The Collaboration Journey: Are we there yet?

This is an excerpt of the original article. It was written for the November 2016 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2016

Is supply chain management strategic or tactical? Are the best supply chains collaborative? Should the goal be an integrated supply chain or an integrative supply chain? The answers are a mixed bag, according to this month’s contributors.

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Twenty years ago, Boston Consulting Group’s Harold Sirkin warned that competition is no longer “company vs. company but supply chain vs. supply chain,” inviting a new era of supply chain collaboration. Pundits soon referred to collaborative supply chain design as the “ultimate core capability” and the “enabler of winning business models.” Based on your own experience with the day-to-day tussles that occur in the typical supply chain, you may wonder: “What on earth were they thinking?” The answer: Industry watchers had witnessed the stunning success of Honda and Toyota and viewed collaboration as inevitable.

For instance, as Honda prepared to bring the 1998 Accord to market, Honda’s internal analysis revealed two key points:

THE GOOD NEWS. Honda designers had developed an outstanding, customer-pleasing car.

THE BAD NEWS. As designed, the Accord would be too pricey. Honda needed to cut costs by 25%.

Because 80% to 85% of the typical Honda is sourced from suppliers, Honda had only one option: Ask suppliers for help. And that’s exactly what Honda did. Working with suppliers, the automaker lowered the cost of the ‘98 Accord by almost 30%. The launch was a success. Many of the technological advances developed for the 1998 Accord appeared in the next iteration of the Civic, a model that became a huge cash cow for Honda. The bottom line: Honda and its suppliers had shown that supply chains that work together win together.

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