Collaboration can unlock value, enable innovation and share risk, says Supply Chain Expert Jim Goodhead
Companies that collaborate effectively across the supply chain have enjoyed dramatic reductions in inventories and costs, together with improvements in speed, service levels and customer satisfaction. To ensure success, partner companies should take these six actions together.
You must have trust
“Good collaboration depends on a number of things”, says Procurement Consultant Jim Goodhead. “It depends on the industry and it depends on how mature the supply chain is. Does collaboration go on? Yes it does.
“For collaboration to work, you need trust on both sides. The supplier needs to trust the customer i.e. they are not going to disclose sensitive information. And equally, the customer needs to trust the supplier to give them a good view on what they are working on.
“When you collaborate, you usually have a problem or you want to share risk. There are many joint ventures in construction, because of risk sharing. The ventures are huge. It is based on protecting both sides.
“Where does collaboration work? It could be that you need a problem solved for you e.g. you have got an engineering problem and you need a software house to come and solve that problem for you.”
Be a safe pair of hands and add value
There has to be something for everyone in the equation. Being an attractive proposition to work with is essential. Can you add value? Are you a safe pair of hands?
“I work for an IT services company,” Jim says. “You have big providers, you have CISCO, HP and you have to work with them in collaboration, because if you do not, you are not going to succeed. If you add value and/or can do things they cannot or do not want to do (or it is not their core competence), then you are much more likely to collaborate well.”
Make a clear plan
It sounds obvious, but what are you trying to do? If you are trying to solve an engineering problem, for example, then you need to have engineers on board. You need to work with a partner to help you solve problems and you need to engage on expected outcomes; finding that collaborative partner is not always easy because they have to fit your plan too and it has to be beneficial for them. You must ask what you want to solve and if it can be delivered in-house.
“Be very clear about what you want, but also about what your supplier can do for you,” Jim says. “To get true collaboration, understand the need that they will supply. The more prescriptive you become, the less chance of proper collaboration and true innovation there is.”
Get the mindset right
Half the challenge is the mindset, which comes back to trust. Is the supplier going to deliver? Will my team keep up our end of the bargain? Are they commercially astute enough to deliver?
“If you are dealing with sophisticated solutions, you need people that understand what the supplier is delivering and what they are talking about,” Jim adds. “If your team cannot work with the solution, then it is not a working solution, is it? Involve your team in selecting in the first place. If motivation is not there, it will fail and you will end up with something you did not want.”
Measure and analyse using tech
Once you know your scope, develop a set of KPIs to evaluate your outcomes against. It will lead to more productive working relationships. It sounds trite but does not always happen.
“Analytics will help you find something you can use – whether that is delivery time or response time – that can help you define the input and what you are trying to achieve,” says Jim. “It helps you define what you are trying to do and helps you make better decisions.
“What does the data tell you? You have to look at the data for trends and outliers. You might have a problem once a month that you could not see previously. Data is useless in and of itself. It is the clarity and insight you can glean from it that is valuable.”
Know when to form an ecosystem and when not
“This comes down to the sector and the maturity of the supply chain,” says Jim. “It depends what collaboration can offer too. Having an ‘ecosystem’ i.e. a group of suppliers that works with you has always happened. We have to remember that there is not a one-size-fits-all approach to procurement.
“Buying items that have to conform to the same standards e.g. fuel, are unlikely to create ecosystems as they are being spoken about. But if you go broader and ask the market to solve a problem or create a solution, that is where you are likely to see ecosystems used.”
This article was originally published in the Marine Trader, IMPA’s official journal for maritime procurement and supply chain management, in issue 04 of 2019. Head over to www.impa.net to find out more or simply read new issues on the go with the MT Journal app.