2. Collaborate
collaborate kə-ˈla-bə-ˌrāt
intransitive verb
1: to work jointly with others or together especially in an intellectual endeavour
2: to cooperate with or willingly assist an enemy of one's country and especially an occupying
force
3: to cooperate with an agency or instrumentality with which one is not immediately connected
Other forms: col•lab•o•rat•ed; col•lab•o•rat•ing
— collaboration noun
— collaborative adjective or noun
— collaboratively adverb
— collaborator noun
Examples
1. The two companies agreed to collaborate.
2. He was suspected of collaborating with the occupying army.
Merriam-Webster Online Dictionary
3. Easy Peasy …
… Not!
Jbid Arsenyan, Gülçin Büyüközkan, Orhan Feyzioğlu; Modelling Collaboration Formation with a Game Theory Approach, WCE 2011, July 6 - 8, 2011, London, U.K.
4. Why collaborate?
• Is the driving force to establish a collaborative relationship truly a
shared goal, like improving on-shelf availability, or is it more selfish
in nature such as…
…to improve sales and/or profits of your company?
…to take market share away from your competitors?
…to reduce your company’s supply chain costs?
…to eliminate or reduce investments in physical assets?
…to transfer costs and risks to other parties in your supply chain?
…to create a more flexible and responsive supply chain?
• How can parties in the supply chain organize themselves around a
shared goal when they also have many conflicting objectives?
• Do conflicting goals get in the way of collaboration?
• Can you really collaborate if everyone wants the benefits but none
of the risks, costs, and assets?
5. Who to Collaborate with?
• When you take into account the potential
benefits of a prospective collaborative
relationship, and how easy or difficult it will be to
set up and manage, which type of partner
provides the best opportunity for success?
– Collaborating with a customer?
– A supplier?
– A competitor?
– A company outside your industry?
– A 3PL?
6. How to Collaborate?
• Which model works best, and in which cases?
– One-to-One within Industry: Direct relationship between your
company and one other company in your industry (customer,
supplier, etc).
– One-to-One outside Industry: Direct relationship between your
company and one other company outside your industry.
– Many-to-One within Industry: Relationship between your
company and several other peers to serve a single, common
customer (likely facilitated by a third party).
– Many-to-Many within Industry: Relationship between your
company and several other peers to serve multiple common
customers (likely facilitated by a third party).
– Many-to-Many outside Industry: Ad-hoc or structured
relationships between your company and a network of other
companies from different industries facilitated by a third party.
So many questions, so few answers …
Adrian Gonzalez, (2011), “Unravelling the True Meaning of Supply Chain Collaboration”, logisticsviewpoints.com
7. Schematic Representation of the
Fresh Fruit Supply Chain
Packer Landside
Transport
Grower/
Producer
Cold Store Re-packerFreight
Carrier
Regional
Warehouses
Distribution Retailer Consumer
Importer Activities (Demand Side)
Exporter Activities (Supply Side)
8. Question
• Which role do you play in the supply chain?
1. Shipper
2. Logistics Service Provider (3PL/4PL)
3. Transportation Carrier (Air, Ocean, Road or Rail
Carrier)
4. Solutions/Technology Provider or Consultant
5. Other
9. A Framework for Supply Chain
Collaboration in the Agri-food Industry
Managing
Trust
Supply Chain Collaboration
Managing
Power
Designing & Governing
SC Activities
Establishing & Maintaining
SC Relationships
Managing
Dependence
Sharing
Risks
Selecting Partner
(number of
entries)
Selecting
Information
& Data
Sharing
Techniques &
TechnologiesCollaboration
Width
(SC activities)
Collaboration
Depth
(Strategic, tactical,
operational)
Sharing
Rewards
Adapted from A. Matopoulos, M. Vlachopoulou, V. Manthou, B. Manos, (2007),"A conceptual framework for supply chain collaboration:
empirical evidence from the agri-food industry", Supply Chain Management: An International Journal, Vol. 12 Iss: 3 pp. 177 - 186
10. Enablers That Can Facilitate
Supply Chain Collaboration
• Common interest – both parties have a stake in the
outcome of the collaboration to ensure ongoing
commitment.
• Openness – collaboration partners must openly discuss
their practices and processes. Sometimes this means
sharing information that is traditionally considered
propriety.
• Mutual help – when addressing supply chain problems or
opportunities, look for cross-company solutions.
• Clear expectations – all parties need to understand what is
expected of them and the others in the relationship.
• Leadership – without a champion, collaboration will never
be accomplished.
Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
11. Enablers That Can Facilitate
Supply Chain Collaboration
• Co-operation, not punishment – focus on jointly
solving problems, not looking for someone to blame.
