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Collaboration is Key to Successful Supply Chains – So Why Aren’t More Companies Doing It?

The biggest opportunity is operational: companies need operational processes that translate collaboration into bottom line supply chain performance.

By ·
By ·

Companies depend more than ever on collaboration with suppliers and customers, yet they’re terrible at it. According to a recent study from 3M, 70-percent of suppliers claim that half their customers do not have systems in place for collaboration – this leads to inefficiencies.

Only 43-percent of suppliers feel fully empowered to collaborate, and half have held back on strategic innovations because the customer does nothing to encourage or facilitate improvements. The result is unresponsive supply chains, particularly in the current economic environment characterized by volatility with unpredictable peaks and troughs of demand. Staying profitable requires finding new efficiencies.

The biggest opportunity is operational: companies need operational processes that translate collaboration into bottom line supply chain performance. Here are some operating techniques you can implement to try to manage to manage collaboration to ride the wave of demand uncertainty.

On-site assembly and inventory – Keeping a small store of finished or semi-finished product on-site is a powerful method that requires active collaboration to create flexibility and adaptability to customer demands. A widespread approach in healthcare and trade crafts, the method does require some skilled workforce and a degree of modularity.

Centralized planning/information, decentralized execution – Long a staple of military doctrine, this approach is a hallmark of Seven Eleven where store managers use local knowledge to make ordering decisions in the uncertain convenience store environment. The centralized information and analytics tools help store managers at the same time it more tightly integrates the supply chain.

Replace inventory with rapid replenishment – A staple case study in supply chain classes, the use of expedited transportation to reduce both pipeline and on-site inventories has yet to achieve its full potential as indicated by Amazon’s rapid expansion. Customers are willing to wait for a variety of products, particularly if the wait is only a day or two.

Refer customers to competitors – Not a first line of defense, but customers that see that you help take care of their needs are more motivated to return. After all, if you don’t have it but know where to find it, you preserve your role as the go-to supplier. And too many companies are oblivious about when customers order from someone else—you want to know when and why this happens.

Collaboration is a necessity in today’s supply chain and companies need to better embrace it in order to be successful. Managing your demand uncertainties may be as simple as asking your paid experts to offer their expertise.


About the Author

Michael Gravier
Michael Gravier is an Associate Professor of Marketing and Supply Chain Management at Bryant University with a focus on logistics, supply chain management and strategy and international trade. Follow Bryant University on Facebook and Twitter.

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