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Integrated Supply Chain: Can It Really Make You More Agile, Customer-Focused?

Posted By Jeff Moad, February 06, 2012 at 3:02 PM, in Category: Global Value Networks

Does knocking down walls between supply chain, manufacturing, and other enterprise functions help make a company more agile and more responsive to customers? Glass container manufacturer Owens-Illinois is about to find out. The $7.4 billion manufacturer today announced a restructuring under which it has created a new integrated supply chain operation as well as a broadened technology group that combines the company's engineering and R&D functions.

Under Ed Snyder the O-I Integrated Supply Chain organization includes the company's global manufacturing, supply chain, environmental health and safety, quality performance management, procurement, logistics, and recycling groups.

O-I also created a combined engineering and R&D unit under Giancarlo Currarino.

In a statement, O-I CEO Al Stroucken said the moves are intended to make the company "more nimble, more innovative, and more customer-centric." But bringing supply chain and manufacturing together is also clearly meant to improve operational visibility and reduce costs. Stroucken late last month told financial analysts that the new Integrated Supply Chain structure "will help maximize operational efficiency and provide better visibility and control over production costs."

In the second quarter of last year, O-I ran into supply chain problems in North America and higher-than-expected inventory levels, reducing its net earnings for the period.

O-I certainly isn't the only company to have integrated supply chain and manufacturing functions in an attempt to improve agility. Recent research suggests 26% of studied organizations have created some flavor of integrated supply chain structures in recent years.

Has your company turned to a more integrated supply chain organization that incorprates manufacturing? If so, has it improved agility and helped reduce costs? What are some of the challenges you have faced in attempting to create an integrated supply chain function?

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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