16 August 2019
Collaboration has become one of the more popular buzz words, not the least in supply chain. Companies are constantly trying to capitalize on new technologies, business models and innovations which in turn requires bringing partners, business and otherwise, into the fold of change and improvement. This is easier said than done. Many companies attempt at supply chain collaboration are doomed to fail. Not because of lack of will, money or competence, but a conflict of interest. Or rather a lack of common goals.
Companies having different needs and wants is an undeniable thing and joining a collaboration with another company while having different end-goals of the collaboration in mind is a recipe of disaster. One might want to increase sales and profit of their products while the other might wish to reduce supply chain costs. Furthermore, neither of the collaborating parties wishes to stand holding the bill, especially when the return on investment might not be assured. Of course, for some companies these problems are no trouble at all. Big actors in the supply chain can force change and control big parts of the supply chain by themselves while the smaller parts of the chain must comply or be replaced. But this is not what we are talking about when we speak about supply chain collaboration.
Doing what’s best for your company, but at the same time what’s best for all collaborating parties at is the key to a successful collaboration. But how do you construct common goals which benefit all parts of the supply chain and overcome conflicts of interest while no one whishes to bear the risks, costs and investments and at the same time reap all the benefits of collaboration?
We must, in topics such as these, begin with the segmentation of flows based on type and character such as customer and product type or the strategy used for customer, product or leadership. The second step is to understand each other pre-requisites, such as lead times, affected and critical segment. Also, how integrated are the companies and segments with each other, how aware are we of the different priorities and how digitalized are the different supply chain flows currently. These are the questions each company need to base their reasoning for finding common goals and interests before beginning their collaboration.
After finding collaboration partners in your supply chain and having identified common goals and gaining a sense of the difficulty of the task you are one your way on a path to success. When it comes to collaboration there are many different models depending on situation, company type and whenever the collaboration is within or outside the industry.
Collaboration with direct relation between your and another company within your industry such as a customer, client, supplier or similar is the most common type of collaboration and focuses on pain points and relationships between the companies’ improvement areas. This may also be done with a company outside the industry. A very safe collaboration, but the focus is mainly an exchange of knowledge and experience.
You may also create a network with several companies from both inside and outside the industry. Creating a network with companies from the same industry lets you work towards improving flows and collaboration towards one or several common customers. It’s common to have an external impartial third part to help driving questions and projects. Creating a network with external companies from different industries allows for solving generic problems that may be solved similarly across different industries.
What all these different collaboration methods have in common is for all parts of the collaboration need a wide enough scope of the problem for a positive result. Furthermore, those solutions that are produced from the collaboration needs to be to that extent that it favors all involved parties. If both the issues and the added value can be shared between the parts, then supply chain collaboration can be a powerful tool for both improving and innovating supply chain.