Over the past several years, the subject of supply chain collaboration has garnered increased attention. Leonie Barrie reports that last fall participants at a supply chain conference heard that issue stressed throughout the event. They were told, “Efforts to increase supply chain transparency should include closer collaboration and partnerships with suppliers.” [“Viewpoint: Collaboration key to tackling supply chain issues,” just-style, 17 October 2013] Collaboration implies a lot more than simply sharing information; but, that is usually the starting part. The reason that information sharing is the starting point is because the first thing that most companies desire is more transparency and better visibility in their supply chains. Supply chain analyst Lora Cecere insists that visibility should be obtained from a supplier’s supplier to a customer’s customer; but, sharing information isn’t easy. Different proprietary systems are often involved and data can be stored and displayed in different ways. Safely and securely integrating all of this information, then sharing appropriate parts of that information up and down the supply chain, quickly becomes extremely complex.
Then there is the issue of trust. For a good discussion of collaboration and trust, read Trevor Miles’ article entitled “Do you trust yourself to collaborate? The real barrier to collaboration is not technology, but trust.” Collaboration, obviously, is a two-way street. That means that information must flow in both directions. When that happens, both parties must feel comfortable that shared information will be handled properly. The issue of trust is made more complex when groups outside of the supply chain (such as NGOs and competitors) are required to collaborate to address a serious issue that is bigger than any one company. For example, Barrie indicates that one of the reasons that collaboration was raised at the conference she covered was the collapse of the Rana Plaza factory building earlier in the year. As a result of that tragedy, more than 1,100 people lost their lives. The factory was making clothing for more than one brand. In other words, there are two kinds of collaboration: the first to improve supply chain efficiency and effectiveness and the second to address larger systemic problems. Each type of collaboration requires a different kind of information to be shared and for different reasons.
During an interview with Dustin Mattison, Michael Gunther, founder and managing partner of Collaboration, LLC, addressed the first type of collaboration. He stated, “Collaboration in business has been a buzz word that has come out the last few years. The big push started after the dot.com boom, where many high tech companies realized they didn’t have to be knowledgeable in every area and that they could rely on other people in the supply chain providing other technology. This would help make a better product or to better service their clients. … In today’s economic times and in this competitive marketplace it is invaluable to be able to collaborate. Collaboration provides innovation, efficiency, and productivity. Organizations that don’t allow for collaboration are not participating and will lose in the long run.” [“What it means to collaborate in business,” Supply Chain Expert Community, 12 August 2011] Gunther then went on to note that collaboration has moved beyond individual corporate supply chains. He stated:
“That movement has now moved into all areas of business. People realize the benefit of collaborating, even with their competitors. They realize that by bringing competitors in on a piece of a project you are able to service your client better. Sometimes a project may be outside your scope and you know someone in your industry who does it better. Being able to collaborate with someone is a huge thing because the clients will always see you as that resource. Working together and collaborating can be both internal in organizations or external working with various suppliers within the supply chain.”
The following video, prepared by Sedex, explains why both types of collaboration can be beneficial for a company, although it does focus more on collaboration to address larger systemic challenges involving supply chain sustainability.
Sree Hameed, a Vice President at ChainLink Research, insists, “We are moving from siloed enterprises to federations of partnerships and communities of ideas that think and execute in streams – not rigid processes.” [“From Silos to Streams – Collaboration & Integration Means Connection,” SupplyChainBrain, 27 February 2013] Hameed, however, is talking about technologies “such as video conferencing, enterprise social network, shareware supporting asynchronous communications.” These are mostly person-to-person collaborative technologies. The problem gets trickier when machine-to-machine collaboration enters the picture or when certain data needs to be made available to specific people in particular circumstances. Brian Bolam, president and founder of OmPrompt and chairman of ELUPEG, the organisation which focuses on developing logistics collaboration, asserts, “Collaboration can take 25-30 per cent of the cost out of the supply chain in some cases, plus it can boost sustainability which is now a pre-requisite, particularly from a consumer perspective.” [“Dangerous to ignore it,” by Lucy Tesseras, Supply Chain Standard, 1 October 2011] Tesseras notes, “A fundamental requirement of collaboration is sharing information, and while companies don’t necessarily have to be linked on the same system, any system that makes it hard to integrate partners into information systems or networks could cause an obstruction to true collaboration. … It is this sharing of information that often prohibits companies from investigating collaboration further as many see it as a potential risk, particularly when it comes to collaborating with competitors.” That’s the rub. To state the obvious, guaranteeing that the right type of information is available only to an authorized user of that information can be a challenge.
“There are many obstacles to information sharing in a supply chain,” writes Daniel Dumke. “Confidentiality is probably one of the biggest issues, but there are others not so obvious like antitrust regulations, the timeliness and accuracy of the provided information, differing technologies between the supply chain partners or a mismatch in the alignment of incentives. Therefore trust and cooperation become critical ingredients in a supply chain partnership.” [“Information Sharing in Supply Chains,” Supply Chain Risk Management, 7 March 2011] Whitney Johnson, co-founder of Rose Park Advisors, Clayton Christensen’s investment firm, adds, “Most of the really important stuff we want to get done professionally and personally requires we enter into the risky business of collaboration. While barriers to collaboration are manifold, the underlying deterrent is lack of trust.” [“Collaboration Is Risky. Now, Get on with It.” Harvard Business Review Blog Network, 7 June 2011] To address that challenge, my company Enterra Solutions® offers a secure information sharing (SIS) system that automates rules management capabilities to monitor data source policies, apply automated situational awareness, and offer an attribute-based access control (ABAC) model to coordinate secure data sharing across networks. Because companies remain in complete control of their information (and decide who gets what information and when), trust becomes a much easier challenge with which to deal. We like the ABAC approach because it systemically addresses most of the concerns involving information sharing.
Even though collaboration is difficult and risky, most analysts agree that a company is better off when it collaborates. By implementing the right kinds of technologies and policies, a lot of risk can be reduced and trust in the process increased.