New Research: Using Collaboration in Bringing Competitive Advantage to Your Supply Chain

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If your organization wants to create competitive advantages through its supply chains, collaboration is crucial, according to new research from the Global Supply Chain Institute at the University of Tennessee – Knoxville. The findings were presented in a white paper, End-to-End Supply Chain Collaboration Best Practices, written by Mike Burnette, managing director of the institute.

Burnette and other supply chain faculty at the university interviewed 17 leading companies in eight industries to determine the best practices that help organizations achieve success through collaboration. Proving that there are tangible benefits to be had from collaboration is key here, of course, as business leaders and stakeholders are unlikely to support collaboration for the sake of collaboration.

“Negotiations are frequently over-utilized and insufficient,” Burnette writes. “Negotiation by its very nature creates winners and losers. In this win/lose environment, total supply chain value is rarely optimized. In the past several decades, supply chains have added collaborative approaches to drive holistic improvement with a few critical suppliers or business challenges.”

Supply chains have become much more complex as a result of globalization, varying government regulations, and consumer and stakeholder expectations. Burnette argues that in order to deal with today’s complex business world, supply chain professionals need to pay attention to gaps in both internal and external collaboration. The former includes collaboration with other business functions in addition to within supply chain, and the latter refers to working with all players across the supply chain, such as IT and third-party logistics providers.

A Supply Chain Improvement Model

Source: “End-to-End Supply Chain Collaboration Best Practices”

As the graphic above shows, supply chain competitive advantage rests on three factors: an organizational culture with common values; an end-to-end understanding of the supply chain; and a zero-waste mindset (“if a system had 100 dependent steps and each step delivered its product on time 98% of the time, the total system would deliver its product on time only 13% of the time”).

Collaboration falls among six “enablers” of competitive advantage, and it also affects each of the other five:

  • Supply chain integration. Each activity across the supply chain must be in communication with other activities, if supply chain integration is to be achieved.
  • Supply chain synchronization. This is about balancing capacity and workflow between supply chain activities. Risks associated with too little capacity are obvious; too much capacity, on the other hand, is wasteful.
  • Supply chain digitization. Blockchain, advanced analytics and other technologies can transform today’s supply chain into one that is transparent and that allows for real-time decision-making.
  • Waste elimination. For organizations that have significant cost cutting goals, identifying and eliminating all processes and resources that do not add value is key.
  • Platform lifecycle management (PLCM). Implementing PLCM requires procurement, manufacturing and logistics to have strong partnerships with research and development and commercial.

Collaboration Best Practices

Burnette and his colleagues received 95 recommendations from their interviews with industry experts and supply chain managers at leading companies, and they chose the seven most mentioned ones to highlight as best practices in the white paper. We will discuss a few of them in more depth, but first, here are the seven best practices:

  • Supply chain leaders drive collaboration to improve results
  • Supply chain leaders have end-to-end experience and capability to influence other functions and enterprises
  • Creating a collaboration culture
  • Total-value-based business and supply chain measures
  • Collaboration tools, systems and data
  • Robust external team structures to facilitate collaboration
  • Effective sales and operations planning (S&OP)

Leadership came up again and again in the interviews that Burnette and his colleagues conducted. Supply chain leaders need to be the ones driving collaboration in their organizations. This includes collaborating across various supply chain disciplines and business functions, as well as with suppliers and clients.

Supply chain leaders should be communicating to the wider organization their expectations for collaboration. This might take the form of one-on-one and group discussions, strategic action plans and performance reviews. The message should not be limited to the supply chain function but also communicated at top-level company meetings and incorporated into strategy decisions.

What this helps create is a culture of collaboration, which is much easier said than done. “In many ways collaboration goes against a supply chain department’s short-term goals,” Burnette writes. “A manager assigns resources to work on a great project for the holistic system, but has nothing to show for the effort on their scorecard.”

Both strong leadership and trust are needed. The latter refers to placing trust in suppliers and other business functions instead of expecting partners to earn the trust. To illustrate the former, the white paper mentions a case study where cost, working capital and customer service improved by leaps and bounds under a supply chain executive who valued collaboration. When the executive left the company and was replaced by someone who did not clearly communicate collaboration expectations, the improvements disappeared.

The right technologies and systems need to be in place to support and enable collaboration. The white paper mentions monthly reviews, project meeting structures, meeting spaces and alignment to facility tours as examples of simple-sounding yet often unavailable, key elements that support collaboration.

Access to data also belongs under this bullet point. As Burnette writes, “If suppliers, logistics, manufacturing and procurement are working to improve material quality, the supplier and all internal supply chain disciplines need access to the same data (e.g., supplier quality data, supplier’s contract, plant supplier quality data, logistics inventory and service data [and] quality capability at the supplier).”

These are only three of the seven best practices. Each one is discussed at length in the white paper, as well as paired with multiple real-life case studies, so we highly recommend that you check out the research for yourself.

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