• Trust – this must be evident throughout both
organisations – at every management level and
functional area.
• Benefit sharing – in a truly collaborative relationship,
partners share the pain, the risks and the losses.
• Technology – advanced technology is essential to
enabling a collaborative relationship across the supply
chain.
Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
12. A Framework for Supply Chain
Collaboration in the Agri-food Industry
Managing
Trust
Supply Chain Collaboration
Managing
Power
Designing & Governing
SC Activities
Establishing & Maintaining
SC Relationships
Managing
Dependence
Sharing
Risks
Selecting Partner
(number of
entries)
Selecting
Information
& Data
Sharing
Techniques &
TechnologiesCollaboration
Width
(SC activities)
Collaboration
Depth
(Strategic, tactical,
operational)
Sharing
Rewards
Adapted from A. Matopoulos et. al.
13. Forms of Supply Chain Collaboration
Suppliers
External
Own Company
Internal
Competitors
External
Customers
External
Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008)
Non-Competitors
External
14. Own Company’s Value Chain
Outbound
Logistics
Inbound
Logistics
Operations Marketing
and
Sales
Services
Firm Infrastructure
Procurement
Human Resource Management
Technology Development
Primary Activities
SupportActivities
Michael Porter, (1985), Competitive Advantage
15. Own Company’s Value Chain
Outbound
Logistics
Inbound
Logistics
Operations Marketing
and
Sales
Services
Firm Infrastructure
Procurement
Human Resource Management
Technology Development
Primary Activities
SupportActivities
Michael Porter, (1985), Competitive Advantage
16. The Value System for the Company
Supplier’s
value
chains
Firm’s
value
chain
Channel’s
value
chains
Buyer's
value
chains
17. Typical Vertical Supply Chain Collaboration
Supplier’s
value
chains
Firm’s
value
chain
Channel’s
value
chains
Buyer's
value
chains
18. Evolution of Supply Chain Practices and
Inter-organizational Governance
Retailer’s
store
Retailer’s
warehouse
Manufacturer’s
warehouse
Manufacturer’s
factory
Raw
materials Consumer
Product flowInformation flow
Low HighBenefits and Costs of Collaboration
Relational
contracting
Standard
contracting
CRP
DRP
CPFR
ECR
Vertical
integration
19. Forms of Supply Chain Collaboration
Suppliers
External
Own Company
Internal
Competitors
External
Customers
External
Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008)
Non-Competitors
External
20. Typical Horizontal Supply Chain
Collaboration with a Competitor
Supplier’s
value
chains
Firm’s
value
chain
Channel’s
value
chains
Buyer's
value
chains
• To bundle complementary goods
• To bundle non-related goods
• To share information
21. Typical Horizontal Supply Chain
Collaboration with a Non-Competitor
Supplier’s
value
chains
Firm’s
value
chain
Channel’s
value
chains
Buyer's
value
chains
• To bundle complementary goods
• To bundle non-related goods
• To share information
22. Typical Horizontal Supply Chain
Collaboration with a Non-Competitor
Supplier’s
value
chains
Firm’s
value
chain
Channel’s
value
chains
Buyer's
value
chains
• To bundle complementary goods
• To bundle non-related goods
• To share information
24. Question
• What is your current experience with horizontal
collaboration?
