Winning Supply Chain Teams Need to Collaborate

Stephen DeAngelis

August 15, 2017

For years subject matter experts have touted the benefits of closer supply chain collaboration. For example, back in 2013 Leonie Barrie reported that participants at a supply chain conference were told, “Efforts to increase supply chain transparency should include closer collaboration and partnerships with suppliers.”[1] 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 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. In addition, there is always that nagging fear that proprietary information will be shared with the wrong people. Safely and securely integrating all of this information, then sharing appropriate parts of it up and down the supply chain, quickly becomes extremely complex.

Collaboration Begins with Trust

Trust and collaboration are fellow travelers. Back in 2010, Trevor Miles (@milesahead), Vice President of thought leadership at Kinaxis, pointed out that collaboration requires trust but that there is a natural tension present whenever people (or companies) are required to collaborate.[2] To explain why this tension exists, he started with the definition of the word “collaborate”:

col•lab•o•rate
intr.v. col•lab•o•rat•ed, col•lab•o•rat•ing, col•lab•o•rates
1. To work together, especially in a joint intellectual effort.
2. To cooperate treasonably, as with an enemy occupation force in one’s country.

Miles explains, “I think this definition brings together the yin and yang of collaboration very neatly. On the one hand we see collaboration as something positive that will bring mutual value. On the other hand we view collaboration as working with the enemy to the detriment of our own group. What I find fascinating is that the same action can be perceived to fall in either category depending on the perceived objective and the level of trust one has of the party with which one is collaborating. The conclusion I came to is that the real barrier to collaboration is not technology, but trust.” Whether the obstacles involve trust and/or technology, they are keeping supply chain teams from collaborating. The staff from Material Handling & Logistics (MH&L) report, “While it is an accepted supply chain business strategy that collaboration and sustainability can drive innovation and growth, most suppliers are not acting on this. A new study from 3M shows that only 43% of suppliers feel fully empowered to collaborate with their partners.”[3] The staff continues:

“In fact, half of all suppliers surveyed have held back from making strategic recommendations due to lack of incentive or customer openness. The reason for this is that 57% of suppliers don’t feel encouraged or empowered to innovate and make suggestions for improvement for the customers they supply. Furthermore, 70% of suppliers said at least half of the customers they supply do not have a strong system and process in place for buyer and supplier collaboration. ‘This coordination gap is potentially costing customers millions in efficiency and development opportunities,’ the report concludes.”

Most analysts agree a lack of collaboration can be detrimental to supply chain performance. Antonia Renner (@AntoniaRenner), a Senior Solutions Marketing Manager at Informatica, explains, “A lack of supply chain visibility and ineffective collaboration [are] often the reason[s] for poor supply chain performance. [They] often lead to bad decision making, missed market opportunities, high costs, slow time-to-market, and increased manual workloads. But more importantly, [they] frequently result in a bad customer experience.”[4]

Trust but Verify

The late President Ronald Reagan famously stated about U.S. relations with the former Soviet Union, “Trust but verify.” Trust and verification are also important in supply chain collaboration. Technology can help with verification. Unfortunately, many companies technology is not up to snuff. Analysts from Synchrono note, “Jessica Twentyman reported in the Financial Times, that for many manufacturers, supply chain collaboration is stuck in the dark ages. When it comes to ordering materials and components, managing inventory levels, or organizing the delivery of finished goods to customers, companies are forced continually to chase business partners — mostly suppliers, logistics companies, and retailers — via a messy stream of emails, phone calls, and even faxes. Worse still, much of the data that could give manufacturers a complete, end-to-end view of their supply chain already resides within the systems of these partners; as much as 80 percent of it, according to some industry estimates.”[5] They add, “Supply Chain Market reported the closest any manufacturer can get to the magic bullet of efficiency (collaboration) is through greater supply chain visibility. Supply chain visibility means all partners get access to — and share data — in real-time.”

Sharing data is not as straight forward as it may seem. Many suppliers provide their goods to more than one customer and exposing customer data to competitors is seldom a good idea. Beyond the trust issue, data is often stored in different formats by different companies and making data stored in incompatible systems collaboratively useful can be tricky. As the Synchrono analysts explain, cutting edge cloud technology is making the challenge easier. “With the multitude of data sources feeding the supply chain, the visibility value is in the ability to “mash up” or bring together data from these disparate sources to tell a complete story. The strategy for doing such is standardizing — or normalizing — data. And while this is not a new concept, today there is a more efficient and cost-effective approach.” Cognitive computing platforms are generally able to gather, integrate, and analyze both structured and unstructured data, which is becoming increasingly important in today’s digital supply chain environment. To address the trust challenge (i.e., to ensure the right people get the information they need but not information to which they are not entitled), a combination of strategies is generally necessary. One approach involves an Attribute Based Access Control (ABAC) model that coordinates information/data sharing across a federated group environment. Another tool is blockchain technology that ensures every transaction on the network is recorded and available for all participants to see and verify.

Summary

J Steven Perry (@jstevenperry), a Principal Consultant for Makoto Consulting Group, writes, “When two parties execute an agreement, there are several moving parts. But what makes the transaction efficient is trust.” [6] As Miles pointed out, however, trust must go beyond transactions if true collaboration is to take place. He concludes, “What we need to do is to provide tools that make the collaboration feel natural.” Much of this collaboration (e.g., data exchange) can be done automatically once protocols are in place. But true collaboration requires more than machines communicating with one another. Winning supply chain teams need to identify and leverage all avenues of collaboration available to them.

Footnotes
[1] Leonie Barrie, “Viewpoint: Collaboration key to tackling supply chain issues,” just-style, 17 October 2013.
[2] Trevor Miles, “Do you trust yourself to collaborate? The real barrier to collaboration is not technology, but trust,” 21st Century Supply Chain Blog, 17 December 2010.
[3] Staff, “Half of Suppliers Don’t Collaborate with Partners,” Material Handling & Logistics, 19 June 2017.
[4] Antonia Renner, “Realizing a Seamless End-to-end Information Supply Chain,” Informatica Blog, 18 August 2016.
[5] Staff, “The Magic Bullet for Real-Time Supply Chain Collaboration? Cloud Visibility.” Synchrono, 19 June 2017.
[6] J. Steven Perry, “What is blockchain? A primer on distributed ledger technology,” The developerWorks Blog, 4 January 2017.