supply chain collaboration
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Question
Find a company that is not listed in the article and describe their level of collaboration and your thoughts on that for your initial post. Be sure to cite any courses. Make at least two meaningful responses to classmates.
Does true supply chain collaboration exist?
Joel L. Sutherland, managing director, Center for Value Chain Research, Lehigh University; and vice president strategy, Priority Distribution Inc.
Before answering this question, it is necessary to define collaboration. As a supply chain professional actively involved in defining and implementing collaborative solutions for several decades, I have discovered that true collaboration consists of considerably more than cooperation.
All companies engaged in a collaborative initiative must work actively together toward common objectives, and be willing to share information, knowledge, risk, profits, and benefits in an agreed-upon, consistent fashion.
At the operational level, collaboration entails understanding how other companies operate and make decisions, and what is important to them.
Another important clarification relates to the term “supply chain.” Because a supply chain consists of so many different elements and moving parts, the focus of a collaboration project can only be on key operational components such as planning, forecasting, replenishment, or transportation. In other words, “supply chain collaboration” is a misnomer.
On the other hand, true collaboration can and does exist when addressing operational components of the supply chain. Take truck transportation for example.
As we all know, the trucking industry faces a multitude of inefficiencies including wasted trailer space, loading and unloading delays, empty miles traveled, excessive freight damage, and high driver turnover.
The only way to address these inefficiencies is for multiple supply chain entities to work together to reduce costs and establish optimal processes for transporting goods. A single supply chain entity—a shipper, receiver, carrier, or 3PL—can only do so much. Collaboration is the answer.
COLLABORATION IN ACTION
I experienced collaboration in action early in my career while working for Japanese auto parts manufacturer Denso. My responsibilities included overseeing activities such as production planning, inbound transportation, inventory management, distribution, outbound transportation, customer service, and returns management—functions that today fall under the supply chain management category.
Employing the Toyota Production System, Denso built healthy, long-term relationships with all its suppliers and service providers. It was absolutely essential to Denso’s success that all trading partners be healthy and successful.
Once companies became qualified partners—which sometimes took years—they understood they were accepting a long-term commitment. The setup was as close as possible to an industry marriage.
Whenever problems arose, all parties worked together to resolve the issue and implement a solution. When devising solutions, we not only considered cost, we looked at the solution’s potential impact on partners and the way any alteration affected their roles.
Before adopting any changes, all parties—Toyota, Denso, and suppliers or providers—had to agree and commit to these changes. If any supply chain entity was adversely affected, we’d continue the analysis until we found a solution that benefited all parties in a tangible and fairway.
Why don’t more companies adopt this collaborative framework today? The simple answer: because it is hard to do.
Before achieving true collaboration, cultures at collaborating supply chain entities must change and mesh with one another. This collaborative approach is becoming more popular today as a result of increasing transportation challenges. Excellent examples exist within the retail supply chain.
Best Buy and AutoZone, for example, have taken control of their inbound supply chains—once the purview of their product suppliers. In doing so, these retailers are better able to share demand schedules with carriers and 3PLs; plan inbound moves more effectively; reduce lead times; improve on-time pick-up and delivery performance; minimize freight damage; reduce inventory levels, and reduce supply chain costs.
PARTNERING FOR SUCCESS
While dubious at first, product suppliers have also begun to recognize the benefits of collaborative arrangements, and are embracing this philosophy.
As a result, suppliers reap benefits such as improved scheduling, simplified operations, and stronger relationships with their retailers.
Carriers, in turn, are able to more efficiently schedule pick-ups and deliveries, load fuller trucks, develop regular routes, and increase long-term relationships through collaboration.
Lastly, the retail customer sees benefits in terms of lower costs and greater product availability.
So, ultimately, does true supply chain collaboration exist? Yes, in some functional areas.
The benefits are clear, but the road to collaboration is difficult. To make the necessary changes we need strong leaders who can strategically implement collaborative cultures within their organizations, and lead their supply chain partners down the same path.
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