Integrating the supply chain

It is a never ending cycle for medium-sized businesses across all industries. Plant floor employees regularly work costly overtime, yet at other times there is not enough work to keep them occupied; as a result warehouses are either packed to the brim or are standing almost empty; which in turn can lead to an inability to fulfil customer orders. And so the cycle continues.

For many of these businesses disparate supply chain processes are to blame. Most typically, their IT systems are not integrated and are unable to exchange basic, yet essential, data that could see this vicious cycle being broken.

Traditional supply chain processes are set up solely to meet the demands of the distribution centre and operate reactively to the demands of the market, according to industry experts. Because of this businesses have not had a great need for integrated systems.

However, by turning this around and developing an integrated supply chain, driven by customer demand, businesses can start to become more proactive. Commonly referred to as a demand-driven supply network (DDSN), this approach can ensure employees have less downtime, warehouse shelves are stocked to cope with demand, and customer orders can be fulfilled quickly.

Customer demand information is fed into an integrated supply chain system that combines demand forecasting, operations planning and supply ordering. Ensuring these three elements of the manufacturing and production process are used in combination can eliminate supply chain inefficiencies. This real-time visibility over the supply chain means businesses can be more responsive to market demands.

Although cost and time constraints mean this level of IT integration is still in the pipeline for many medium-sized businesses, many have begun to see the benefits and have begun to implement united, integrated IT systems that offer similar benefits, such as systems that eliminate the need to input data more than once and ensure customer orders a fulfilled to deadline.

According to IT market research company, AMR Research the market for such products grew by 3% in 2005 to reach $5.6 billion, however as more businesses start to see the benefits, figures for 2006 are predicted to rebound with a 7% growth rate.

And, as more medium-sized businesses see the benefits of an integrated supply chain, the detrimental and inefficient production cycles seen in many manufacturing, retail and warehousing businesses could soon become a thing of the past.

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