“Collaboration equals Innovation”-Michael Dell

Supply chain collaboration is a hot topic today—and no wonder: 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.

The concept of collaboration is not new. Professor Maria Reyexplains in her report “Supply Chain Collaboration” that Japanese companies in structures called sogo-shoshas are “clusters of related companies with common ownership and strong single leadership that offer each other privileged access to products, services and personnel.” This concept is similar to that of a virtual organization and derives from another Japanese concept Keiretsu; an organizational collective of manufacturers, suppliers, trading and finance companies, that is based around mutual shareholding and cooperation.

A study undertaken by Redshift discovered that there is a fairly extensive ‘perception gap’ between procurement specialists and other professionals (such as IT, finance, sales and marketing employees) regarding their professional relationship. The study found that 44% of procurement specialists stated they had a ‘very close’ relationship with other business departments, but only 18% of professionals from these other departments felt the same. When discussing supplier selection, 24% of those in procurement said it was a joint decision between themselves and those from other departments, but again far fewer respondents from the other business sectors agreed – from IT, finance and sales and marketing, only 8%, 6% and 2% agreed respectively.

Supply chain today involves a far greater degree of collaboration and this is largely the result of technology enablers such as the Internet, the reduction of communication costs and the increase in cloud computing. Collaboration is also seen as a new enabler that can help business create competitive advantage. Today’s technology is undoubtedly one of the principal enablers at the application level as it facilitates the integration of business processes, but this must be supported by both information systems and people-based decisions. We therefore believe that there are two fundamental requirements for collaboration to work:

• Technology must deliver the right information to the right people at the right time and in the appropriate context to make quality decisions, and,

• Technology must enable people to use information effectively, so this can be used at the appropriate points in the business process.

Organizations of the future must be flexible, adaptable and able to respond to change using new innovations and collaborative techniques to achieve their strategic objectives.