Supply Management in the Decade Ahead X: Collaboration

This post continues our coverage of Succeeding in a Dynamic World: Supply Management in the Decade Ahead (a detailed report based on research jointly undertaken by the ISM, A.T. Kearney and CAPS Research), and our review of the seven critical supply strategies for succeeding in a dynamic world in particular, with the fifth critical supply strategy identified by the report – collaboration.

Unlike the days of old where a company could extract gains by creating competition in their supplier markets in order to use the “invisible hand of the marketplace” to maximize value from competitively sourced suppliers, the new marketplace requires collaboration to achieve value above and beyond what you are realizing today.

Respondents to the study identified the following three strategies as the top three internal collaboration strategies for an enterprise:

  • Use cross-functional teams for category and supplier strategy development and implementation
  • Establish shared goals and objectives between the supply management organization and other internal organizations
  • Integrate business planning and supply management processes

Respondents to the study identified the following three strategies as the top three external collaboration strategies for an enterprise:

  • Collaborate with suppliers and customers to reduce supply chain costs
  • Provide transparency of cost and financial information throughout the supply chain
  • Collaborate among supply chain companies to root out waste

The study itself highlighted the following four generic key success strategies:

  • Internal collaboration and integration must advance further if companies are to capitalize on their future needs
  • External collaboration will require a shift from competition to partnership for some segments of a company’s supply base
  • Technology will be necessary to enable an increase in collaboration
  • Companies must be willing to jointly work through their concerns with risk and IP protection

The study then went on to highlight some keys to external collaboration:

  1. Manage Strategic Suppliers
  2. Collaboratively Obtain Innovation
  3. Block Competition through technological exclusivity and tying up supplier capacity
  4. Increase Transparency

I’d like to focus on the first and third recommendations. Managing suppliers might be good, but enabling suppliers is much better. Give them the tools and information they need to help you be a better supplier to your customers, and your gains will be greater. Blocking is also good, but blocks have shorter and shorter life-spans as time goes on. Considering that your supplier probably obtained at least some of it’s new technological capabilities from a vendor itself, it won’t be long before it’s competitors have the same capabilities and your competitors line up partnerships with them. the doctor thinks that a better strategy would be to become the strategic customer to your strategic supplier and work with them to continually outpace your competition.