Integration in Global Supply Chains

Integration in Global Supply Chains

Shawnee Vickery (Michigan State University, USA) and Cornelia Droge (Michigan State University, USA)
DOI: 10.4018/978-1-61692-862-9.ch006
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Abstract

Supply chain management (SCM) demands a holistic view of the functions and processes required to bring a product or service to market. It assumes that optimization of subsystems does not necessarily lead to global optimization and that the supply chain should be strategically managed as a single entity in order to effectively and efficiently deliver the desired results. SCM requires supply chain integration, both internal integration (for example, across functions) and integration with suppliers, customers, and/or other concerned channel members. The key recurring themes characterizing integration research as applied to business processes concern connectivity and simplification. Connectivity implies seamless linkages (internally or externally) and encompasses coordination, collaboration, cooperation, and interaction. Simplification is the common manifestation of system optimization. The most important specific mechanisms for achieving integration are teams (or integration via human interaction) and IT (or information integration); these two are central to the evolution of knowledge integration into a collaborative “culture” of joint decision-making and knowledge management. The literature suggests that integration in a supply chain and firm performance are positively linked. Although a lot of research in a variety of research domains has addressed cross-functional teams or IT (internal integration) and firm performance, less work has been done on the interaction of integration mechanisms or on the impact of integration mechanisms conditional on other factors, such as environmental turbulence. Furthermore, empirical research with a holistic supply chain orientation is in its infancy. For example, neither second tier suppliers and customers nor recyclers are typically considered. The chapter concludes by suggesting several avenues for future research in global supply chain integration.
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Background: Integration And Supply Chain Management

Supply chain management (SCM) demands a holistic view of the activities, processes, systems, and functions required to bring a product or service to market. SCM assumes that the supply chain can be strategically managed as a single entity or system, in contrast to the separate and often isolated management of the various segments or subsystems comprising the whole. Managing segments or subsystems may result in local optimization in terms of efficiency and effectiveness, but does not usually result in global optimization of the entire system; SCM seeks to avoid global sub-optimization. Recently, some SCM conceptualizations have also included consideration of recycling and final disposal, making supply chain management’s domain “earth to earth.” For example, government legislation may mandate “reverse logistics,” such as retailers and/or manufacturers being forced to collect and recycle computer equipment disposed of by their consumers.

Supply chain management focuses on the integration of activities, systems, and functions internally and across the supply chain, and the SCM literature emphasizes that integration is the core tenet. Lambert, Cooper, and Pagh (1998, p. 1) define supply chain management as “the integration of key business processes [emphasis added], from end users through original suppliers, that provides products, services, and information that add value for customers and other stakeholders.” The Council of Supply Chain Management provides a simpler, more concise definition: “…Supply Chain Management integrates [emphasis added] supply and demand management within and across companies” (Chen et al. 2009).

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