Supply Chain Management In Integrated Manufacturing Commerce Essay


Integrated manufacturing strategy is defined, systematic and strategic coordination of the business functions and the approaches to these business functions within a supply chain. This strategy is aimed at definitive provision of product and service packages needed by consumers. Supply chain system is defined as a chain of processes which start from the raw materials to the use of the final product moving across multiple supplier-customer connections. The objective of supply chain activities is to develop a net value, competitive infrastructure and synchronize supply together with demand and the global measuring performance. Currently, manufacturing businesses are required to co-operate with their trading partners through their business systems such as the design, manufacture, after-sale services and distribution (Umenda & Jain 5).

Processes of Integrated Manufacturing Strategy

Flexibility in integrated manufacturing strategy is characterized by a process chain that incorporates demand management, raw material deployment and production scheduling. These processes help to adequately utilize the available information, inventory and manufacturing resources. More recently, a Supply Chain Operations Reference (SCOR) model is used to explain supply chains. The model outlines five categories of processes namely; Plan, Source, Make, Deliver and Return thus with the use of this process types, an industry can implement operations strategy and at the same time measure their own performance. To enhance competition and active participation in the global business community, enterprises must use current information and communication technologies that allow low-cost and high-speed communications. However, the recognition of business-process integration depends on how well the mechanisms for sharing information among the supply chain member enterprises are organized (Wang 213). Powerful tools such as simulation are required to support the operation and design of the operation systems.

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While designing manufacturing systems, it is important for an enterprise to define its operational strategy in their inventory and production management.

Operational Policies in Material Management

Basically, there are four kinds of operational policies in relation to material management. These include, Material To Stock (MTS), Make To Order (MTO), Assemble To Order (ATO) and Engineering To Order (ETO). Operational strategies are used to design supply chain systems which comprises of multiple manufacturing enterprises. Integrated manufacturing strategies are used to reduce the inventory costs; this is because single chain members are able to synchronize their processes with each other so as to meet consumer s demands in time. Manufacturing operational strategies are used by enterprise to determine and make decisions on the efficient production management strategy that is required for a supply chain based on the environment in which it operates (Rao 1). Further, manufacturing strategy integration leads to environmental excellence that is critical for achieving overall corporate goals (Newman, Hanna and Youngdahl 53).

Material To Stock (MTS) system is used in a production environment where products are finished before the receipt of order from the customer. In this case the customer does not have time to make decisions on the product features since the suppliers manufacture the products and sell them from the finished goods catalogue. This saves time and cost as the orders are directly filled from the existing stocks. MTS strategy is only applicable to manufacturing products whose demand is constant and easy to predict such as electrical and electronic appliances. In Make To Order strategy, the production begins after the receipt of consumer s receipt. Thus, manufacturers do not make the products until an order from the customer is received and the supply chain has neither products in stock or parts stock. This strategy is quite advantageous since the end product is a blend of standard items that are custom-designed so as to meet the particular needs and wants of the customers (Chakravarty 315).

Engineering To Order (ETO) is a type of manufacturing operational strategy that is used when the users requirements need different engineering design and significant customization. The product is designed and produced after the enterprise receives a customer order depending on the customers special needs. This strategy eliminates waste and damage of stock since the inventory will only be purchased when the manufacturer requires it. Assemble To Order (ATO) is used when accessories are stocked before receipt of customers orders. It is efficient and sufficient since a lot of end products can be made from combinations of fundamental subassemblies and components. Therefore, the key elements such as bulk, intermediate, semi-finished, manufactured, subassembly and packaging utilized in the finishing process are planned for and stocked in expectation of customers orders. The above mentioned strategy is most advantageous where a big number of finished products can be gathered from main components, for instance in the computer industry. The delivery lead- time in this strategy is minimised since there is limited design period needed and also the inventory is held as raw materials (Boone & Gash, 119).

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Implementing Integrated Manufacturing

System designers and managers of integrated manufacturing strategies face various problems during the design, planning and the operation of the supply system. The process of planning an operational system is tedious and time consuming since it requires detailed examination of the amount of labor and machine resources that are needed to finish the production work. The operational strategies have lead-time planning difficulties. Lead-time is composed of order preparation, time of queuing, processing time, transportation time and the receiving and investigation time. These problems negatively affect the proper implementation of manufacturing operational strategy. It is difficult to make decisions on the due dates of production, the volume of products to be manufactured and the type of transportation channels to be used.

