It's Time to Break Barriers Down

Senior executives say collaboration is crucial to business success, according to Accenture survey

New York  November 25, 2002  With an economic rebound less robust than anticipated and greater pressure to enhance shareholder value, companies see collaborating with suppliers and customers as an opportunity to increase top-line growth and reduce costs, according to research released today by management and technology services firm Accenture.

The research was based on a survey of 150 senior executives at Fortune 1000 companies in the manufacturing, high-tech, transportation, finance, insurance and utility industries. Participants were asked a variety of questions about collaboration with supply chain partners, including the benefits of collaboration, barriers to collaboration and key areas for collaboration.

Fifty-four percent of the survey respondents indicated that developing collaborative relationships in demand and supply planning with their customers and suppliers was very important, compared with less then 10 percent who said that such collaboration was not important.

"That the survey confirms a strong emphasis on collaboration, which entails sharing detailed information with suppliers and customers, shouldn't be surprising," said John Matchette, a partner in Accenture's supply chain practice. "During an economic downturn, successful companies focus on collaboration because it enables them to improve visibility and transparency in their supply chains, which helps increase efficiencies and ultimately reduce costs."

When asked what one area of collaboration creates or could create the greatest value for their business, the respondents were split between collaborative product design (26 percent), joint sales planning (23 percent) and production planning (21 percent).

When asked to identify the largest benefit their company achieves or expects to achieve by collaborating with trading partners, 28 percent of respondents said increased sales and top-line growth, another 28 percent said cost reductions or savings, and 21 percent said developing stronger strategic relationships.

Matchette said the growth and savings expected from collaboration come from two areas. "First, collaboration allows you to focus on your core competencies, freeing up your company's resources to drive greater growth. Second, the information sharing inherent in collaboration increases understanding of customer needs. The more you collaborate with your downstream partners, sharing forecast data and user-demand data, the more you'll improve your forecasts, cut your inventory and reduce your production costs.

"Ultimately," Matchette continued, "we believe the next cost and productivity frontier for companies is going to be with their channel partners because these partners are holding their products and shipping them to customers using, in many cases, duplicative assets." When asked what information would benefit their companies the most, 43 percent of executives surveyed selected greater access to customer demand data (including point of sale, sales forecast, etc.); 20 percent said strategic plans about products and pricing; and 18 percent selected production plans, inventories and shipping information.

Among the survey's other findings:

" "Lack of a clear value proposition" was chosen by the most respondents (26 percent) as the greatest barrier to successful trading partner collaboration in their organizations, followed by "technology and data synchronization hurdles," which 22 percent of respondents selected.

" When asked what factor would most persuade them to invest in integrated processes and technologies with their trading partners, nearly half of respondents (48 percent) said "operational effectiveness," followed by 32 percent who selected "close relationships with customers requesting it"; only 2 percent selected "close relationships with suppliers requesting it."