[From iSource Business, September 2001] As companies expand globally, supply chains are becoming increasingly complex because of the multiple partners, participants and locations involved. Within a supply chain, it's not uncommon for an order to be filled from several supplier locations worldwide and then travel by sea or air, rail and truck to a final destination, perhaps even merged in-transit along the way.
In today's increasingly harried, competitive environment, manufacturers cannot afford to have a product in-transit in the supply chain. Instead, the product must flow directly toward and in sync with the source of the demand. To keep step with this competitive and intense pace, effective supply chain partners understand that collaboration with each other is the only alternative.
In my view, the most important key to successful collaboration is accurate, real-time data sharing, which is just as important as the product's physical delivery. However, employing that data is the tricky part. In the transportation industry, most carriers and shippers use data tools with different formats and types of information. Those different types of information travel at different speeds, utilize different technologies and are aggregated for different purposes, which represents the greatest single challenge to a successful global supply chain: the synchronization of data and the facilitation of collaborative decision making through technology integration among all supply chain participants. Resolving this issue requires technological and managerial leadership. How can companies meet this challenge?
Historically, a supply chain has been sequentially operated. Supply chains began by sourcing suppliers, with manufacturers either vertically controlling their own production or setting the design criteria with suppliers, who were typically in control of capacity decisions and other production capability factors. The process then moved to the planning stage where decisions were made about how much to purchase, a number that was often based on limited information regarding customer demand and was seldom shared with suppliers. Finally, manufacturers processed the information and made the product. However, any ensuing customer feedback was generally limited and not shared within the seller's organization, let alone with suppliers.
Now the Internet enables so much more. It has created the ability to collaborate more effectively across company lines and out to key business partners. When a company seeks to optimize its supply chain across customer-supplier relationships and the product cycle, it's a competitive opportunity (see "Stop. Collaborate and Listen" on page 32 of the September 2001 issue of iSource Business), which makes collaboration and information visibility the keys to success. In essence, the technology is available for companies to collaborate right now, and it should be taken advantage of.
No Easy Task
But the collaborative process is not always easy. No company can completely and effectively control its entire supply chain, and some still have difficulties collaborating internally, let alone with suppliers and customers. Nevertheless, there are certain steps any reasonably well-integrated company can take to achieve a collaborative supply chain.
First, companies need to commit to new business processes. Collaboration will not be effective if partners do not operate within a process structure. Leadership is needed within the companies to:
- Establish a single point of contact for each customer
- Nurture the collaborative process
- Assess progress and concerns
In addition to having process integration, participants must have clear objectives regarding core processes and desired results, with short- and long-term goals. Open collaboration is the business model for future global supply chain optimization, and, for it to be a success, it requires sharing sensitive information, such as product development plans, production schedules and sales forecasts. Unfortunately, there are many companies that are reluctant to share those types of information.