LOGISTICS INTEGRATION AND DISINTEGRATION

- IN SEARCH OF A FRAMEWORK

Nathalie Fabbe-Costes
CRET-LOG, University of la Méditerranée (Aix-Marseille II), France, nfc@univ-aix.fr
Marianne Jahre
Department of Strategy and Logistics, Norwegian School of Management (BI), Oslo, Norway,
marianne.jahre@bi.no

Abstract: Integration is one of these words that most authors in logistics and supply chain
management literature use without defining it precisely, as if its sense was obvious. Most academics,
in line with managers, claim for more logistics integration, look for integrated supply chains, etc. But
“behind” integration, there are issues in need of clarification and structure. The purpose of our paper is
to clarify the notion pointing out main dimensions of the concept for the development of a framework.
The paper ends with an opening discussion regarding degrees of integration and how to address the
question of disintegration and non-integration.
Keywords: supply chain management, logistics integration, supply chain disintegration, framework.

1 Introduction
Integration is one of these words that most authors in logistics and supply chain
management (SCM) literature use without defining it precisely as if its sense was obvious.
According to Pagell (2004) integration ‘has been defined in a number of different, albeit
interrelated ways’ and ‘many authors who have studied integration offer no formal definition
of the construct’. Most academics, in line with managers, claim for more logistics integration,
look for integrated supply chains, etc. Integration is considered to be at the core of logistics
management providing cost effective and customer-oriented solutions and is so popular in our
domain that it appears in almost every call for paper or contribution (cf. the ISL call for
paper!). The concept of integration is used a lot and considered to be essential in logistics.
However, for a few exceptions (see for example Kahn and Mentzer, 1996 who discuss its
definition in an intra-organisational context, whereas Bask and Juga, 2001 Håkansson and
Persson, 2004, Jahre and Fabbe-Costes, 2005 take it up in an inter-organisational context) it is
not much problematised. A large number of other concepts are used as substitutes and/or
explanations for integration including strong coordination, synchronization, tight coupling,
cooperation, connectivity, interoperability, coherence, etc.
The term ‘integrate’ dates back to approximately the year 1586 and is defined in
Merriam-Webster's Collegiate Dictionary as ‘to form, coordinate, or blend into a functioning
or unified whole’ (http://www.search.eb.com/dictionary) whereas the word ‘disintegrate’,
dating back to 1796, almost 200 years later, means ‘to break or decompose into constituent
elements, parts, or small particles’. Hence, ‘disintegration’ can be viewed as a term to
describe that something that was integrated has been broken or split, whereas the term ‘non-
integration’ denotes something that never was integrated in the first place.
Even if integration seems to be an ‘ideal’ for logistics and supply chain management,
recent research has claimed that (supply chain) integration is more difficult in practice than it
seems to be in theory (e.g. Christopher and Jüttner 2000, Harvard Business Review 2003).
Power (2005, p.261) concludes with ‘the apparent contradiction in the literature between
promised benefits and still limited evidence of extensive implementation…’ There are also an
increasing number of articles claiming that flexibility, agility and adaptability are just as
important as leanness, adaptation and integration because of varied and rapidly changing
customer needs (Fuller et al 1993, Christopher 1997, Bechtel and Jayaram 1997, Fisher 1997).
There are discussions of whether the requirements for integration make it more difficult to be
flexible. Whereas Towill and Christopher (2002) claim that ‘In reality, the two approaches
can complement each other,…’ (p. 8). Jahre and Fabbe-Costes (2005) show that there is
indeed a trade-off between adaptation (leanness) and adaptability (agility). It seems there is a
need for more understanding of the extent to which integration hinders flexibility and the
potential need for dis- or non-integration.
But what is integration? A brief look at managerial and theoretical logistics and SCM
literature shows that “behind” integration there are many issues to consider. There is a
question of what should be integrated: flows? Processes? Organizations? The scope of
logistics integration also varies from intra-functional to inter-organizational integration.
Further, in an inter-organizational context, integration sometimes means to have something
done with outside partners as if it was done inside the company, referring both to the notion
of vertical integration in strategy and transaction cost theory with the classical dilemma
between market and hierarchy (i.e. “integration”). In fact, the integration question in logistics
and supply chain management is in line [but at an inter-organizational level] with Lawrence
and Lorsch’s (1967) research as also discussed by Persson (1978). They studied the
connection between the varying technical and economic conditions in the environment and
the organizational patterns that lead to successful economic performance, with the key
question of the organization’s differentiation and integration. For them, differentiation of an
organization [for us of supply chains and logistics function] into sub-systems is based on
environmental requirements. Integration is the quality of the state of collaboration that exists
among sub-systems that is required to achieve unity of effort by the demands of the
environment. But the more differentiated an organization, the more difficult it is to achieve
integration. Integrating devices consistent with the diversity of the environment may be
implemented to help with integration.
This rapid overview shows that integration is used for many purposes and with many
meanings in logistics and SCM and that it refers to an old question in organization theory.
Contemporary flexible and agile supply chains call for a deeper analysis of the need for
integration, non-integration and/or disintegration.
Our purpose is to contribute to the understanding of the integration concept by
providing a clear and structured framework for studies of integration. The framework builds
on main dimensions of the integration concept identified in the literature review. The paper at
this stage is purely conceptual and its main purpose is to open up the discussion concerning
degrees of integration and the potential of disintegration and non-integration. We suggest
further research to apply the framework for an increased understanding (theoretically and
from a managerial viewpoint) on cases, e.g. within the construction industry or other similarly
temporary logistics solutions (see e.g. Modig 2004, Fabbe-Costes 2005). In section two, we
present dimensions of integration as provided by logistics literature and the resulting
framework for understanding and analyzing integration. Section three concludes with further
research and managerial implications.

