Question

What is the outcome of having tighter integration within the supply chain?

Answer 1

Tighter integration within a supply chain means well integrated network of departments and various business partners. All these elements work together to achive a common objective. The tight integration allows flexibility of responding to external events. Management can garner detailed data and information about the supply chains.

It also implies that there is better inventory management which results in few overstocking and understocking conditions. Retailers can use the tight integration to adjust their inventory orders in advance. It also implies that just in time inventorty is also possible in the business. There are lower costs due to operating flexibility and tighter inventory management. It provides the company with visibility into their own as well as the operations of the suppliers.

Tighter integration allows an early warning system. It is however complemented with a high upfront cost due to new information systems.