barry blake, scm world – “connect and collaborate: overcoming supply chain performance...

Connect and Collaborate

Barry Blake Vice President, Supply Chain Research

Overcoming Performance Barriers with a Supply Chain Operating Network

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Harnessing the power of the profession

Over 20,000 senior supply chain, procurement, and operations practitioners from the world’s foremost companies actively participate in and contribute to the SCM World community’s continuously evolving knowledge base.

$4 + trillion

$3 + trillion

5,000 +

5 million +

Total combined market capitalisation

Total combined number of production facilities

Total combined sales revenues

Total combined number of company employees

Source: SCM World Membership Community, 2013


• Cost savings

• Risk mitigation

• Innovation

• Productivity

• Strategic impact – 50% faster organizational learning

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What does collaboration mean?


Collaboration is strategic

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A “truly collaborative relationship” is:

n=377


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... to a supplier?

My customer shares demand information e.g. forecast, future plans, promotions

My customer dedicates resources to work with my team to solve problems

My customer shares multi-level demand information e.g. downstream market forecasts Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

n=377

What does collaboration mean?


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What does collaboration mean ...

... to a customer?

My supplier shares availability information e.g. capacity, lead times

My supplier dedicates resources to work with my team to solve problems

My supplier shares multi-level availability information e.g. upstream capacity, lead times

My supplier shares cost savings with me

My supplier shares multi-level cost information e.g. materials, labor, transport etc

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree n=377


• Visibility – onto demand for suppliers and onto availability for customers

• Dedicated problem solvers

• At least a degree of shared benefit

Supply chain collaboration means ...

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Visualizing collaborative organizations

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Barriers to collaboration

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Trust and governance

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We worry that the individual we are working with is not aligned with his / her own organization's internal goal

We worry that we and our trading partner don't share the same goal

We worry that our trading partner lacks appropriate mechanisms to manage continuous collaborative issue resolution over time

We worry that our trading partner lacks a reliable process for issue resolution

We worry that our trading partner will use information against us later

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

n=377


Information and connectivity

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Disagreement on facts between us and our trading partners is a problem

Connecting or on-boarding new trading partners to our trade information flow is a problem

Inability to learn from past issue resolution is a problem e.g. we repeat the same mistakes again and again

Inconsistency in the timeliness of information shared between us and our trading partners is a problem

Inconsistency in the granularity of information shared between us and our trading partners is a problem

Speed of issue resolution between us and our trading partner is a problem

Lack of information shared by us and our trading partners is a problem

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

n=377


Trust is evident in attitudes on shared benefit

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How would you describe the sharing of benefits derived from collaboration?

n=377


• NOT a trust problem

• Much more about information synchronicity

• Secondarily about talent

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Barriers to collaboration


Disagreement at the senior level

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• “A lack of capability to make it work and a lack of top executive support”

• “Depending on the company, it sometimes is quite difficult to get with the right people within the company”

• “Our relationship with the customer is primarily through the sales organization. Many practitioners are unwilling to set time aside to meet with our representatives”

• “Time - not a customer priority”

Commitment problems with customers

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• “The biggest issue in recent times has been a focus on cost rather than the value that can be generated”

• “Fear that transparency will result in the buyer taking an increased/unfair share of value”

• “Holding back information / not sharing, waiting to see if the other side figures it out. Both sides think the other side is hiding margin”

• “Collaboration with suppliers can be challenging for a number of reasons. There can be issues with the R&D teams and their engagement, there can be trust issues on both sides as well as it takes more time up front and that can cause the various teams to struggle to action”

Trust problems with suppliers

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Benefits of collaboration

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Collaborative execution saves money …

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In a “truly collaborative” trading partner relationship, business is more cost-effective (rank on a scale of one to five, where one is disagreement and five is complete agreement)

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

n=377


... through inventory reduction

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In a “truly collaborative” trading partner relationship, inventory buffers are reduced (rank on a scale of one to five, where one is disagreement and five is complete agreement)

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

n=377


Collaboration minimises risk

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In a “truly collaborative” trading partner relationship, risk is minimized (rank on a scale of one to five, where one is disagreement and five is complete agreement)

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

n=377


Innovation is better

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In a “truly collaborative” trading partner relationship, experimentation is easier & more effective (rank on a scale of one to five, where one is disagreement and five is complete agreement)

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

n=377


Collaboration enables management by exception

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In a “truly collaborative” trading partner relationship, management by exception is the norm (rank on a scale of one to five, where one is disagreement and five is complete agreement)

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

n=377


Collaborative partners solve problems faster

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In a “truly collaborative” trading partner relationship, process problems are resolved more quickly (rank on a scale of one to five, where one is disagreement and five is complete agreement)

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

n=377


Problem resolution is twice as fast

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By what rate are process problems resolved more quickly?

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Not faster

Too small to measure

1.2 times faster

1.5 times faster

2 times faster

n=377


Collaboration accelerates learning

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In a “truly collaborative” trading partner relationship, learning is faster (rank on a scale of one to five, where one is disagreement and five is complete agreement)

n=377

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree


Learning curves are 50% steeper

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For those who agree that learning is faster in a collaborative relationship, how much faster?

n=377


Senior leaders agree

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Collaboration in action

1 2

3 4


• Cost savings • Risk mitigation • Innovation • Productivity

• Strategic Impact

– 50% faster organizational learning

Benefits summary

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Prioritizing collaboration

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Purpose & impact: choose your battles


• Prioritize collaborative opportunities as you would manage portfolio decisions

• Segment suppliers and customers to separate real opportunities from pipe dreams

• Use respect to build respect

• Open up to risk sharing and new capital structures

Concluding thoughts

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barry blake, scm world – “connect and collaborate: overcoming supply chain performance...

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