Estimated reading time: 2 minutes, 55 seconds

The Importance of Integration

IntegrationIntegration is always a hot topic for the supply chain. It's a powerful tool to improve profitability by reducing costs. Like a lot of ideas, though, its effectiveness depends quite a bit on context. What works best for a small manufacturer may be considerably different than what does the trick for a large retailer. The pressure for profits may be the similar but there’s a huge difference in scale.

 

A small or medium-size business may consider the pinnacle of integration to be automatically creating sales orders from EDI PO’s they’ve received from their major retail customer. That removes a big burden from their office staff, gets the orders into the system faster, and improves accuracy. It’s a big win for them.

 

At the opposite end of the spectrum, the mega-retailer wants a lot more. They need ASNs to set up receiving at their DC, RFID tags on inbound products, automated receipts to set up their AP system, integration between their ERP and WMS systems to facilitate order picking, POS data from their customer-facing systems to support their forecasting, and….. I could go on and on, but to shorten the story, every handoff between systems must be automated. And you know what? Even that isn’t enough.


Two huge trends will drive the need for ever increasing integration between systems that support the supply chain. We’re already facing the first, the need for visibility. As supply chains have become more global and complex, the ability to instantaneously view the flow of products into and out of facilities and to spot impediments and problem areas has grown. This isn’t a new phenomenon, but it’s one that the pressure has been ratcheted up on due to both internal and external issues. Visibility is a product of process and system integration, and unless your systems talk to one another you have little chance of providing the visibility needed to mitigate risk and provide great customer service. Ken Kinlock has been all over this topic in his series on supply chain control towers (read his first article on the topic HERE).

The second megatrend that will push the need for integration to even higher levels is the machine-to-machine (M2M) connectivity required to build and maintain the Internet of Things (IoT). I wrote about this topic last year (read it HERE) and not only has it appeared on many lists of predictions for hot topics for 2014, there’s also real work being done in the IoT arena by big players like General Electric. Ubiquitous sensors will feed systems to monitor performance, drive quality improvements, facilitate control changes without human intervention, track movement, optimize inputs and outputs… Again, I could go on ad nauseam, but the point is that the next big advance in technology that has huge impacts on supply chains, M2M, just doesn’t work without integration. That’s what the ‘2’ in M2M represents. A great example of the possibilities and the reality of what’s happening in this arena can be found on the GE website (see it HERE).

Traditionally, the claims to fame for supply chain integration have been in cost reduction and accuracy improvement. Now and in the future, though, it will mean much more: it’s absolutely necessary to support the new capabilities driven by visibility requirements and M2M connectivity. Getting those orders in without rekeying is just step one. To reach future state supply chain nirvana, integration must be universal.

Read 1711 times
Rate this item
(0 votes)

Visit other PMG Sites:

PMG360 is committed to protecting the privacy of the personal data we collect from our subscribers/agents/customers/exhibitors and sponsors. On May 25th, the European's GDPR policy will be enforced. Nothing is changing about your current settings or how your information is processed, however, we have made a few changes. We have updated our Privacy Policy and Cookie Policy to make it easier for you to understand what information we collect, how and why we collect it.