Until recently Supply Chain Management was considered by many companies as an area with limited value added potential. This however has been changed in a revolutionary way by the emergence of information technology solutions enabling real time information exchange and real time supply chain optimisation. This revolution doesn’t only mean better resource utilisation and simple cost reduction. It also means integration of company’s operations with it’s suppliers, service providers and customers which for most of Polish companies is related to dramatic change in the philosophy of doing business.
The integration results in a new situation on the market. The competition as before is driven by cost efficiency and customer satisfaction but the market players are changing from individual organisations to chains of strongly linked companies concentrated on best performance for final consumer.
The influence of Supply Chain Integration on the position of a company can be analysed taking as an example the situation of producers on Polish consumer market.
For the past couple of years their competitive position has been impaired by the emerging hyper and supermarket channel (mass distribution chains) which to date took over c.a. 22% of retail sales in Poland. If Poland is to follow the Western Europe development patterns this trend will continue. The wholesale channel responded to this situation by capital consolidation of major players, collaborative purchases, vertical integration and offering additional services (such as for example transportation). This however might not be enough to survive for local and regional wholesale networks given that strong financial position of mass distribution chains allows them for numerous customer attracting initiatives.
The emergence of mass distribution chains reduced margins of both producers and wholesalers and one of the strategic alternatives for them is to build new distribution channel to the market driven by the newest technology solutions and the idea of supply chain integration. The new channel consists of a “virtual” part allowing for electronic ordering, order and payment processing and distribution planning integrated with the “real” part responsible for physical delivery of ordered goods (producers and distributors).
This channel offers the retailer or the consumer the widest possible offer range and additional value of for example “to door” delivery at the price comparable to this offered by mass distribution chains. For the producers and distributors it offers high volume turnover without any pressure form intermediaries and the ability of effective demand forecasting and communicating new product offering to the market.