Week One Discussion 1 Replies

Reply to the TWO students' discussion posts with a minimum of 75 words each

Oladipo Efunkoya

Why Supply Chain Management Processes Must Be Both Cross-Functional and Cross-Firm

Supply chain management is most effective when it is managed through processes that cut across organizational functions and extend across multiple firms in the supply chain. Modern supply chains involve the coordinated flow of materials, information, and finances from suppliers to manufacturers, distributors, retailers, and customers. Therefore, managing supply chains requires integration both within a company and among supply chain partners.

Functional Silos

Functional silos occur when departments such as purchasing, manufacturing, marketing, sales, logistics, and finance operate independently and focus only on their own objectives. This often leads to the problems listed below:

· Poor communication and information sharing.

· Conflicting goals and performance measures.

· Inefficient decision-making.

· Inventory imbalances, stockouts, or excess inventory.

· Reduced responsiveness to customer needs.

For instance, the sales department may seek high product availability while finance focuses on minimizing inventory costs, creating conflicting priorities. Cross-functional processes align these departments around common supply chain objectives and encourage collaboration across functions. Research shows that successful supply chain management requires cross-functional integration because supply chain activities span multiple departments and cannot be optimized independently. 

Lambert, Garcia-Dastugue, and Croxton argue that organizations should “ventilate” rather than eliminate functional silos by implementing cross-functional business processes that allow departments to work together while still contributing their specialized expertise.

Overcoming Corporate Silos

Corporate silos occur when companies within the supply chain (suppliers, manufacturers, distributors, retailers, and customers) operate independently and fail to share information or coordinate decisions. Problems associated with corporate silos include:

· Limited visibility across the supply chain.

· Poor demand forecasting.

· Increased lead times and costs.

· Duplication of effort.

· Reduced ability to respond to market changes.

· Greater risk of disruptions and inefficiencies.

Supply chain competition today occurs between supply chains rather than individual firms. Consequently, organizations must collaborate with suppliers and customers to coordinate planning, inventory management, production scheduling, and information sharing. Cross-firm integration improves customer service, reduces uncertainty, increases information flow, and enhances overall supply chain performance.

Researchers have emphasized that successful SCM requires integration across the network of firms that comprise the supply chain. The ultimate success of an organization depends on its ability to overcome both functional and corporate silos through cross-functional and cross-firm processes. 

Conclusion

Supply chain management processes must be both cross-functional and cross-firm because supply chain performance depends on coordination throughout the entire value chain. Cross-functional integration reduces internal conflicts and improves organizational efficiency, while cross-firm integration enhances collaboration, information sharing, and responsiveness across supply chain partners. By overcoming functional and corporate silos, organizations can improve customer satisfaction, lower costs, increase flexibility, and achieve a sustainable competitive advantage. 

References

Croxton, K. L., Garcia-Dastugue, S. J., Lambert, D. M., & Rogers, D. S. (2001).  The Supply Chain Management Processes. International Journal of Logistics Management, 12(2), 13–36.

Eng, T.-Y. (2005).  The Influence of a Firm's Cross-Functional Orientation on Supply Chain Performance. Journal of Supply Chain Management, 41(4), 4–16.

Lambert, D. M., Garcia-Dastugue, S. J., & Croxton, K. L. (2008).  The Role of Logistics Managers in the Cross-Functional Implementation of Supply Chain Management. Journal of Business Logistics, 29(1), 113–132. 

Mentzer, J. T., DeWitt, W., Keebler, J. S., et al. (2000).  Issues in Supply Chain Management. Industrial Marketing Management, 29(1), 65–83.

Lambert, D. M., & Enz, M. G. (2017).  Issues in Supply Chain Management: Progress and Potential. Industrial Marketing Management, 62, 1–16.

Van Owen Legaspi

Good evening Class,

I hope everyone is having an amazing week!

This is one of those questions where the answer seems obvious until you have actually watched the alternative play out. Supply chain management has to be cross-functional and cross-firm because the moment any single department or company tries to optimize just its own piece, the rest of the chain pays for it somewhere else.

On the functional silo side, the classic example is the bullwhip effect. Sales runs a promotion without telling production; procurement chases the cheapest supplier without checking the lead time impact on the production schedule; and each function looks fine on its own numbers while the chain as a whole gets worse. One study on a UK dairy product actually measured this and found the production order variance ran 7.68 times higher than the real demand variance (Disney, 2025). That distortion is not free. Industry estimates put the inventory cost of bullwhip swings at 25 to 40 percent higher carrying costs compared to a chain where the functions are actually talking to each other (Netstock, 2026).

I saw a smaller version of this in Navy aviation maintenance. Supply, maintenance control, and operations were all chasing the same goal of keeping aircraft mission-ready, but they worked off different inputs. Supply ordered against historical consumption, maintenance generated demand off actual discrepancies on the aircraft, and operations changed the flight schedule without always looping the other two in early enough. Some months, we had parts shortages on aircraft that needed to fly, and other months, we had excess stock of things nobody needed. The same root cause as the bullwhip effect occurs at a squadron level instead of a corporate one.

Cross-firm silos are the same problem, just between companies instead of departments. Perfect Planner (2024) cites an Institute for Supply Management study finding that 41 percent of supply chain professionals point to siloed operations as the main barrier to real supply chain integration, and that barrier does not stop at the edge of one company. If a manufacturer will not share demand data with its supplier, the supplier has to guess and build in extra safety stock and longer lead times to cover the uncertainty, which raises costs for everyone downstream, too.

The companies that get this right treat suppliers like part of their own operation instead of an arm 's-length vendor. Zara can design, produce, and get new items into stores in about three weeks (Perfect Planner, 2024), and that is only possible because design, manufacturing, and distribution partners are sharing real-time information instead of each guarding their own piece.

Bottom line, functional silos create the bullwhip effect inside a company, and corporate silos push that same distortion across company lines into the whole supplier network. Integration on both fronts is what actually turns a supply chain into a system instead of a chain of guesses.

Best,

Van

References

Disney, S. M. (2025). Bullwhip effect. In F. Petropoulos et al. (Eds.),  Operations & supply chain management: Principles and practice (pp. 87–90). arXiv.  https://arxiv.org/abs/2503.05749

Netstock. (2026, January 22).  The bullwhip effect: How to prevent supply chain disruptions and save costs.  https://www.netstock.com/blog/how-to-minimize-the-bullwhip-effect-in-your-supply-chain/

Perfect Planner. (2024, December 12).  Building trust and collaboration in cross-functional supply chain teams: Breaking down silos for success.  https://perfectplanner.io/building-trust/