done through installing the soft ware at the ware house its main work is that of it quickly reading the code of incoming goods, the pallet label is scanned the operators get a print out that instructs them where the product is needed, whether it needs repackaging or whether it needs to be loaded in the next truck going out this will save time and bring about preciseness in the activities being carried out in the warehouse, human errors and mistakes will be maintained at a minimal rate at the warehouse. (Hopp, Spearman 1996)
Marketing techniques can also be used in integration in the supply chain to improve its operations this will increase sales and it will aim at adding value to the end product two of the main ways of going through this phase include design and branding. The company should make efforts of creating a design that will reflect its endeavors as a company; the design should be used by the company as an identification factor that will promote the consumer to buying it off the shelf. Branding of products can also be used as an integration method through which products are re-branded; this is a marketing tool that can be used in plugging the gaps found in marketing goods in a supply chain. Re-branding both the services and goods being offered will gain some mileage when being marketed, branding maximizes the value as perceived by the consumer while at the same instance minimizes the complexity associated with buying decision on the consumers side.
Branding helps the consumer in identifying the kind of products he wants and also diminishes the problem the company faces in reintroducing the products into the market from time to time. After the company has established the kind of design it wants then it can spearhead to branding the product which will stand the test of time when it comes to the marketing arena. Thus branding can be used as a form of integration that adds value to the end product by posing its advantage to the consumer. Branding helps to portray a company’s’ inward and outward expression it can be used to identify the company by the consumer. Meaning a certain image is conjured in the consumer’s brain when he thinks of the company or when buying the products or using its services. For instance a company can decide the shape of its products to be a certain way, certain color, a certain fragrance all these factors when taken in spectrum will create a distinctive cut above the rest.
Cash flow problems should be solved through integration of an accounting firm that will deal with all money matters of the chain. Thus lack of funds or mishandling of funds can be a thing of the past.
Roles played by system integration
Before the internet came into play the aspiration of creating software’s were diminished hence the ability to foresee and predict demand from customers was low. But with the coming of internet things have been thrown into a wide arena this has allowed companies to be able connect their supply chain with chain of their suppliers and that of their customers, this is done in one single network hence costs are optimized and opportunities are increased for everyone involved. (William, 2008)
The above has enabled companies in supply chain management to share data with their partners it has also increased supply chain visibility. In this sector most companies don’t trust one another but they can share in order for them to gain from it eventually. Suppliers won’t have to crack their heads on guessing how much raw materials to order, the manufacturers too wouldn’t be forced to order more than what they need from the suppliers this meaning they would just have sufficient products to pull through the demand system. Retailers too would benefit from it they wouldn’t experience times of empty shelves because they would have shared their sales information with the manufacturers. The internet makes the art of showing others in the industry your hands possible, long ago the issue of mistrust and lack of coordination made this a huge problem. (Hopp, Spearman 1996)
The problem of inventory thus is solved because a company is armed with the information on the quantity of products that is needed to be shipped, the demand scale on the market, this cuts costs in great margins this is because the warehousing bills are cut you only hire for the space you need. (William, 2008)
A good case study is that of Wal-Mart and Proctor and gamble companies long time ago they didn’t have a system integration capability this brought problems due to lack of communication between the retailer and the producer incase product were out of stock in the store. But as times changed the two companies agreed to share data and a system of software’s was integrated, any time the distribution stores run low of stocks then the soft ware communicates this to the manufacturers that is Procter and gamble to ship more products. This software allows Procter and gamble to view the Wal-Mart store shelves through sate light link ups this is done whenever a proctor and gamble product is swooped at the till through scanning. Through innovation in recent years it has grown to using radio frequency identification frequencies. With this kind of free information flow Proctor and gamble is able to manage itself well by knowing when to ship, by what quantities, and to which stores.
The above case study displays and conveys the effectiveness it applies in supply chain management other gaps like cash flow in invoicing also take the same shift in direction this is to say that payments are done through this software making it convenient and efficient and allowing customers to get their products in friendly prices. (Hopp, Spearman 1996) another role of system integration is that of building and maintaining a multilevel and cross functional relationship within the organization and the consumer this applies to marketing, branding and design as form of integration in a company. Thus the level of employees working together in the aim of a common goal is established and the consumer enjoys the end product that exudes value for his money. Thus the role of marketing in integration in supply chain management increases the sales of the products and services while making the products to above the rest in the market the consumer is able to identify with the product and also the company.
Factors affecting Implementation of an Integrated System
There are many issues that tend to cause roadblocks when it comes to implementing or integrating these systems into supply chain management systems. This is because of the nature of supply management which is complex, employees will have to adapt to they new systems abandoning their old ways, and this will include all employees associated with each member of a supply unit. Only big players of the sector can force such radical changes to the suppliers and partners throats. Meaning most companies may opt to sell using this concept to outsiders on the system. By a company adopting this method of operation it poses a threat to the next in line for example if a manufacturer adapts the method then he will take the responsibility of checking and maintaining (management) his inventory a role that subsequently was taken by the retailers. It demands an act of compromise for the method of system integration to take effect the managers should be willing to take an inkling of sacrifice for a collaboration to take effect. Another hindering factor is internal resistance to change its hard enough to sell to the outside world what about in the inside. Operations people are well accustomed in using telephones and faxes to get them around to use software applications will be hard enough hence it may take time for them to adapt and appreciate the usage of software in the companies.
