An article from late last year in the McKinsey Quarterly on building better links in high-tech supply chains did a great job of summarizing the roadblocks to collaboration in today’s high-tech supply chains and of providing great advice for building better bridges across your supply chain.
When you get down to the nitty-gritty, the following roadblocks are almost universally present in under-performing supply chains:
- Partner complexity and churn
Supply chain partners often change as product designs and specifications evolve.
- Siloed forecasts
Manufacturing, Sales and Marketing, and Product Development often keep, and modify, their own copies of the forecast separately.
- Poor data quality
OEM forecasts, which set broad targets across a number of product lines, aren’t typically granular enough to be useful to partners.
- The spiral of mistrust
Executives often believe that they must guard information on their business plans and processes, even from partners.
However, with a little work, they can be removed. The advice given in the McKinsey article is good.
- Sledgehammer the Silos
Everyone needs to work off of the same plans and forecasts.
- Trust is Tantamount
Very little is truly so confidential that it can’t be shared with (strategic) supply chain partners. For example, point-of-sale, customer forecasts, and primary market data will soon be public knowledge anyway (a supplier could walk in and see your product in a store, access public import/export records, and do a survey to see where most of your product ends up), so why not share the information up front? Confidential designs beyond the subassembly they’re building are one thing, forecasts are another.
- Share
Why should your partners use their own separate distribution networks with overlapping inventory hubs and logistics systems, which only increases costs for everyone? These assets can, and often should, be shared … and this will reduce costs for all parties.
- Collaborate
Undertake joint product development, at least on the components your partner is responsible for. After all, they’re the true experts and given the freedom to come up with a design that conforms to a few parameters might save you a bundle of cash. Look at what Tata Motors did. You could do that to.