Complex supply chains require collaboration; which is when two or more factions or external organisations work together to perform supply chain operations. Supply Chain Collaboration can either be Vertical or Horizontal.
Globalisation and fierce competition reveals the need to cease supply chain isolation. This is because isolation limits flexibility and cannot aid resource optimisation.
Vertical & Horizontal Collaboration
Ferrell et al (2019) describes horizontal collaboration as a relationship between organisations with similar services or products that can benefit from economies of scale by working together.
On the other hand, Renko (2011) defines vertical collaboration as the collaboration between suppliers, internal stakeholders and customers. I probably won’t argue which is more efficient but will definitely argue that Supply Chain Collaboration is very important and either can be deployed depending on the situation.
Advantages of Supply Chain Collaboration
• Delivery Lead Time Reduction
• Improved quality of products and services
• Improved supply chain visibility and transparency
• Long term cost reduction
• Better customer focus
• Cross-functional process improvement and strategy implementation
• Easier Supplier Performance Tracking
• Faster Data-driven decision making
• Improved inventory optimisation
Now that we know what we stand to gain from SC collaboration, what must be done to make it work? The answer is ensuring forward and reverse communication flows.
Supply Chain Collaboration (SCC) isn’t new and has always been a good way to drive value. It ensures a good balance between demand and supply. Supply Chain Managers in 2020 need to understand this and think broader as this is much more than getting products at the best price, quality and time. Collaborative partnerships are vital. Imagine your Apple iPhone without apps or your beautiful DELL laptop without a windows installation. Remember, we are talking value and customer focus. With SCC, suppliers will also understand the perspective and behaviour of consumers and partake in joint research and development.
Procurement and Supply Managers should ensure innovative and sustainable ways to foster supply chain collaboration. It starts with finding the right partners and then maintaining the relationship and ofcourse seeking ways to continually improve.
Finding the right partners
Selecting the right partners is a strategic approach which should be given a lot of thought so that the organisation can reap the potential benefits that come with supply chain collaboration.
To find the right partners, a supply chain manager must;
• Possess deep understanding of requirements
• Ensure Win-Win situations at all times
• Select partners based on value potential, culture alignment and capabilities.
• Embrace Supply Chain Digitalisation
Thinking Long-Term
As we strive to get the best out of complex supply chains, Collaboration will help to mitigate potential supply chain disruptions and these disruptions in no time will become opportunities.
