3 Challenges to Supply Chain Collaboration

The Article is very informative which is worth reading it. Thanks

I agree totally with what is written, however it does seem to ignore the real number 1 reason for the lack of effective communication and hence poor collaboration.
As has been noted by Professor Alan Waller, “we have been taught to compete and not cooperate.” Competition therefore rules over cooperation, and rules and procedures have majored over relationships. Yet the future is not of competing companies but of competing supply chains.
Paradoxically however, whilst many supply chain people will readily accept that managing a dependent process, independently, is simply the wrong thing to do; they seem to miss out that effective collaboration is always ultimately about relationships and that any supply chain relationship, is only ever going to be as good, as the trust that exists between people.
The lack of trust especially in western business cultures is well documented, for example:
"Trust is not something soft and fluffy. The absence of trust has a direct impact on the bottom line. It affects financials and the business performance. You ignore it at your peril"
“Trust is not just a soft “nice to have” quality, it is quantifiable, hard, real and measurably affects both speed and cost.”
“Trust changes the paradigm. It's definitely a different type of relationship with your customer. It's based on mutual trust and it's got to be there to succeed”.
“On paper, the process seems simple to implement, but in the real world of personalities and professional relationships, there are many obstacles to climb. Trust, is very important for success”.
"You can define any relationship by the degree of trust. No trust then no relationship. This applies both in business and also in personal life”.
“The biggest thing my boss could do for me is to trust me”
"In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed.”
"Collaboration will be the critical business competency of the internet age. It won't be the ability to fiercely compete, but the ability to lovingly cooperate that will determine success.”
“Business is increasingly interdependent, where action takes place between and not within”
“Running a business is not always a matter of logic and mathematics. It is just as much a question of understanding the psychological impact”
"Any intervention in a system which does not change the thinking will produce no change. It is only when people’s view of how to do work changes that their behavior changes”.
“Whilst the Supply Chain is driven by flows of materials, information and money, it also needs people working together in flow – that special state when people are connected and think together; when we have a positive relationship with no separation; when we have connected hearts and minds and we trust each other. Only then, can we realize supply chain success.”


Full reference attributing is in our published books:
• The Relationship Driven Supply Chain-Creating a Culture of Collaboration through the Chain (2006)
• Excellence in Supplier Management (2009)
• A Quick Guide to Supplier Relationship Management(2012)

Hi Stuart,
Thanks for the feedback and the references below. I completely agree with you that “people working together in flow” is the key to a sensing, intelligent and social supply chain. And that is all built on a foundation of trust. I remember my days as a planner and we would build in buffer stock to our supply. In hindsight buffer stock was just another way to say “I don’t trust that you’ll give me your true demand so I’ll build some extra.” I won’t date myself but that was some time ago. Much has changed but one thing that is similar to those days is that supply chains were divided by function and those silos had little visibility to other nodes in the network. By the time we received a demand signal things had changed enough to make that demand out of date. Of course the next time we received a demand plan we didn’t trust it. The systems we used did not foster trust but rather they made it difficult to communicate in time to pass the right information at the right time. That lag time actually inhibited the building of trust between functional groups. As you mention as in any relationship when we start meaningful conversations trust gets stronger. I believe that technology can foster those conversations, build trust and doesn’t have to be a barrier to effective communication. Thanks again for the comments.
Bill

Another major barrier to SC successful collaboration has been, simply, that companies have been using the wrong replenishment process. Any replenishment process using a forecast push methodology is bound to fail, as measured by service/inventory/capacity performance, because, even with world class 80% forecast mix accuracy, most item level forecasts will be >40% wrong. This is never good in a collaboration 'partnership' because it leads to service issues and lack of trust due to perceived incompetence. This is why CPFR never worked. On the other hand, use of enterprise(s) wide pull (or Demand Driven SCM) enabled by SaaS visibility / transparency doesn't rely on accurate forecasts and allows planned service to be achieved with a minimum of high cost buffer and fire-fighting/expediting. And it just requires the parties to collaborate on exceptional / extreme event management and buffer sizing.

Well noted Bill= "we received a demand plan, we didn’t trust it" = my point exactly
Also well noted Simon = failure because of "lack of trust" = my point, again, exactly.
There can be no effective collaboration without trust = 'tis not al that difficult surely, ( but seems it is for some)
Trust first, ICT second!
Game over
:-)

Agree Stuart tho" I'd suggest that use of a demand plan (alright, a forecast) to drive a supply plan is the cause of the trust problem because its bound to always be wrong. But by taking the need for high forecast accuracy out of the relationship you enter a world of positive feedback - great service -> trust -> business growth -> great service etc etc

Well there is only one thing certain about a forecast=it will be wrong!
So surely forecast accuracy is effectively a myth; therefore no blame, and, no breakdown of trust between proper trusting partners?

Simon - I concur with your point of view. Getting the item level forecast accurate is rather hard. Having said that we can't completely discard forecasts either. It is and will continue to be a key input. But one of several. Accepting the limitations of forecast, monitoring the actuals, sensing shifts, and focusing collab conversations on response strategies is a good approach. If collaboration conversations are single mindedly focused on forecast accuracy improvement, the parties will be in for disappointment.

Well have to say of course my last comment was "tongue in cheek" as of course it is demand that drives the supply chain ( no demand = no supply).
We can only better work together make improvements (e.g. towards forecast accuracy, lead time improvement/understanding, optimum service levels and stock holding etc) by CHOOSING, to work together better from having, effective collaboration and trust and with ICT as an important aid.
Until then, forecast accuracy is a lonesome journey to an end, one where it seems, there is the associated acceptance of "it was their fault" = blame and inefficiency that "others" have created. This is silly but seems to be the chosen perhaps covertly, reality?
However, if we work together effectively and collaboratively, then we are on a jointly shared journey that includes understanding and agreement (e.g. we can use forecast accuracy measuring and the resultant shared learning/changing).
Crucially, we have also, then stopped, managing dependant processes, independently. It has to be the right thing to do.
It is not a difficult concept to accept, but the practice most clearly is impossible for many to even accept.

Good article. Thanks for info.

Hi kinaxis.com administrator, Thanks for the post!