As business regulations have changed and the technology influence to new way of doing business has rapidly increased, many businesses face new challenges. New business model, therefore, focuses in process orientation which creates complexity and challenges for business leaders rather than focuses in function orientation in the traditional business model. Braganza and Korac-Kakabadse (2000) suggested that organizational elements consist of strategy implementation, organizational structure, information flows, physical flows changed to process orientation from function orientation due to the challenge and competition in the market.
Process oriented focus basically emphasizes how work is done, while the function oriented focus implies what is done in an organization (Gemmel, & Vandaele, & Tambeur, 2008). In this sense, process orientation promotes the key elements such as business integrated strategies, communication management, information exchange and flow, and organization structure in supply chain management. The supply chain management, therefore, will be influenced by business process integration and management where business process framework consists of the methods and techniques, organization and people, and systems and data has to be in balance and competent (Pienaar, 2007). Similarly, McAdam & McCormack (2001) advised that information technology and human resources management play a key role in creating the enablers of and barriers to business process and that “the enablers of process improvements across supply chains can be expected to be largely the same as those within companies” (p. 115).
In supply chain management, collaboration between business partners is required. Suppliers plan and control business processes by an integration model in which all activities are planned and executed together based on the independent demand from the consumer. In this related processes between organizations, the process framework and the design and implementation of the integrated logistics business processes should be considered thoroughly and successfully.
Subsequently, involving technology to improve business integration process, organizations begin to use the enterprise resources planning (ERP) system. This information technology infrastructure will automate the integration of many business processes. The ERP system basically is a system that integrates those supported generic business processes into one system (Themistocleous, & Corbitt, 2006). This link between the use of ERP system, which enable both integration of information flows and physical flows, and the supply chain integration process needs to be investigated because the relationship will provide business a sense of important business process approach.
Theoretically, the need of focusing on business process oriented approach urges companies to not only integrate business processes within the company’s boundaries, but also strategically implement the integration and management processes with other companies in the chain. There is inevitable sign of the relationship between the adaptation of the ERP system to improve the efficiency and the increasing information exchange with suppliers. Improving the information flows with other companies in the supply chain will enable business in better advancing the influence of the integration process.
Managing the information flow across organizations is increasingly recognized by many businesses. It is proved that the business seeks practical way of doing business by focusing on the supply chain integration and enhancing the functional oriented business approach to process oriented business approach. This requires a massive change in the business structure and processes. McAdam and McCormack (2001) researched many companies which implemented the business processes for supply chain management and proposed the important of this change through their analysis and discussion. The best example to show this belief and success is the particular study on Nortel Networks Corporation. With an in-depth case study by using qualitative method in which many interviews with members of the global supply chain and archive data from Nortel Networks Corporation had been analyzed, McAdam and McCormack (2001) proved that companies in positioning themselves in a suit environment and better decision strategy, they need to change the organization structures. Nortel Networks Corporation responded well to the new environment with strategic innovation in organization structure changes.
Organizations change to adapt the new competition in the market. When new demand from customer emerges, new suppliers becomes known, and government regulation changes, there is a significant change in the market. Companies implement new strategies, change business processes, and restructure the organization to compete with the new environment and demand on the market. Business process integration is feasible and enables businesses to think about the new way of doing business. Supply chain integration also established a good customer relation because this approach helps organizations to satisfy the demanding customer more. In recent days, the digital technology and the Internet actually have brought the integration process work better for customers. The customer relation management system, therefore, has been rapidly developed and used effectively in the supply chain integration business. This system has brought customers closer to the suppliers, creating a good level of loyalty from the customer to the suppliers. “Value managed relationship” defined by McAdam and McCormack (2001) suggested that the added maximum value to the supply chain is being built with key customers and suppliers and that communication between the processes and within supply chain partners is also one of the keys of the integration process.
In conclusion, business process orientation is a new approach of doing business. The business process framework combines the three key elements such as the adoption of information technology, the decision on strategic implementation, and the change of organization structure helps building the business process in supply chain integration approach. However, many researches proved that the integrated business processes only show the effectiveness within internal processes and the significant lack of coherent integration between business partners or suppliers.
Braganza, A., & Korac-Kakabadse, N. (2000). Towards a function and process orientation: Challenges for business leaders in the new millennium. Strategic Change, 9 (45/53). John Willey & Sons, Ltd.
Cagliano, R., Caniato, F., & Spina, S. (2006). The linkage between supply chain integration and manufacturing improvement programmes. International Journal of Operations & Production Management, 26 (3/4).
Gemmel, P., Vandaele, D., & Tambeur, W. (2008). Hospital process orientation (HPO): The development of a measurement tool. Total Quality Management, 19 (12).
McAdam, R., & McCormack, D. (2001). Integrating business processes for global alignment and supply chain management. Business Process Management Journal, 7 (2).
Pienaar, A. (2007). Integrated logistics management. In Mentzer, J. T., Myers, M. B., & Stank, T. P. (Eds.), Handbook of global supply chain management (pp. 169-183). Thousand Oaks, CA: Sage Publications.
Themistocleous, M., & Corbitt, G. (2006). Is business process integration feasible? Journal of Enterprise Information Management, 19 (4).