What makes one supply chain better than another? The answer may well be collaboration. Some people think it's a nice word for coercion. But in fact, collaboration is much closer to mutual cooperation.

Collaboration allows companies to anticipate supply chain events. It lets both suppliers and their customers plan around potential glitches while maximizing their return on supply chain opportunities. Furthermore, collaboration can have as much positive impact on what happens within the four walls of any company as it can across organizations.

If collaboration is the next wave (we're too early in its development to know for sure), it will be because it addresses a core supply chain issue—that is, what's more important, the link or the chain?

We recently posed that question to a roundtable of supply chain software suppliers. The discussion was quite interesting, especially in light of the participants' involvement in building supply chain infrastructure. And the length of time it took the 10 participants to say what they wanted was remarkable—nearly two hours.

Their first reaction was, What exactly do you mean by link and chain? The response, of course, was that the link is inside the company and the chain is the relationship between the company and its customers and suppliers. In any case, their initial reaction was a tip-off to how differently 10 astute suppliers of software to the supply chain market could see things.

But back to that opening question of chain and link, here are some excerpts from three of the panel members' responses:

The link is the chain. You can't separate them. It's like asking which comes first, the chicken or the egg.

It depends on whether you are top management or an operating manager. The CEO and COO are concerned with channel opportunities or the next huge leap the company can make with its supply chain. But VPs and operating managers are looking for optimization of the supply chain within their own businesses.

The link and the chain are gone. They are already obsolete. What we're looking at is more of an atomic model with no straight lines whatsoever. It looks much more like DNA.

Although the group didn't exactly come to a consensus (let alone collaborate on anything), their answers, when taken collectively, did make two points abundantly clear. First, there's nothing simple or straightforward about any supply chain or its priorities. And second, the answer to the question depends upon your starting point. In other words, supply chains today are exceedingly random.

Another roundtable, held a few months after the first, reinforced those early observations. This time, the participants were 10 other vendors of supply chain software. The question was asked somewhat more specifically of them: What's holding back e-commerce from achieving its potential? Here are some answers:

There's so much pressure on the Web front end to get started in e-commerce that people tend to forget about this fulfillment stuff.

e-Commerce, to be successful, has very little to do with the B in B-to-B, or the B or C in B-to-C. Success has everything to do with the "to." Anyone who focuses only internally is missing the point.

The supply chain is e-commerce if properly done. And collaboration is the defining factor of the supply chain in the e-commerce world.

"Defining factor" ... now those are two fairly strong words. But then again, collaboration does seem to be the missing ingredient in so many underperforming supply chains. It also appears to have the potential to remove disruptive randomness from any supply chain.

Even if you haven't heard much about collaboration until now, you probably know the concept by some other names. Collaboration has been around since quick response (QR), the first broad-based attempt at improving supply chain efficiencies. The target of QR during the late 1980s was to reduce the time needed to replenish the fashion departments of stores. Sharing inventory data between stores and their suppliers was a key component of this initiative. It was also a big leap for all involved. Trust by department stores of their suppliers was far from commonplace at that time.

Since the introduction of QR, there have been various other attempts to promote collaboration. Wal-Mart, for example, was an early advocate of the value of collaboration. Manifesting this belief, the retailer was the first major company to require standardized bar-code shipping labels on all shipments made to its distribution centers. Now Wal-Mart might have been a little heavy-handed in implementing its program, but its initiative was an important step toward future collaborative efforts.

Electronic data interchange (EDI) was another stage in the collaboration evolution. Though costly and a little cumbersome, EDI did provide a format for exchanging key shipment information between companies. The fact that this technology never achieved its full potential is a secondary concern. What matters more is that EDI gave companies a great opportunity to build their level of cooperation.

Next came the emergence of integrated enterprise resource planning (ERP). ERP systems allow a company to create an information backbone for use across departments. Beyond the internal organization, ERP provides a basis for sharing transaction information on labels and in EDI messages with customers. That makes ERP a part of the collaboration foundation.

Then came a major breakthrough early last year when the first collaborative planning, forecasting, and replenishment (CPFR) software package was introduced. CPFR takes the ideas behind EDI and ERP and makes it possible to plan fulfillment operations across companies by sharing inventory and order information in a highly organized format. Complexity and randomness don't intimidate the software. Furthermore, it enables users to look across the supply chain from any point in that chain.

In one grand swipe, CPFR took the largely qualitative base for collaboration that already had been built and added a quantitative dimension. It also afforded a way to minimize the potential impact of unforeseen factors that can play havoc with otherwise sound supply chain decisions.

With close collaboration, customers and suppliers have visibility into inventory availability to fulfill orders. And they have visibility across the chain as the order-fulfillment process progresses. Thus, visibility removes most of the wild cards on the execution side.

On the planning side, collaboration ensures that all that visibility is put to good use. Ultimately, collaboration forges together the various links of the supply chain or intertwines the DNA double helix, if you prefer that analogy.

Even though the first tech tools now are available to make collaboration practical, the people issues still can get in the way. Quick response ran into them. Basically, collaboration can be a tough sell for companies that are used to keeping suppliers and even customers at arm's length. By its very nature, collaboration requires companies to be more open and share critical data. That's not easy for everyone.

Regardless of the obstacles, collaboration, at this point, looks as if it might have a shot at becoming the "defining factor of the supply chain." But remember, a defining factor is different from a panacea.