2 “Behind” Integration: dimensions in logistics and SCM-literature

If we go through logistics and SCM literature, we can notice first that integration is an
old word that belongs to logistics culture since the 1970’s. The NCPDM’s (National Council
of Physical Distribution Management) 1976 definition stated: “physical distribution
management is the term describing the integration of two or more activities for the purpose of
planning, implementing and controlling the efficient flow of raw material, in-process
inventory and finished goods from point of origin to point of consumption”. In the 1980’s, the
development of lean production and lean thinking with just-in-time and Kanban models
(concepts and philosophy of the Toyota Production System) highlighted the importance of an
integrative approach of logistics. Turning from ‘push’ to ‘pull’ asked for a better coordination
with downstream actors of the chain, while implementing just-in-time demanded a closer
coordination with upstream suppliers. The “lean” origin of the integrative philosophy of
logistics and SCM is clear and is still relevant (see for example Christopher, 1997, p.78).
As mentioned by Ellram and Cooper (1990): ‘During the late 1970s and 1980s, the
notion of integrating functional areas within a firm became popular among major US
corporations… Supply chain management extends this functional integration beyond the firm
to all the firms in the supply chain, bringing the concept of integration into the 1990s’. Today
The Council of Supply Chain Management Professionals (new name for the NCDPM) gives
the following definitions (http://www.cscmp.org).
Supply Chain Management encompasses the planning and management of all activities
involved in sourcing and procurement, conversion, and all Logistics Management activities.
Importantly, it also includes coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain
Management integrates supply and demand management within and across companies.
Supply Chain Management is an integrating function with primary responsibility for linking
major business functions and business processes within and across companies into a cohesive and
high-performing business model. It includes all of the Logistics Management activities noted above, as
well as manufacturing operations, and it drives coordination of processes and activities with and
across marketing, sales, product design, finance and information technology.
Integration is clearly at the core of logistics and supply chain management. But what is
integration? Exploring the literature permits us to point out three different but complementary
and interrelated dimensions of integration:
• Layers of integration (flows, processes, systems, actors)
• Scope of integration (intra and inter-organizational; local and global)
• Degree of integration (low to high).
After a brief presentation of each dimension, we suggest a framework for integration
analysis. Other authors have suggested frameworks including Chandra and Kumar (2000),
Samaranayake (2005) and Power (2005), but these are more related to the question of how to
become integrated.

