Col-lab-o-rate: a recursive process where two or more people or organizations work together to realize shared goals (Wikipedia).
Collaboration is arguably one of the most overused words in supply chain management. And while there are some success stories out there, there are many more false starts and failures.
This got me thinking: WHY collaborate, with WHO, and HOW?
Is the driving force to establish a collaborative relationship truly a shared goal, like improving on-shelf availability, or is it more selfish in nature such as…
…to improve sales and/or profits of your company?
…to take market share away from your competitors?
…to reduce your company’s supply chain costs?
…to eliminate or reduce investments in physical assets?
…to transfer costs and risks to other parties in your supply chain?
…to create a more flexible and responsive supply chain?
And how can manufacturers and retailers organize themselves around a shared goal when they also have many conflicting objectives?
Do conflicting goals get in the way of collaboration?
And can you really collaborate if everyone wants the benefits but none of the risks, costs, and assets?
The drive to push Costs, Risks, and Assets up the Supply Chain
WHO to collaborate with and HOW are also interesting questions to ponder. When you take into account the potential benefits of a prospective collaborative relationship, and how easy or difficult it will be to set up and manage, which type of partner provides the best opportunity for success? Collaborating with a customer? A supplier? A competitor? A company outside your industry? A 3PL?
And which model works best, and in which cases?
- One-to-One within Industry: Direct relationship between your company and one other company in your industry (customer, supplier, etc).
- One-to-One outside Industry: Direct relationship between your company and one other company outside your industry.
- Many-to-One within Industry: Relationship between your company and several other peers to serve a single, common customer (likely facilitated by a third party).
- Many-to-Many within Industry: Relationship between your company and several other peers to serve multiple common customers (likely facilitated by a third party).
- Many-to-Many outside Industry: Ad-hoc or structured relationships between your company and a network of other companies from different industries facilitated by a third party.
So many questions, so few answers (at least for today).
Next Tuesday evening, February 8th, at our “Beyond the Perfect Order Metric” seminar in Orlando, we will tackle these questions in a special networking workshop sponsored by Ryder exclusively for manufacturing and retail executives. If you fit the profile and would like to attend, send me an email at adrian@logisticsviewpoints.com. Space is limited, but a few seats still remain. There is no cost to attend this special workshop. And if you come, we hope you will join us for the main seminar starting the next day, where executive speakers from Del Monte, Whirlpool, Lowe’s, Kraft Foods, and Sony Electronics will share their collaboration-related case studies (click here for full agenda and registration details).
If you can’t join us next week, then post a comment and let us know your answer to the question “WHY collaborate, with WHO, and HOW?”
Great article Adrian.
As with any worthwhile strategy, one must begin with “For the sake of what are we collaborating?” Collaboration for collaboration’s sake is a dead end. It often leaves the parties worse off than if the collaboration had not occurred at all.
Can the collaboration of companies X, Y, and Z produce new coordinated action? Evidence must include: lowered costs, increased service levels, ameliorate threats, or seized opportunities. If not, then the value must be assessed as “low”.
This sounds obvious, yet look at most failed supply chain collaborations. Failure to make sound assessments of the situation, the predicted / unpredicted outcomes, or the concerns of the involved parties (including personal concerns) are almost always found, after the fact, to be fatal flaws.
For solutions providers, powerful collaboration is the key to increased margins and sustainable market advantage. Even the largest companies are finite and limited. We each need as much help as we can afford to configure. Marketplace shifts means that even superior structures must be revisited and improved. This is fertile ground for 3PLs and others seeking collaboration opportunities.
In his article, Adrian tees up a series of clear, valuable, high level questions. Don’t simply answering them, but drill down into each. This is the place from which powerful collaborative strategies emerge. Using Adrian’s list as the top line of a Collaboration Worksheet produces a tool to notice, observe and assess collaboration opportunities.
When our company collaborates with clients we are laser-specific and lay out clear value propositions matched to their unique attributes as well as ours. The extent to which you can do this recurrently will likely predict your ability to produce powerful, successful collaborative outcomes in your customers’ value chains.
Carl Melville
Carl D. Melville | Marketing Automation Strategist | The Melville Group, LLC
Carl.Melville@MelvilleGroup.com | http://www.MelvilleGroup.com
office – 760-671-1110 | mobile – 760-533-7974
Why do people continue to propose that the term “Collaboration” is overused – that’s just not true. The reality is the term is underutilized.
I have personally been writing about and presenting documented case studies on successful supply chain collaborations, in particular Collaborative Transportation Management (CTM), since 1999 – and continue to do so today. The real question should be: if the benefits of supply chain collaboration are so compelling then why don’t more people do it? The answer is that people either aren’t listening, they are afraid to make the effort, they are letting the negative hype scare them away, or they are doing it and just not calling it supply chain collaboration or CTM.
As a former SVP at JB Hunt Logistics (before we formed Transplace) we worked with Wal-Mart and P&G to write one of the earliest (if not the first) white paper on CTM. After we formed Transplace we recognized that some of the comprehensive transportation management services we provided for companies such as AutoZone and Office Depot were in fact CTM services that benefited the shipper, their suppliers and the servicing carriers. This fit the definition of a successful multi-party collaborative relationship.
In 2003 I was invited by VICS to chair a committee to define CTM and its’ relationship to CPFR® with the first definitive white paper on CTM published in 2004. The committee determined that CTM is an independent process from CPFR, yet may be a concurrent undertaking with CPFR. Like CPFR, it does not simply replicate what takes place today but rather reengineers the whole process. Based on this understanding, we documented the financial and service improvement results from a number of successful CTM implementations and laid out a comprehensive process for implementing CTM.
Since 2004, I have seen a number of companies successfully implement CTM without putting that label on it. To most companies the process just made good business sense. Now at Lehigh University’s Center for Value Chain Research (www.lehigh.edu/cvcr) we continue to delve into the challenges and realities of CTM – and supply chain collaboration in general. The bottom line is that collaboration works, more and more companies are implementing collaborative programs (especially in these challenging economic times), but not everyone calls it collaboration or CTM – just a successful business transformation.
–
Joel Sutherland
Managing Director
Center for Value Chain Research
Lehigh University
joel.sutherland@lehigh.edu
CVCR Website: http://www.lehigh.edu/cvcr
Lehigh Profile: http://www.lehigh.edu/~jos206
LinkedIn: http://www.linkedin.com/in/joellsutherland