In support of production strategy, aggregate production plan which is used to estimate the rates of production affects several company activities. Therefore, it is only prepared after collection of information from marketing and conducted with the functions of engineering, finance and manufacturing (Bolstroff 67). Additionally, the production plan may not meet current levels of sales and meet the general objectives of the business.

When a system planner devises a supply chain there is always a supplier selection difficulty which affects the system operation for a long period of time. Further, modern manufacturing enterprises face a problem of outsources planning. This is because it is not possible to maintain expertise in all the processes and technologies that are needed for the manufacturing of a product in a single company. It is very difficult to put into considerations the group of suppliers for outsourcing and how to choose a supplier from the set. Likewise, it is challenging to select between third party self-transportation and to relate both processes of external and internal production planning. In use of operational strategy, there is a problem of selecting the appropriate strategy to drive the supply chain. The management of an enterprise must make decisions on the approach to use to control the movement of products through the supply chain. The above mentioned problems include the decision to make an appropriate choice of a given strategy such as MTS, STS, ATO and MTO at every level of the supply chain (Chapman & Allinger 115).

In the recent researches, complaints have been given regarding global operations which have emerged as a result of Accenture SCM service line; that quite a good number of companies have encountered significant struggles in their attempts to successfully implement the integrated operational strategy. As thus, these companies have to first acknowledge that global operation is very critical to their existence and in order to sustain their worldwide operation they ought to bring their capabilities to be at par. This is only achievable if these companies work tirelessly to narrow the gap that exists between the current capabilities and their operational goals. This will ensure that these organizations do not lose their market share and that they will stand on stronger grounds to satisfactorily meet the needs of their customers (Cleland & Lewis, 460).

The strategies which are resolved at while undertaking global operations have to fit in an enterprise-wide perspective of carrying out activities. Therefore, in pursuit of becoming leaders in the global operations, organizations have to institute three basic capabilities. These include financial-engineering capabilities, adaptability to the supply chain and capabilities in both risk anticipation and risk mitigation. End-to-end changes in the processes of the enterprise are a strategy that can be used by the organization for the purposes of effective global operation. Additionally, the enterprise s generic strategy has to be considered since it is very vital for the enterprise s operations strategy. In the process of implementing the operations strategy, items ought to be produced in good time and at the same time delivered in the shortest time possible and in the right form. Therefore, the factories have to undergo transformation and became virtual enterprises. These virtual factories/enterprises are entrusted with the collection of data, its organization, selection and synthesis after which they distribute the information using IT, by employing the Electronic Data Interchange (EDI), the internet, wireless connections or an integration of the three. Operations strategy can also be achieved through customer satisfaction, shorter product cycle and lead times, coming up with direct-to-direct consumer delivery channels and he use of smaller lot sizes. Besides mass production, new manufacturing strategies have to be pursued to keep at par with the customers speed and customization requirements. Therefore, to realize this, the organizations have no other alternative left other than reducing the cost, globalizing their operations, minimizing the failures of the process and of great importance making improvements in quality (Roussel, 13-14).

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A Refined Strategy

Massachusetts Institute of Technology (MIT) in collaboration with Pepsi Bottling Groups (PBG) offer the MIT-PBG s Approach that can be applied in ensuring integration is achieved in the manufacturing strategy. In this approach, the manufacturing strategy is made flexible and at the same time matches the decisions of production sourcing with the preferences of consumers. This is done on a quarterly basis and takes into account the total supply chain costs of transportation, manufacturing, customer service requirements and warehousing costs. The emphasis of this strategy lies on service cost and customer preferences, which plays a key role in the supply chain performance of cutting down the out-of-stock levels (Scdigest 1).


Overtime both supply chain and operation strategy have been emphasized through lean manufacturing, just-in time (JIT), frequent deliveries to retail outlets and off-shoring. On the contrary, some or all of these strategies may put in danger the supply chain of a firm together with the firm s ability to successfully compete. This is due to the global economic changes, an ever-rising labour cost especially in the developing countries and the huge unpredictability of oil and other commodities. Since companies are not capable of competing successfully on all dimensions, to be put into consideration is the operations strategy that is a function of the customer value propositions of choice, innovation, experience and price. The company s management, therefore, needs to carefully pick its goals. This is due to the fact that the success of the supply chain and the operations strategies, the set skills and the market network depend on the particular value scheme.