2.1 Different layers for analyzing integration

The literature gives many answers to the question of what to integrate. E.g.
Giannoccarro and Pontrandolfo (2003) suggest that more attention has been given to
integration of flows than to integration of actors (i.e. governance), whereas Power (2005),
much in accordance with Samaranayake (2005), talks about information and financial flows,
product and material flows and supply chain relationships. Four inter-related layers of
integration emerge: flows, processes, systems, and actors.

2.1.1 Flows integration

One of the strongest ideas in logistics and SCM is probably related to quality of
material flows (smooth, without disruption nor stock, driven by demand), free flow of
information up and down the chain, and value creation. Each flow (physical, information and
financial) has to be “lean” (relevance, accuracy, no waste, no disruption, no delay, etc.). But
this ‘individual’ integration of each flow is not enough. It is important to regard the three
flows as inter-related, the information being necessary to pilot products and finance giving the
proof that logistics creates value. We consider this layer of integration to be the core and other
layers as a consequence of the quest for flow integration.

2.1.2 Process integration = operations’ synchronization

In line with just-in-time philosophy, the objective of flow integration, whatever actor
taking charge of the flow, leads to the question of synchronization of operations and then to
process integration. The purpose is to design [redesign if necessary] “seamless” processes
‘that link the identification of a physical replenishment need with a just-in-time response’
Christopher (1997, p.72). More globally, ‘supply chain management is the integration of key
business processes from end user through original suppliers that provide products, services,
and information that add value for customers and other stakeholders’ (Lambert et al, 1998).

2.1.3 Systems integration = interconnectivity and interoperability

Logistics processes include many tools and technologies that constitute the facility
structure of supply chains. There are many physical and informational “systems” to interface,
to interconnect that have to interoperate. For most authors, systems integration can be
accomplished by automation and standardization. Smooth, continuous, demand driven
product flow is the objective. Timely, accurate, paperless information flow is the condition.
Information technology plays a key role in making quick response possible and integration of
information systems is a key point for logistics integration. Creating “visibility” along the
pipeline ensures that the manufacture and delivery of products can be driven by real demand
and enables all parties in the chain to operate more effectively. Interoperability of physical
resources and systems (for handling, warehousing, transport, production, etc.) also enables
efficient flows. As for the flow layer, it is important not to think about information and
physical systems’ integration separately (e.g. to develop traceability).

2.1.4 Actors integration = coordination and collaboration

Because many actors participate in supply chains (as defined previously), management
of organizational interfaces is a key point of SCM. Process integration calls for a coordination
of actors (within and across companies) that take part in the overall process. To go beyond
interface improvement and to develop “better” processes (from a logistics and strategic point
of view), collaboration between actors is needed. Systems integration also calls for actors’
integration because of the need for standards development to ensure systems’
interconnectivity and interoperability. Relationships between the actors of a supply chain with
questions of organizational and cultural compatibility are then of great interest in logistics and
SCM. Kahn and Mentzer (1996) distinguish between communication and collaboration when
it comes to interdepartmental integration, which could be an interesting aspect also of inter-
organisational integration that calls for congruent organisations.

Layers What has to be integrated?

Flows physical, informational and financial flows:
individually and in combination
Processes synchronization of operations
Systems Interoperability, interconnectivity of physical and
information systems individually and in combination
Actors coordination and collaboration of teams, functions, companies
Table 1: Four Interdependent Layers to Integrate
 The discussion of each layer points out their interdependence and the difficulty of
integrating one layer without integrating the others (see the arrows in table 1). As claimed by
Mentzer et al. (2001, p.13) ‘corporate philosophy or culture and the management techniques
of each firm in a supply chain should be compatible for successful SCM’.

