In a recent survey of 794 purchasing, manufacturing, logistics and senior corporate managers in 63 companies, CAPS Research found managers are spending more time evaluating supply-chain-enabled business models, but most have not fully grasped the nature of collaboration or the concept of what it takes to achieve a true collaborative capability.

The authors of the study — Stanley Fawcett, Ph.D.; Gregory Magnan, Ph.D.; and Jeffrey Ogden, Ph.D. — suggest that many companies are unsure how to piece together supply chain relationships into a coherent strategic plan.

While some companies have caught the vision and are making great progress on their supply chain journey, others continue to be blinded by "business as usual" and are not prepared for the journey ahead. These companies must get their supply chain collaboration in shape quickly before the competition leaves them too far behind to catch up.

Three Steps to Collaboration
To help companies better understand the forces that are driving changes in supply chain collaboration, the authors provide a three-step process to identify and compare the benefits, barriers and bridges to assess and communicate the viability of pursuing a path toward collaborative advantage. The three stages (summed up nicely by DMReview) are as follows:

• Introspection — the company's orientation and philosophy that consists of two building blocks: customer orientation and systems thinking orientation.
• Supply chain design — consists of five steps: scanning, mapping, costing, competency/outsourcing management and rationalization.
• Supply chain collaboration — practices employed to drive the transformation include relationship alignment, information sharing, performance measurement, people empowerment and collaborative learning.

This study's most successful supply chain companies took a balanced approach to supply chain collaboration. They performed rigorous analysis, invested in relationships, measured performance, documented successes and promoted constant improvement and learning.

The authors identified best practices and compiled them into a supply chain collaboration benchmarking diagnostic to help managers succeed in their supply chain journey. Even the already-successful supply chain leaders found opportunities for victory by benchmarking their practices against the practices in this diagnostic, DMReview recently pointed out regarding CAPS Research's findings.

Shared performance measures, for instance, could help allies overcome goal differences and eliminate the traditional conflicts that exist between supply chain links.

"Firms often have diverging interests in the short term, and such conflicts of interest mitigate the commitment of supply chain collaboration and fully sharing demand information," noted the authors of Supply Chain Collaboration: Making Sense of the Strategy Continuum, at Helsinki University of Technology's Dept. of Industrial Engineering and Management. The authors suggest that collaboration may improve if supply chain members better integrate information from supply chain partners deeply into each member's operations and data processing.

Their article also emphasizes to us that if a product, for example, requires five raw materials and must go through four processes before it's ready for the customer, then the most upstream manufacturer must have the data at the same time — as soon as the final customer purchases — as the manufacturer who is most downstream. Such forthcoming data sharing helps all in the supply chain minimize manufacturing and delivery time while simultaneously minimizing product time in the warehouse. This, in turn, helps maximize return on investment for raw materials and labor.

In addition to the CAPS Research tips, A.T. Kearney's Managing Supply Chains in the 21st Century revealed that relatively few companies have implemented a broad set of best practices. Based on examination of 28 companies, the research report suggests best practices involving collaboration that have been used and for which companies strive to use more aggressively include:

• Managing production capacity as a global resource and making product sourcing decisions on a total landed-cost basis;

• Using dynamic planning to continually optimize the performance of the entire supply chain.

In other words: deepen integration, better collaborate/communicate across the entire supply chain, and build for mass customization or modularization.

Resources

Achieving World-Class Supply Chain Collaboration: Managing the Transformation
by Stanley Fawcett, Ph.D.; Gregory Magnan, Ph.D.; and Jeffrey Ogden, Ph.D.
CAPS Research, 2007

Achieving World-Class Supply Chain Collaboration: Managing the Transformation
DM Review, September, 2007

Supply Chain Collaboration: Making Sense of the Strategy Continuum
by Matthias Holweg, Stephen Disney, Jan Holmström and Johanna Småros
Center for Technology, Policy and Industrial Development, Massachusetts Institute of Technology and Judge Institute of Management; University of Cambridge, Logistics Systems Dynamics Group, Cardiff Business School, Cardiff University; and Logistics Research Group, BIT Research Centre, Helsinki University of Technology

Managing Supply Chains in the 21st Century
A.T. Kearney, July 2003