Integrated Supply Chain Concepts: Theory Versus Reality

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Integrated Supply Chain Concepts: Theory Versus Reality
C.L. Kappagomtula, Professor, Malaysia

Tons of books and articles appear on various aspects of global supply chains and their integration to achieve perfections in their 'efficiency' and 'responsiveness'. While these two pillars hold the key to Supply Chain's idealization, one sometimes wonders if the distance between the reality on the ground and board room meetings or class room theoretical discussions is not too big... When doing business by itself is a competitive practice, why should any businessman share his business dealings with other business entities in the same composite integrated chain?

A truly integrated supply chain is tailored in theory using the 3A's (Accuracy, Appropriateness, and Accessibility) to regulate and control 3 flows in that Supply Chain (Products, Financial Payments and Information). Any organization will only give the needed information to the other two contact points in the upward or downward chain if that meets its own business interest. If it gets integrated with the Value System, a concept advocated in global supply chains to achieve harmony, demand aggregation and risk pooling, the physical function of the 3A's remains only in theory, and not in practice. This is due to innate business competition with one another in the integrated chain.

Each primary chain controller, which happens to be the focal organization, will not like to divulge information to others, lest losing its business advantage. Thus in practice only Primary Value Chains can be realized in practice. And even that only when the Focal Organization is in control of the Chain.

Integrated SCM Concepts are Far from Reality
C.L. Kappagomtula, Professor, Malaysia
Theoretical and ground realities in integrated supply chain operations were projected by the author over a week ago. Do the conspicuous abstention in adding reactions and criticism by the 'pundits' of Supply Chain Operations reinforce the views put forth in the article?
While an excellent operational efficiency and responsiveness can be maintained at the Value Chain level, the same is almost impossible at the Value System level. The prime reason being, the value chain can be effectively controlled by the Focal Organizations but the same cannot be done, when it comes to multiple players involvement in value system process.
While the concepts may sound impressive for generating academic interest and for producing journal papers supported with an elaborate mathematical treatise, yet, in practice they are far from practical reality.



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