PROCESS INTEGRATION

‘Creating collaborative advantages in the textile and clothing industry’

THE INTERNAL VALUE CHAIN

PRIMARY ACTIVITIES

ExpectationsMarketing

Operations CustomerStrategicDecision Product

and/or ServiceSpecifications

Product and/or Service

Interpretation ofExpectations

OutboundLogistics

RawMaterials

Sales

SUPPORT ACTIVITIES Firm infrastructure

Management, strategy, information technology, finance, capital etc.

Human Resource Management Technology development, engineering Procurement

INTERNAL INTEGRATION

ExpectationsMarketing

Operations CustomerStrategicDecision Product

and/or ServiceSpecifications

Product and/or Service

Interpretation ofExpectations

OutboundLogistics

RawMaterials

Sales

PROCUREMENT

THE SUPPLY AND DEMAND INTERFACE

DEMAND INTEGRATION Enhanced customer satisfaction Facilitated production planning Corrections and adjustments Shortened lead-time Inventory risk considerations Timely deliveries

SUPPLY INTEGRATION Production excellence Reduced lead-time Cost effectiveness Maximised capacity utilisation

COLLABORATIVE ADVANTAGE

“Two or more organisations ability to act as a cohesive whole in order to reduce transaction costs, increase organisational flexibility and responsiveness.”

(Dyer, 2000)

DRIVERS OF COLLABORATION Gain access to valuable information Gain access to external know-how Gain access to new technology Gain access to new market Improve response times and service flexibility Share risk of investment Gain market power Speed up new market entry

RISKS ASSOCIATED WITH COLLABORATION Lack of control Inappropriate relationships Poor communication or lack of understanding Lack of strategic focus Lack of mutual benefits Lack of trust Difficult to manage

VERTICAL INTEGRATION

BENEFITS Increased coordination and control Flexibility limited to internal capacity Confined trade secrets

CONCERNS Increased takings from ownership Capacity balancing issues