Key Elements of a Collaborative Supply Chain

A collaborative supply chain requires, first and foremost, visibility. Each stakeholder needs to be able to track activity upstream and downstream to facilitate planning, optimize operations, and anticipate emerging issues.

What facilitates visibility? Continual, bidirectional communication. At the most basic level, teams need to be in regular communication around product design changes, material availability, compliance, lead times, and the like. But even as most manufacturers maintain regular communication on these and other issues, only a minority have adopted a system that allows supply chain partners, for example, access to the product record and product change or review processes.

Failing to implement such a system makes it harder for partners to track the latest revisions or identify product design issues throughout the NPD and NPI processes.

Shared visibility, and the proactive communication it entails, is only one side of the collaborative equation. The other side is empowerment. When supply chain partners not only raise concerns but are also encouraged to address them, the supply chain becomes truly collaborative. Indeed, it is this level of collaboration that makes it possible for the supply chain to quickly adapt to emerging challenges.

Joe Andrews at Supply Technologies has identified three levels of supply chain collaboration:

Transactional integration (the most basic level) focused on aggregating and providing visibility to purchase orders, work and sales orders, invoices, and payments.

Supply chain information sharing (the next level) focused on production planning or component forecasting, manufacturing capacity and transportation planning, and product designs, including parts, assemblies or bills of materials (BOMs), and service levels.

Strategic collaboration (the highest level) features an improved ability to deliver the right products to meet demand with better forecast accuracy, profitability, enhanced sales and operations planning, production resourcing, and resolution of critical supply chain events.

When companies get to the highest level, they stand the best chance of weathering supply chain shocks. Andrews points out, they can also:

Reduce costs by improving efficiency and eliminating errors, quality issues, and scrap/rework

• Deliver high-quality products faster
• Accelerate innovation through real-time interaction

The collaboration described here has become more common. In 2016, APQC’s Open Standards Benchmarking research indicated that 66% of organizations were already involving their suppliers in new product or service development, including product improvements and extensions. While that figure may sound promising, the degree of supplier involvement was and remains quite variable. The same research indicated, for example, that only about 31% of organizations invited extensive participation of suppliers in their product development efforts.