Integrated Supply Chain Management - Marketing Benefits

In addition to the potential for reducing costs for companies involved in supply chain integration (SCM), some authors (KAMPSTRA et al., 2006; MARTIN and GRBAC, 2003; SCHLOETZER, 2012) point to important marketing benefits as a result of this integration, arising from the greater speed of response to the market, better level of customer service and greater ability to adapt to changes, which can significantly increase the sales revenue of companies.

Market Response Speed

In traditional commercial relationships in a supply chain, the flow of information tends to be predominantly unidirectional, permeating the different companies from final consumers to raw material suppliers, with the exclusive transmission of orders from the buyer company to the buyer company. seller (CACHON and FISHER, 2000). Relevant information for serving consumers, such as the position of inventories along the chain, production and transport capacity, real demand and marketing actions, for example, are omitted as a way to enhance each company's bargaining power individually (COOK et al..

The improvement in information flows resulting from integrated supply chain management (SCM) enables greater speed of response to the market, culminating in two significant marketing benefits:

• Firstly, information flows become bidirectional, allowing information on the capacity of suppliers and carriers to be made available quickly so that companies closer to end customers can shape their offer, making it more attractive (AGAN, 2011);
• In addition, the greater integration between companies allows the new requirements, needs, desires and desires of consumers to be translated into products and services more quickly (MADHANI, 2010), reducing deadlines for launching innovations.

MADHANI (2010) also points out that for products with short life cycles, such as fashion apparel, electronic devices, personal computers and automobiles, response speed is critical and, therefore, effective supply chain integration (SCM) is even more important. more important.

Customer Service Level

FAWCETT et al. (2008) point out that the level of customer service, which involves dimensions such as product availability, delivery time, deadlines reliability, support information, among others, plays an important role in the purchase decision process and in customer loyalty.

Several authors (ARSHINDER et al., 2011; BOWERSOX et al., 1999; LEE et al., 2000; LEONARD and CRONAN, 2002; VIVALDINI, 2010) state that collaboration and integration between commercial partners in a supply chain bring significant improvements in the level of service offered to customers, especially with regard to:

• Increased product availability ð The improvement of the sales forecasting process, in addition to the benefits associated with cost reduction previously discussed, makes it possible to better shape the offer, reducing stockouts and increasing availability rates (WANKE and FERREIRA, 2006);
• Reduction in the order cycle time ð Result of the use of tools that speed up the exchange of information, better planning, the correct dimensioning of operations and the coordination of actions between companies (FAWCETT et al., 2008);
• Greater reliability of delivery times ð The coordinated planning of operations between supply chain partners allows for greater operational stability and discipline, avoiding the concentration of orders in specific periods of the month, or year, for commercial reasons (MADHANI, 2010) . In addition, greater visibility allows you to react to operational issues quickly, reducing the number of delays;
• Flexibility ð Close relationships with suppliers leave room for special orders at unique times of high demand, helping to meet customer expectations, or deliveries under special conditions, such as at night hours or outside the distribution center (FAWCETT et al..

Ability to Adapt to Changes

In a competitive and rapidly changing environment, there is a need to develop solutions capable of adapting the supply of goods and services to new market conditions, preventing systemic risks and meeting new customer requirements (GUNASEKARAN et al., 2008). This flexibility makes it possible to better deal with the risks associated with the supply chain, which can range from simple changes in the competitive environment, caused by regulations or the entry of new competitors, to natural catastrophes such as hurricanes, floods and earthquakes (MANUJ and MENTZER, 2008). . LEE (2004) points out that the integrated management of the supply chain allows greater flexibility insofar as:

• Closer relationships in the supply chain make it possible to use the multiple international branches of the operations of its trading partners to monitor a wide spectrum of economies and countries, increasing the possibility of anticipating a crisis (LEE, 2004);
• It uses information from the needs of final consumers to shape the offer of products and services and, no longer, is based on superficial data from immediate customers (GUNASEKARAN et al., 2008; Lee, 2004);
• Allows alignment between product development teams, who must design them with component standardization and customer satisfaction in mind. postponement, which allows working with smaller intermediate stocks (LAMBERT and POHLEN, 2001), ensuring resilience to the chain (LEE, 2004; SCHMITT and SINGH, 2012).

Table 1 - Summary table of benefits related to increased revenue (marketing)

The network of relationships summarized in Table 1 is presented in Figure 1, which details the causal relationships present in the exposed literature. It can be seen that, with regard to the level of service, the results often depend on the combination of several concomitant actions. It is also worth mentioning the fact that some actions and results are interchangeable between the different types of improvement – ​​adaptability, agility and service level – which in this case are confused.

Figure 1 – Network Design for Benefits Associated with Increased Revenue
Source: AUTHOR using Atlas.TI tool

The relative importance of the benefits seems to depend on the functional area involved in the process, according to a study by FAWCETT et al. (2008), which showed that the supply team pointed to the reduction of purchasing costs as the main benefit of SCM, the logistics area cited meeting the delivery deadline and, for production, the main benefit intended with SCM practices is the reduction of rescheduling to fulfill production orders. In addition, corroborating the segmented view of potential earnings, FAWCETT et al. (2008) also point out that the prevalent advantages identified by a functional area are considered less important by the other areas.

The prevalence of advantages associated with customer satisfaction in the SCM literature was not confirmed by the executive survey conducted by Fawcett et al. (2008), which had cost reduction as the most cited objective, a result corroborated by the analyzes presented Figure 2 with data from PwC – Global Supply Chain Survey 2013 (GEISSBAUER et al..

Figure 1 – Network Design for Benefits Associated with Increased Revenue
Source: AUTHOR using Atlas.TI tool

Benefits related to customer satisfaction seem to be perceived as more lasting by managers. Pursuing these goals, however, seems to be more difficult, as executives are driven to produce short-term gains, more directly related to cost reduction (FAWCETT et al., 2008; WALTERS and RAINBIRD, 2004).

References:

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2 ARSHINDER, K.; KANDA, A.; DESHMUKH, SG A Review on Supply Chain Coordination: Coordination Mechanisms, Managing Uncertainty and Research Directions. In: CHOI, T.-M.; CHENG, TCE (Eds.). Supply Chain Coordination under uncertainty. Berlin, Heidelberg: Springer Berlin Heidelberg, p. 39–82, 2011.

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