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Key Steps to Enhanced Supply Chain Collaboration

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Key Steps to Enhanced Supply Chain Collaboration

I read with interest the Blog Post on 21st Century Procurement entitled – Collaboration and the Making of the Social Supply Chain, elements of which I have included within this post.

Agnes Rubaj, the author highlights that;

“collaboration in a supply chain organisation is essential to pretty much every role, from the customer service rep, to the demand planner, to the supply chain executive. And those are just the roles within the company. Supply chain organizations operate within global networks of external trading partners that require regular back and forth communication.

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Social media aids collaboration within a business environment because it can help build trust and closely connect people from different roles, backgrounds, and locations across the globe. Many companies, in the supply chain space or not, are turning to enterprise social networking tools to influence collaboration and open communication throughout their departments. However, research shows that these tools are not getting as much traction as predicted and employees go back to relying on outdated collaboration methods, such as email, review meetings, and phone calls.”

She goes on to suggest that there are some requirements that a supply chain planning system of record must possess in order to facilitate proper integration of social networking functions, including:

  1. An end-to-end integrated system that includes everyone you collaborate with, including customers and external suppliers = Everyone working in one place
  2. Cross-functional visibility into up-to-date data = Everyone working from the same data
  3. Ability to create copies of said data (what-if scenarios) to model various supply chain business problems = Analysis is purpose-driven based on specific events/goals
  4. Ability to share the what-if scenarios with anyone in the system = Collaboration happens in context and with a specific objective
  5. A way to connect people in the system to the processes and materials for which they are responsible, so that identifying who to work with can be done quickly and mid-task = The right people are brought together

Although I accept the need for tools to facilitate effective collaboration, there are often other significant questions that organisations need answers to before they can really consider implementing a collaborative supply chain arrangement. These include;

  • What is supply chain collaboration?
  • Where does your firm stand in terms of supply chain collaboration with key trading partners?
  • What level of collaboration do you wish to achieve?
  • How would the increased collaboration influence the performance of your supply chain?
  • What, by the way, can be regarded as successful collaboration?
  • How can your firm get there?

Supply Chain Collaboration is one of the core pillars of my C.O.S.T. Optimisation Formula and I cover these questions in more detail within my book (download a free copy here).

So how do you Define collaboration?

All supply chain and procurement relationships can be considered as falling within a continuum, with traditional, arms-length relationships at one end, and collaboration at the other end, with cooperation and coordination in the middle.

At the most basic level, supply chain collaboration can be defined as the continuous process of sharing, partnering, connecting, and aligning to improve supply chain performance, for win-win benefits.

It represents the highest level of commitment between/among supply chain participants, short of joint venture or vertical integration. Getting down to basics, collaboration can be defined as “the co-ordinated application of a group’s knowledge to deliver a goal.”

In other words, a coordinated effort to pool knowledge of supply chain partners towards a common goal.

Many levels of collaboration are possible in a supply chain relationship in order to achieve a common goal.

Dan Gilmore of Supply Chain Digest offers a framework for supply chain collaboration that covers four levels:

Fig7

  1. The first level is achieved with consistent communications. – It is necessary for trading partners to talk in meaningful ways about opportunities for joint improvement. Although this is the first level, I often find that clients do not actively engage with their trading partners.
  2. At level two, there can be transaction integration with the automation of basic business processes and transactions, using various means such as EDI, the Internet or proprietary connections. This, in itself is a form of collaboration as it involves investment. Making use of your supplier partners online ordering portal for instance and linking this into your finance systems is an obvious example here.
  3. Information sharing moves collaborators to level three in terms of collaboration. At this stage, trading partners share information using the same platforms as in level II to help them make better decisions. Examples of information shared include those on production, components, forecasts, inventory levels, Point-of-sale data and more.
  4. The highest level of collaboration achievable requires business process integration between trading partners. This is the level at which trading partners engage in true joint planning, implement process redesign across trading partner interactions and really begin to share risks and rewards from collaborative efforts.

Depending on their inclination and the levels of commitment from supply chain collaborators, organisations can decide on the levels of corporate “intimacy” they want to achieve through collaboration.

What’s your experience of Collaboration?  What’s worked well? What should others be wary of? Please share your thoughts.

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