2.2 Scope of integration

From the literature we see that the scope of integration can vary. ‘While some authors
have addressed the entire supply chain, others have focused on parts of it, across or within
firms’ (Cooper, et al., 1997, p.2). As mentioned previously, the scope of integration has been
discussed since the 1980’s. Stevens (1989) presented four “stages” of integration:
independent operation of each function (no integration), functional integration (limited
integration between functions), internal integration (full functional intra-company integration)
and external integration (full inter-organizational supply chain integration). Later, Harland
(1996), Cooper et al. (1997), Bechtel and Jayaram (1997), Larson and Dale (1998), Croom et
al. (2000), Mentzer et al. (2001), and Fabbe-Costes (2002), discussing SCM definitions, also
highlight the variation in scope. We conclude from the literature that in contemporary supply
chains, four scopes of integration have to be considered.

2.2.1 Intra-organizational integration = inter-functional coordination and cooperation

Looking for logistics improvements most companies start by working with internal
integration. “The key issue is that processes are ‘horizontal’ in that they cut across traditional
‘vertical’ function” (Christopher, 1997, p.72). The same could have been said for flows
(§2.1.1) and systems (§2.1.3) in particular information systems. ERP (Enterprise Resource
Planning) systems are good examples of intra-organizational integrated systems. The
literature mentions a number of functions that must coordinate and cooperate (e.g. in cross-
functional teams), in particular to share information, planning and learning, including
marketing and sales, logistics, production, purchasing, finance and research and development
(R&D). See Pagell (2004) for an in-depth analysis of the integration of operations, purchasing
and logistics.

2.2.2 Local inter-organizational integration = coordination and cooperation between close

partners
‘To achieve real integration in the supply chain requires ideally that these processes also
be integrated upstream with suppliers and downstream with customers’ (Christopher, 1997,
p.72). The purpose is to continue towards inter-organizational integration of flows, processes
and systems (Electronic Data Interchange (EDI) is a good example of such an integration).
Research and experience show that there is a need for better coordination between firms and
if possible a stronger cooperation. Many authors have looked at inter-organizational
integration on a dyad base and most of them focus on the direct partners of each firm (direct
customers, first tier suppliers). In general this local inter-organizational integration is being
prioritized by companies wanting to improve logistics and SCM even if they are aware that
they need to take a more global view of the problem into consideration.

2.2.3 Global supply chain integration

If we adopt Christopher’s position (1997, p.22), ‘individual companies no longer
compete with other standalone companies, but rather supply chain now compete against
supply chain’, the supply chain is then the appropriate level to improve integration. Looking
more in detail, some authors defend a holistic approach of the supply chain [that is also a
value chain], with a global analysis, while others (e.g. Lambert et al., 1998) adopt a pivot
firm’s point of view that results in a double global integration: an up-stream integration with
all suppliers and a down-stream integration with all customers. For both, global integration
refers to some common approaches related to flows, processes, systems and actors’ choices
related to organization and strategy.

2.2.4 Total supply chain integration

An ever-increasing number of academics point out the question of “other stakeholders”
in logistics and SCM. In particular, greater attention is paid to logistics and SCM
contributions to sustainable development and environmental consideration (e.g. Wu and
Dunn, 1995, Min and Galle 1997, Walton et al 1998). Green supply chains, reverse logistics
and eco-design are contemporary issues leading to an even broader integration including the
citizens’ demands in the loop (concerning security, economic development and environmental
consideration).

\Scope Intra- Local-Inter- Global SC Total SC Integration

Layers\ organizational organizational integration
Flows flows inside each flows with directs global SC flows + reverse flows, flows
company partners of waste
Processes internal processes with overall SC overall SC + RC
processes direct partners process process
Systems internal Interface with SC systems compatibility with
interoperability partners’ systems compatibility environment
Actors teams and relationships with relationships relationships with
functions inside close partners with all partners partners and others
each company stakeholders
Table 2: Dimensions of integration analysis (SC: supply chain; RC, reverse chain)

Crossing layers and scopes (Table 2) gives us a framework for the analysis of
integration. According to the literature there are relations between the different scopes (as
between layers) much like Russian dolls. Looking for a wide scope is probably (as suggested
by Stevens (1989) and other authors, e.g. Power 2005, p.253) difficult if there is poor
integration in the more narrow scopes. The development of, for example, global traceability
requires first internal traceability in each company, then that each interface between
companies (local inter-organizational level) is accurate, and that globally companies agree on
procedures to react to any problem. However, it has been shown that actual SCM practice is
more internally than externally focused (Fawcett and Magnan 2002, p.351).

