Executive Briefings

How to Create an Integrated Approach for Supply Chain Management

Analyst Insight: The global supply chains of today are tremendously complex. They consist of a global network of suppliers, manufacturing facilities, warehouses, distribution centers, and the broader fulfillment network. Supply-chain planning and execution occur across all areas of the supply chain, and the success of operations is largely reliant upon the success of the supply chain. Such complexity and the abundance of touch points are driving the need for modern supply chains to implement an integrated approach to supply-chain management. – John Santagate, research manager, IDC

How to Create an Integrated Approach for Supply Chain Management

An integrated approach to supply-chain management involves creating alignment across the business processes and throughout the supply-chain application suite. Such an environment requires that the supply-chain planning and supply-chain execution processes and applications are tightly coupled where planning activities and execution activities are interrelated. Ultimately, the idea is that the flow of material and information throughout the supply chain becomes a unified process. 

Delivering on the promise of an integrated supply chain requires an organization to create business processes that flow from end to end across the supply chain and implement a technology architecture conducive to delivering a singular view of the supply chain across the entire organization. The business process must be developed with the objective of optimizing the performance of the entire supply chain with the understanding that trade-offs will have to be made in some instances.

Several key points must be considered when attempting to build out an integrated approach:

Break down organizational silos: For an integrated approach to SCM to be effective, the end-to-end supply-chain organization must operate as a unified entity.

Define organizational objectives: Move beyond business unit and functional unit design and metrics. Look at the organization holistically and define the objectives as a complete entity.

Align business processes: Take a cross-functional approach to business process design. Start at a high level and map out the supply-chain flow with the goal of creating an end-to-end mapping of the business process.

Design the IT architecture to support an integrated approach: Leverage a cross-functional approach to IT systems design. As much as possible, standardize across the organization in terms of the applications that are used. Seek to eliminate, as much as possible, disparate applications in favor of leveraging a common set of applications across the business.

Reshape leadership and culture: For most organizations, the single biggest impediment to delivering an integrated approach to supply-chain management is culture change. Change of this magnitude must be driven by leadership. Leadership must collaborate and drive the effort to deliver an integrated supply-chain organization.

Designing and achieving an integrated approach to supply-chain management are not easy tasks. For most organizations, it will require a complete overhaul to both business process and IT architecture. However, making this change need not be conducted with a big-bang approach. Take a strategic approach to change by evaluating the current processes and IT and leverage the current state as the foundation for process and technology design. During the process of mapping the current state, identify gaps and seek to close the gap by creating a road map to the future state.

The Outlook

Achieving an integrated approach to supply-chain management is a significant undertaking. It requires a fundamental shift in the traditional operations of the business as well as a rethinking of how to leverage technology to achieve objectives. However, when the supply chain is effectively integrated, the operation becomes far more agile, flexible and responsive.

An integrated approach to supply-chain management involves creating alignment across the business processes and throughout the supply-chain application suite. Such an environment requires that the supply-chain planning and supply-chain execution processes and applications are tightly coupled where planning activities and execution activities are interrelated. Ultimately, the idea is that the flow of material and information throughout the supply chain becomes a unified process. 

Delivering on the promise of an integrated supply chain requires an organization to create business processes that flow from end to end across the supply chain and implement a technology architecture conducive to delivering a singular view of the supply chain across the entire organization. The business process must be developed with the objective of optimizing the performance of the entire supply chain with the understanding that trade-offs will have to be made in some instances.

Several key points must be considered when attempting to build out an integrated approach:

Break down organizational silos: For an integrated approach to SCM to be effective, the end-to-end supply-chain organization must operate as a unified entity.

Define organizational objectives: Move beyond business unit and functional unit design and metrics. Look at the organization holistically and define the objectives as a complete entity.

Align business processes: Take a cross-functional approach to business process design. Start at a high level and map out the supply-chain flow with the goal of creating an end-to-end mapping of the business process.

Design the IT architecture to support an integrated approach: Leverage a cross-functional approach to IT systems design. As much as possible, standardize across the organization in terms of the applications that are used. Seek to eliminate, as much as possible, disparate applications in favor of leveraging a common set of applications across the business.

Reshape leadership and culture: For most organizations, the single biggest impediment to delivering an integrated approach to supply-chain management is culture change. Change of this magnitude must be driven by leadership. Leadership must collaborate and drive the effort to deliver an integrated supply-chain organization.

Designing and achieving an integrated approach to supply-chain management are not easy tasks. For most organizations, it will require a complete overhaul to both business process and IT architecture. However, making this change need not be conducted with a big-bang approach. Take a strategic approach to change by evaluating the current processes and IT and leverage the current state as the foundation for process and technology design. During the process of mapping the current state, identify gaps and seek to close the gap by creating a road map to the future state.

The Outlook

Achieving an integrated approach to supply-chain management is a significant undertaking. It requires a fundamental shift in the traditional operations of the business as well as a rethinking of how to leverage technology to achieve objectives. However, when the supply chain is effectively integrated, the operation becomes far more agile, flexible and responsive.

How to Create an Integrated Approach for Supply Chain Management