It is the stage of full functional independence, where each business function operates completely independently from the others. An example is the case in which the production tries to optimize its unit costs through larger production runs without considering the gradual increase in inventories of finished products and the consequent impact on the need for warehouse space and capital.
STAGE 2: FUNCTIONAL INTEGRATION
At this stage, companies recognize the need for a minimum degree of integration between the adjacent (eg, distribution and inventory management, purchasing and material control).
STAGE 3: INTERIOR
This stage is the natural outcome of the previous one: it provides a planning framework to the other extreme activities.
STAGE 4: EXTERNAL INTEGRATION
Represents the true supply chain integration: the links and coordination achieved in the previous step are now extended to suppliers and customers.
Logistics is essentially a process of planning and organization and management of activities aimed at optimizing the flow of materials and related information within the company. The Supply Chain Management is based on logistics and aims to build and optimize links and coordination between the processes of other companies, suppliers and customers, and the company itself.