Many mistakes will be experienced at first before they get used on how to operate the new systems thus forecasters should know better that they need to add some twists to the information they get in their systems in the first time usage of the new program. For instance in case an input of large demand being fed into the system will lead to high projection when it comes to production levels thus in accuracy. This can lead to huge losses which will mean high production level low demands levels. Such problems have led to mistrust by forecasters who rely on their own data this means that the supplier will have to fine tune the system first than work out in re-establishing of employees confidence. (Hopp, Spearman 1996) in marketing the roadblocks in implementing may consists of lack of enough capital and high levels of technology that are needed to construct distinctive designs and brands that are hard to imitate and which will be easily be noticed and identified by the consumer. In order for an integration system to be achieved adequately then the following points should be taken to good consideration the technology needed to accomplish the task should be incorporated on time, resources of hiring the perceived equipment or staffs should be made available, the head office should be supportive of the integration process, forethought strategies should be put in place because integration of a new theory can go hire wire, well laid plan and strategy should be the upfront measure when starting out in the marketing, branding designing or additional software technology in a company.
Adding Customer value beyond plugging the gaps
Through the integration of customer relationship management product and ERP and supply management modules the customer has benefited in huge way. For instance any time he goes to a store the chances of getting a product out of stock is nil hence efficiency is added and value for his money is accounted for by aptness in delivery of his services. His demands at the market level are also catered for because forecasts are made and visibility is assigned on the projection this will mean supply will be meted on demand this is because the manufacturer has thorough information on exactly what is needed by the customer. The quality of his product are of high quality taking for instance the quality measures that are installed in factories hence more value to his money by getting a good quality product. Value will be captured and delivered if these integration systems will be adopted by every one involved in the supply chain and mistrust being disillusioned.
The potential of delivering value to the end user is high because the bureaucracy, lots of paper work, and human error is limited by an electronic system which is put in place. In case of lack of satisfaction the customer through established systems in the supply chain management they are able to return the product or an exchange can be offered this is done in a fast and efficient manner. (Hopp, Spearman 1996) as the integration of different elements to bring out a good product enhances the different people involved at times get in each others neck as they play the blame game this is apparent due to the many people involved with different concepts. Once a problem arises the culture of accusations comes into there front run the people involved should be able to control their emotions and recognize the feelings of others.
The above can achieved by applying emotional intelligence on the workers side to effectively be able to deliver and capture value. On the same context there is need for staff members to exhibit communication skills, expertise networks and trust networks to enable integration to pull through its course because by the mere fact that they work together daily doesn’t give evidence that they trust each other. Thus for capturing and delivering value at the end then trust should be built in the whole network or system. The customer again should be secured by the fact that the services being offered to him will last meaning a continual [process thus the need for the company to offer some form of commitment when it comes to continuity. The above should be done in the view of long standing clients who are die hard. For an effective integration system it should start from the top trickling down to the organization while there should be an open communication process between al pockets of integration in the company in other words coordination.
Most companies at this time and age have a problem when it comes to competition thus most are not adherent open to other players in the same sector, but with the software age coming into play there is need to work together by sharing data with other business so as to maximize their profits. For the sector of supply management it’s a bit complex thus it needs cooperation between all players thus the need of having a management team that will coordinate all the activities of the main players in the sector bringing costs down and realizing its major goal of delivering value added products. For an effective integration system to be put in place such as cultural and design and branding, then the relationship between marketing and management should be considered first the staff found in the supply chain again should work in trust towards the common goal of customer satisfaction. Other factors and areas to be considered are the areas of cash flow management and capital, which have great potential if taken into consideration. So for effective supply chain management software technology should be used, marketing strategies, and an accounting system to incorporate good cash flow management.
Bill C and Dean M. (2001), Supply Management and Technology – Computers, Common Ground Publishing.
David L, Philip k, and Edith S. (2000) Designing and Managing the Supply Chain; Concepts, Strategies, and Case Studies McGraw-Hill publications.
Edward F (2001), Supply Chain Strategy the Logistics- Business & Economics – McGraw-Hill, publications.
Handfield R, and Nochols E (1999), Introduction to Supply Chain Management, Prentice Hall publishers.
Hopp J, Spearman M. (1996) Factory Physics: Foundations of Manufacturing Management, Irwin-McGraw-hill publications.
James B. (2006), handbook of supply chain management – Business & Economics – Auerbach Publications.
Jeffrey P. (2008), Lean Supply Chain Management – Productivity, Press Book Publications.
Jeremy F. (2001) Modelling the Supply Chain. Duxbury Thomson Learning Publishers
Martin C. (2005) – logistics and supply chain Management, Business & Economics – Financial Times Prentice Hall Publishers.
Michael H. (2006), Essentials of Supply Management – Business & Economics – John, Wiley publishers.
Shoshanah C, and Joseph R. (2004), Strategic Supply Chain Management, McGraw-Hill, publications.
Sunil C and Peter M. (2006), supply chain Management: Strategy, planning and Operation – Business & Economics – Pearson/Prentice Hall publishers.
Sridhar T, and Ram G, (1999). Quantitative Models for Supply Chain Management, Kluwer Academic Publishers.
Viswanadham N. (2000) Analysis of Manufacturing Enterprises, Kluwer Academic Publications.
Viswanadham N. (1998), Performance Modelling of Automated Manufacturing Systems Prentice Hall of India publishers.