Supply Management

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Date Submitted: 12/26/2011 06:24 PM

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Pre-Module Assignment

The Superefficient Company

In the article, “The Superefficient Company”, the author, Michael Hammer, stresses the importance of vertical integration to make a company truly efficient (Hammer, 2001). Vertical integration is the capability to generate goods or services formerly purchased or acquiring a supplier or a distributor (Heizer & Render, 2009). In the article Hammer makes a very strong argument that vertical integration can help a company to outperform its competitors and increase profits by streamlining cross company operations. The author might be right in certain businesses or industry but it’s not the case everywhere. This paper will give you a brief summary of the article, advantage and disadvantages of vertical integration, and critique the concept by placing the idea in different scenario.

According to Hammer, in today’s time, companies have done a phenomenal job in streamlining their internal processes but haven’t given enough attention to their external processes which involves interaction with foreign companies. A lot of redundancy can be streamlined with the proper exchange of information thus making a company more efficient than ever. Streamlining cross-company processes is the next great frontier for reducing costs, enhancing quality, and speeding operations (Hammer, 2001). He has supported his arguments by explaining the business model of HP, Geon Chemicals and IBM which are based on vertical integration and excellent sharing of information. He also mentioned the importance of sharing infrastructure and information with non-competitors to reduce cost and operate efficiently by giving the example of General Mills and Land O’ Lakes.

With the help of revolutionized IT, communication technology and business intelligence it is possible to handle cross-company information efficiently and securely. It is difficult for inter-departmental collaboration, but even more difficult to get different companies to collaborate....