Adversarial relationships have long dominated business relationships, but Supply Chain Management (SCM) entails a new perspective. SCM requires a movement away from arms-length relationships toward partnership style relations. SCM involves integration, co-ordination and collaboration across organisations and throughout the supply chain. It means that SCM requires internal (intraorganisational) and external (interorganisational) integration. This paper analyses the relationship between internal and external integration processes, their effect on firms performance and their contribution to the achievement of a competitive advantage. Performance improvements are analysed through costs, stock out and lead time reductions. And, the achievement of a better competitive position is measured by comparing the firm s performance with its competitors performance. To analyse this, an empirical study has been conducted in the Spanish grocery sector.