What is an integrated supply chain? Explain how two selected businesses have been able to integrate their supply chains.

• Has shorter lead times
• Inventory turnover increases            
• Quality improvement
• Workplace organisation
• Set up times are reduced dramatically in the factory
• Closer relationship between customers and suppliers
• Efficient method of locating, pulling and moving merchandise from warehouse to shelves
• Consistency of scheduling is improved and employee work hours
• Employees are utilized more efficiently

Although there are many benefits to using “Just in Time” there is some drawbacks, these are that it leaves suppliers and downstream consumers open to supply shocks and large supply or demand changes. An example of this would be when Toyota suffered a major supplier failure; this was because of the 1997 Aisin fire which rendered one of its suppliers incapable of fulfilling there order. Not only this as a drawback but also by using “Just in Time” it comes with additional costs such as storing and tracking the inventory and the implementation of new ways to streamline warehouse efficiency. As a result of this being quite a complex control system it may require a significant upgrade in the computer systems you already have, which will cost a lot of money.

The first selected business I will be looking at who has been able to integrate their supply chains is Toyota. They have managed to integrate their supply chains over the years through their Toyota production system (TPS). This is based on two concepts these are Jidoka and “Just in Time”, by having these two concepts it has gained more flexible production. Also by using the Kanban system for the TPS it has given it the production instruction and the parts retrieval making it easier to follow for them. Lastly in the TPS they use “Single minute exchange of die” (SMED) this   provides a rapid and efficient way of converting a manufacturing process from running the current product to running the next product. This rapid changeover is key to reducing production lot sizes and thereby improving flow. Also over the years they have managed to integrate the supply chain by cutting down on their warehouse space. This is done by them as they only make what is needed, when it is needed and in the amount they need. They do this by when a vehicle order is received; a production instruction is issued to the beginning of the vehicle production line as soon as possible. When this has been done the assembly line must be stocked with small numbers of all types of parts so that any kind of vehicle ordered can be assembled. From this the assembly line must replace the parts used by retrieving the same number of parts from the parts-producing process. The preceding process must be stocked with small numbers of all types of parts and produce only the numbers of parts that were retrieved by an operator from the next process.

The next selected business I will be looking at who has been able to integrate their supply chains is McDonalds. As before they used “just in time” McDonalds used to pre-cook a batch of hamburgers and let them sit under heat lamps. If nobody bought the products after a certain time that they couldn’t sell they would just throw them away, this meant that there was no fresh hamburgers, only when a special order has been made, which took a long time to prepare. But now when using “just in time” McDonald's doesn't begin to cook its orders until a customer has placed a specific order. This has been as a result of sophisticated burger-making technology which has been able to make McDonald's to make food fast enough to wait until it's been ordered. The benefits of using “just in time” is that it helps provides customers with their order as fresh and fast as possible while finished products sit in the inventory for as short as time as possible. The other benefit for McDonalds is that it is producing better food at a lower cost. This is because the fresher the burger is going to be, the higher of quality if made fresh just for you. The less obvious benefit is the higher quality customer service that arises from the JIT burger assembly.  When McDonald's waits for you to order the burger, they do a few things to improve customer service.  When you place a special order, it doesn't send McDonald's into a panic that causes huge delays. Now that McDonald's is in the practice of waiting until you order a burger until they make it, they don't freak out when they have to make a special order fresh just for you.  This higher quality customer service is subject to McDonald's ability to actually produce faster.  Without this ability, McDonald's ordering costs would be sky-high because the costs associated with ordering would be the loss of customers tired of ordering fast food that really isn't fast. “Just in Time” allows McDonald's to adapt to demand a little bit better. Seemingly, lower inventory levels would cause McDonald's bigger problems in a higher demand because they wouldn't have their safety stock.  However, because they can produce burgers in a record time, they don't have to worry about their pre-made burger inventories running out.