2.3 Degrees of integration

The third and final dimension of the framework is the degree of integration. Many
questions arise: do we need to search for the highest level of integration whatever the scope
and the layer? Is a higher degree of integration always the better solution? Must the
integration be uniform or can it vary depending on the scope and the layer? For a certain
scope and layer, is there a generic degree of integration? Literature gives some, albeit
sometimes contradictory, answers. In this section, we focus on the mainstream.

2.3.1 The tighter the integration, the better

Authors’ points of view differ on what is a “good” integration. For most, the tighter is
the better. According to Christopher (1997, p.23), for example, ‘this concept of supply chain
management requires a fundamentally different approach to relationships within the
marketing channel’. He claims for a ‘philosophy of cooperation and ‘win-win’ thinking’ with
‘highly coordinated logistics and supply chain structures, driven by the real-time capture of
sales data’. In line with lean principles and according to the authors that defend integration,
companies should look for the highest degree of integration at every layer and for every
scope. The fact that observed integration (in “real” supply chains) is not as high as expected
do not change their mind!

2.3.2 Weaker integration as an intermediary step in the integration process

As in many aspects of management, it is necessary to separate the process of
integrating, from its result [degree of integration] that can be observed at a time “t”. The fact
is that when observing, “real supply chain integration” at ‘d’ date, there are always different
degrees of integration depending on the scope and the layer, even in supply chains that use to
be presented as “examples” (e.g. in the automotive sector). Considering a certain scope and
layer (i.e. a particular ‘box’ of table 2), there are also different degrees of integration (e.g.
functional integration is not always homogeneous, all suppliers are not integrated in the same
way, integration of information systems is not the same with each customer or supplier, etc.).
In line with a continuous improvement approach and the hypothesis that the highest
integration is the best, most authors, like Bowersox (1989) or Stevens (1989), consider that
supply chain integration is accomplished sequentially and that the observed differences are
pieces of evidence that all companies are not ‘best in class’ – ‘best in class’ being highly
integrated – and that they thus need to improve logistics and supply chain integration.

