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Supply Chain Collaboration

1 September 2018
Supply Chain

Accenture's Supply chain management in the cloud report states that "Supply chains face the common challenge that detailed knowledge of operations is held locally creating silos—organizational, functional, and cultural—and these undermine effective collaboration between different elements of the supply chain, increasing the likelihood of problems emerging at a late stage, and limiting options for response."

As such, in order to reduce problems, companies need to facilitate collaboration. Unfortunately, the Financial Times’ J. Twentyman recently wrote that: “for many manufacturers, supply chain collaboration is stuck in the dark ages”. Everyday actions like organizing and following up of goods transportation or even the whole billing process thereof are still managed via emails, phone calls and – shockingly – faxes. The existing lack of visibility can result in operational overhead, part shortages and even costly line stops. This situation then creates an increased need for spot loads – often sprinters but even helicopters are not unheard of – to get required parts where they need to be. Frustratingly, the data needed to give manufacturers a full 360° visibility on their supply chain often already exists within the systems of their partners.

There is however good news in all of this. As the basic building blocks of an efficient network are in fact already present, quick wins can be made with one of the three types of collaboration. Operational collaboration or deploying activities more efficiently within the existing logistic structure (De Vos et al, 2003), can be achieved through the digitalization of the supply chain. Connecting all logistical stakeholders to a cloud platform can ensure that everyone has the same – most recent version of – data at their disposal, in real time. That platform can effectively bridge the local knowledge silos and help create a self-aware ecosystem of partners who can exchange data in the most efficient manner and be alerted proactively of any possible action that may require their attention.

Digitalization along the supply chain allows for smooth interaction of all participants. Inventory and transportation costs are reduced significantly, while production processes can be accelerated and lead times decreased while maintaining a high percentage of on-time deliveries.

In this context, the cloud is considered an enabler of collaboration in the diverse world of the automotive industry. A central IT platform facilitates cooperation between the many suppliers, logistics providers, and manufacturers in the network. It enables cross-team and cross-company workflows and allows for a full view of the operational process; business relations are replaced by collaboration, which expedites information.

Stakeholders within the most complex of global supply chains are provided important information at the earliest stage. This way they gain room to make better decisions and plan more precisely. Once data has been entered in the platform, it is available immediately for all participants at the push of a button, location-independent, and duplicate manual entry of data is eliminated.  

It doesn’t take much to imagine how this connected platform increases collaboration: A supplier can call-off their goods which allows the manufacturer’s logistics department to automatically book a shipment with a carrier and seamlessly share that information to all key stakeholders in real-time. The manufacturer’s accounting department receives the agreed rates for audit and payment purposes. The management team sees that the shipment arrived on time and was booked with a 17% saving, because the logistics team had full availability of all current carrier rates and the system selected the best possible quote. Finally, the carrier itself has visibility of the shipment for planning, track and trace updates, and invoice management.

If this was not convincing enough of the need for collaboration, we leave you with the European Business Network for Corporate Social Responsibility’s five reasons why collaboration is key for the logistics sector:

  1. Inter-connected sector:Logistics is not a standalone sector, but highly inter-connected and the gear along the supply chain. Therefore, issues in the logistics sector will trigger issues in the supply chain.
  2. High expectations of policy makers and international organisations:The European Commission and the United Nations set ambitious targets that are impossible to reach by one company or sector alone.
  3. Mutual understanding of challenges and priorities:By collaborating with other actors along the supply chain, companies will better understand the challenges and priorities of their business partners. 
  4. Learning and adapting:Collaboration with business partners and stakeholders provides companies with valuable insights into other organisations. It enables companies to re-think and re-shape internal structures and processes and provides competitive advantages.
  5. Scale and impact:Multi-stakeholder approaches and business collaboration take into account several actors and their individual requirements. This makes cross-sector approaches solid and leads to greater impact on the ground.