This document discusses operational integration and achieving logistical integration. It outlines several key points: 1) Operational integration creates economic value through economies of scale, market value by presenting attractive products, and relevancy through customization. 2) Achieving logistical integration involves responsiveness to customers, reducing variance and inventory, consolidating shipments, and continuous quality improvement. 3) Internal integration barriers include functional organization structures, traditional measurement/reward systems, inventory leverage issues, infocratic structures, and knowledge hoarding between functions. These barriers contribute to a "great divide" between functions in many businesses.

1. OPERATIONAL INTEGRATION
CHAPTER 11

2. Why Integration Creates Value
Economic Value- builds on economy scale in
operations as the source of efficiency. Its all about
doing thing as well as possible.
Market Value- All about presenting an attractive
assortment of products at the right time and place to
realize effectiveness.
Relevancy-Involves customization of value adding
services, over and above product positioning, that
make a real difference to customers.

3. TO ACHIEVE LOGISTICAL
INTEGRATION
Responsiveness- A firms ability to satisfy
customer requirements in a timely manner is referred
to responsiveness.
Variance reduction- Elimination of system
disruptions
Inventory Reduction-Inventory can and does
facilitate desirable benefits.
Shipment Consolidation- an effort to reduce
transportation cost.

4. TO ACHIEVE LOGISTICAL
INTEGRATION
Quality – A fundamental operational objective is
continuous quality improvement.Total Quality
management (TQM) is a major initiative throughout
most facets of industry.
Life Cycle Support- It’s the final integration design
objective.It requires Cradle to cradle logistics.
Elimination of system disruptions.

5. Internal Integration Barriers
Organization-organization structure of a business
can serve to stifle- cross functional processes. Most
business organizations seek to align authority and
responsibility on the basis functional work.
Measurement and Reward System- traditional
measurement and reward systems serve to make
cross functional coordination difficult. Most reward
system are based on functional achievement.

6. Internal Integration Barriers
Inventory Leverage –traditional measurement and
reward systems serve to make cross- functional
coordination difficult.
Infocratic Structure- serves as an invisible force to
retain traditional functional information flows.The
impact of this is one of the driving reasons why
Enterprise resource planning ( ERP)systems have
great general management appeal.

7. Internal Integration Barriers
Knowledge Hoarding- in most business situations
knowledge is power, so unwillingness to share
and general lack of understanding how to share
knowledge are not common.

8. GREAT DIVIDE
Clearly many obstacles make functional
integration difficult. To some extent, the five
barriers have contributed to a common situation
in business referred to as the “great divide “