3 Conclusions and further research

The purpose of the framework is to help with analysis into what, where and to which
degree there should be integration in logistics and SCM. We consider that separating the three
dimensions (layer, scope and degree) as suggested above, helps us in understanding the
different possibilities of integration, and gives an opportunity for a differentiated approach.
With a describing and understanding research objective, the framework could be used to map
supply chains’ integration, showing differences in integration degrees at different layers and
scopes. Some ‘profiles’ could emerge from this kind of analysis. It could also be used in a
particular industry (e.g. automotive, construction, food) to compare integration of different
supply chains that could result in pointing out “critical” layers or scopes for the industry and
could be incentive to compare integration devices. With a longitudinal perspective, the
framework could help in understanding the evolution of integration and check whether there
is a ‘typical path’ or not. Are companies looking for an ever-increasing degree at each layer
and scope? Is a high degree of internal integration always a pre-requisite? What is the ‘first’
layer to begin with? Considering the question of change in supply chains (e.g. integrating a
new supplier, changing rules in a distribution channel, introducing new technologies) the
framework could help in diagnosing the situation and anticipating difficulties. What layers are
the easiest to change? Which scope is less critical? Is it always harder to change highly
integrated layers and scopes?
We propose that more ‘differentiated’ view of integration could help academics to
understand and managers to seize occasions when and where it is hard vs. easy to obtain
integration, and help us grasp (and perhaps solve) some of the problems that prior literature
has pointed out regarding supply chain integration. Beyond the assessment of a differentiated
integration, the question is how to identify the ‘relevant degree of integration’ for each box of
the matrix in Table 2 and what relations exist between these boxes.
For most authors in logistics and SCM a high degree of integration is a ‘good thing’.
However, there are also those that have a more differentiated view. According to Lambert et
al. (1998), there is a need to differentiate: ‘Strictly speaking, however, the supply chain is not
just a chain of businesses with one-to-one, business-to-business relationships, but a network
of multiple business and relationships’. Thus, key decisions include, ‘who are the key supply
chain members with whom to link processes? What processes should be linked with each of
these key supply chain members? What level of integration and management should be
applied for each process link?’ They further claim that, ‘integrating and managing all business
process links throughout the entire supply chain is likely not appropriate’ and that ‘the levels
of integration vary from link to link and over time’. Simchi-Levi et al. (2000, p.189) also state
that, ‘there is no single “appropriate level” of supplier integration’. In line with the
differentiated approach, Bask and Juga (2001) suggest that semi-integrated supply chains is a
better approach than of ‘all-embracing’ integration. But even in a differentiated approach,
critical links need to be strongly integrated and actively managed. The framework could help
in conducting more in-depth analysis of integration in supply chains that could give answers
to such questions.
Jahre and Fabbe-Costes (2005) discuss the drawbacks of highly adapted resources and
strong system integration. In line with Weick (1982) they believe there is a trade-off between
tight coupling and adaptation [integration] on the one hand and loose coupling and
adaptability [flexibility] on the other. Their analysis illustrates ‘how trade-offs between
adaptation and adaptability relate to system levels [scope in current paper], development over
time and degree of adaptation [here degree of integration]’. They pose the following question:
‘Is simultaneous loose and tight coupling possible, i.e. how can we obtain adaptation and
adaptability at the same time?’ and they wonder ‘Is the answer to ‘loosen up’, i.e. to
disintegrate logistics systems, or do we have to differentiate between system levels [scope]
focusing on tight couplings between a limited number of resources and loose ties between
these couplings?’ The framework above may be a start of answering such questions.
Another complicating issue concerning supply chain integration is that as the scope over
the years has widened, the chain view is now being questioned, as each company is always a
member of more than one chain. Thus the network metaphor has been suggested as a more
appropriate ‘totality’ (Gadde et al 2002, Håkansson and Persson 2004, Jahre and Fabbe-
Costes, 2005). Linked to this is also the issue of whether the widening of the scope combined
with a high degree of integration in an increasing number of (even all) the layers leads us
back to where we started: in the vertically integrated company. Thus, starting from intra-
organizational integration, going to inter-organizational integration and back again!
Kemppainen and Vepsäläinen (2003) argue that supply chains and networks are too large and
complex to be controlled by only one company. It has been suggested that one way of getting
around this is actually to ‘break up the value chain’ (manager Fung cited by Power, 2005).
Disintegration is also in question in temporary supply chains that have to be integrated
during a period (e.g. the duration of a project) and disintegrated later (that suggests to us to
use the plug and unplug metaphor). At what layer(s) and what scope(s) should partners – that
generally participate in a global network – search high (or low) integration? What devices (at
what layer and for what scope) help companies in a network to have a changing integration
(depending on the projects)? The framework could help in determining integrative and
disintegrative capacities and resources as well as ‘key factors for plug-in and plug-out’. Such
results could also be useful to improve agility in ‘classic’ supply chains that have to
continuously adapt to keep in tune with complex and changing environments.

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5 Biography
NATHALIE FABBE-COSTES is Professor at the “Université de la Méditerranée”
(Aix-Marseille 2, France) and senior researcher at the CRET-LOG. Her major fields of
interest include logistics as an inter-organizational management concept and logistics
information and communication systems as part of supply chain management and strategy.
MARIANNE JAHRE is Research Professor at the Norwegian School of Management
(NSM) and head of The Centre for the Construction Industry at NSM. Her current research
interests include resource development in logistics and construction networks, reverse
logistics and design of logistics systems.