Managing Supply Chain

Internal and External Integration in Managing Supply Chain



Internal and External Integration in Managing Supply Chain

LITERATURE REVIEW

Introduction

Acquiring capabilities to maintain competitive edge and stay on top has always remained the foundation of creating strategic structures in management and is considered to be a vital subject recently. Earlier, the concepts of relative advantage, consideration of supply, demand and cost and application of theories of market operations guided the business operations and managers made sure that the strategies designed were in alignment with the economic rules and the economic structures of the country and complied with all the legal regularities. Economic study was basically a part of a country or a nation. However, on the other side managers today now consider competitive advantage over other organizations which have led to the alteration of these theories and are relatively different from those presented from the economist point of view. For instance, experimental and learning curves concepts were applied after the onset of World War II in order to reduce the cost of goods sold (CoGS) (Netemeyer 2003, 14-19). This concept was distinct from the classical theories where CoGS was generally presented on the production scale. Research identified that emphasis on productivity and improvement of quality output through reduction of lead and work time can help in reducing the total CoGS by 15% (Wisner 2005, 17-20).

Another important aspect is specialty orientation which reflects the concept of saving work and time. This theory emphasizes that in the face of increasing inflation and high competition, it is necessary for the organizations to reduce their CoGS. The concept was basically utilized in the Japanese organizations and presented their growth and development for these companies leading to reduced CoGS overall because they were successful in conducting the experiment and applying learning curve concept into their operations.

Looking at the growth of Japanese organizations and how their operations and management are considered to be the benchmarks, today companies have altered various theories and have been applying techniques to stay competitive. They make sure that those factors are utilized which help them in creating and retaining capabilities to maintain the competitive advantage. For this, the concept of supply chain management is applied and is considered to be a vital tool in the contemporary era for the organizations. Supply chain management involves all the activities of sourcing of materials, their procurement and extends to the conversion of materials to distribution. Here, an important aspect is coordination, collaborating and communicating with all the facets of the channel which may involve the suppliers, third party service providers, intermediaries and even the customers. (Daft 2008, 25-29).

The approach makes sure that all the aspects are fully integrated and there is high cooperation between all the aspects involved where the supply channel is focused towards the reduction of lead time, makes sure that there is less waste of materials, delivery time is faster and all the needs of the market are answered responsively. This helps the managers in responding to the actions in ...