The Concept of a Supply Chain Integrator

I'm not sure that I agree with the concept of "supply chain integrators" proposed in this story in Supply Management. The notion is that a supply chain integrator would "serve as [a] connector between major retailers and manufacturing suppliers overseas ... [visiting] the suppliers to observe the manufacturing process, and therefore take on all the risk." It would seem to me that given this definition, a supply chain integrator is little more than a hybrid trading company / quality control type of intermediary. But when it comes to supply risk -- including the risks posed by suppliers using child labor, as the article suggests as one type of example -- companies need to take greater ownership of their own supply chains rather than outsource bits and pieces to third parties (the alternative is to outsource every part of an operational direct materials supply chain). After all, it's what you don't know about direct and lower tier suppliers which can have disastrous implications on the business. But perhaps what this suggestion can teach us is that there might be a role for new types of financial intermediaries who are willing to insure against global supply chain failures, offering policies based on the overall risks of specific practices (or the lack of certain practices, as the case may be, when it comes to supply risk management).

Jason Busch

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