1. Collaborated with competitor (complementary goods)
2. Collaborated with competitor (non-related goods)
3. Collaborated with competitor to share information
4. Collaborated with non-competitor (complementary goods)
5. Collaborated with non-competitor (non-related goods)
6. Collaborated with non-competitor to share information
7. At pilot stage of horizontal collaboration
8. Researching horizontal collaboration
9. Considering research into horizontal collaboration
10. Waiting to see what other companies are doing
11. No interest in horizontal collaboration at the moment
25. Shippers’ Experience with Horizontal
Supply Chain Collaboration
0% 5% 10% 15% 20% 25% 30%
No interest in horizontal collaboration at the moment
Waiting to see what other companies are doing
Considering research into horizontal collaboration
Researching horizontal collaboration
At pilot stage of horizontal collaboration
Collaborated with non-competitor to share information
Collaborated with non-competitor (non-related goods)
Collaborated with non-competitor (complementary goods)
Collaborated with competitor to share information
Collaborated with competitor (non-related goods)
Collaborated with competitor (complementary goods)
European Supply Chain Horizontal Collaboration Report (2010)
26. Objectives of Horizontal
Supply Chain Collaboration
Objectives Possible Results
Lower logistics cost • Improved use of transport/storage facilities
• Economies of scale in deliveries to customers
Higher service levels • Shorter throughput times to customers
• More frequent deliveries to customers
Higher turnover/market share • Collaborative distribution channel to customers
• Shared offer for new/potential customers
Reduced investments • Shared investment in DCs and handling activities
• Shared investment in transport
Sustainable logistics • Reduction of CO2 footprints
• Improvement in fuel/energy use
Knowledge exchange • Exchange of best practices
• Shared innovation
Samewerking in de logistiek, Kees Verweij, TNO (2008)
27. Key Drivers Encouraging Shippers to
Consider Horizontal SC Collaboration
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Enabling modal shift
Reducing congestion
Cutting reverse logistics costs
Cutting maintenance & operations costs
Being amongst industry leaders & innovators
Lowering carbon emissions
Cutting sourcing costs
Cutting storage costs
Improving delivery times
Reduce empty running
Improving overall efficiency
Enhancing customer service
Cutting distribution costs
Cutting transport costs
Very Important Quite Important Important Somewhat Important Not Important
European Supply Chain Horizontal Collaboration Report (2010)
28. Top Success Factors for Horizontal
Supply Chain Collaboration
• Lower logistics costs provides the start, but higher service
levels for the customer keeps it going
• Collaboration is easier to set-up with non-competitive
partners
• Benefits should be shared fairly, but this does not have to
be transparent
• Make clear and timely agreements on stepping in or out of
the consortium
• Continue to think about each other’s reasons to collaborate
• Invest in a fit between people and partners
• Reaching benefits of collaborating takes time – be flexible
Samewerking in de logistiek, Kees Verweij, TNO (2008)
29. Shipper Methods of Finding Partners for
Horizontal Supply Chain Collaboration
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
50%
Other
With the help of a carrier
Searching for partners with same carriers
With the help of a consultant or orchestrator
Seeking partners with complementary goods
Being approached by potential partners
Searching for partners that can be trusted
Comparing trade flows & delivery information
Searching for partners with similar goals
Searching for partners with same 3PLs
Searching for partners by industry
With the help of a 3PL or 4PL
European Supply Chain Horizontal Collaboration Report (2010)
30. A Framework for Supply Chain
Collaboration in the Agri-food Industry
Managing
Trust
Supply Chain Collaboration
Managing
Power
Designing & Governing
SC Activities
Establishing & Maintaining
SC Relationships
Managing
Dependence
Sharing
Risks
Selecting Partner
(number of
entries)
Selecting
Information
& Data
Sharing
Techniques &
TechnologiesCollaboration
Width
(SC activities)
Collaboration
Depth
(Strategic, tactical,
operational)
Sharing
Rewards
Adapted from A. Matopoulos et. al.
31. Technology Alone is not the Answer
• Benefits can flow from the right technology:
– Allow a company to communicate with its suppliers at
all levels
– Can help a break down barriers between companies
– Speed up information flows
– Can turn data into useful collaborative information
• It should be emphasised that technology in and
of itself is not enough – a human contribution is
essential
32. Inter-organizational Systems for
Supply Chain Collaboration
Uniqueness of Processes
Degree of
Inter-organizational
Integration
(processes, systems,
and data)
Type of Relationship
CustomizedStandardized
Tight
Loose
Many-to-Many One-to-Many One-to-One
Third-party
Electronic
Marketplace
EDI/EAI
Offline
Trade
Exchange
eProcurement
Hub/Portal
Web-based
Order Entry
Offline
Auction
Shared
Collaborative
Systems
Fax/
Email
Phone
T. McLaren, M. Head, Y. Yuan, (2002) "Supply chain collaboration alternatives: understanding the expected costs and benefits“, Internet Research, Vol. 12 Iss: 4, pp.348 - 364
33. Expected Overall Cost-Benefit of
Supply Chain Collaboration Systems
Costs
(ownership
and opportunity
costs)
Benefits
(market responsiveness and
supply chain cost reduction)
Third-party
Electronic
Marketplace
EDI/EAI
Offline
Auction
eProcurement
Hub/Portal
Web-based
Order Entry
Shared
Collaborative
Systems
Fax/Email
PhoneLow
High
High
Low
Offline
Trade
Exchange
Adapted from McLaren et. al. (2002)
34. Benefits of Real Time Information Sharing
Retailer’s
store
Retailer’s
warehouse
Manufacturer’s
warehouse
Manufacturer’s
factory
Raw
materials
2-3 days 2-3 days1-2 days
1-2 days 1-2 days
1-2 days
1-2 days
1-2 days
Total: 10-18 days
Total: 4-8 days
Demand
spikes
250%
Traditional
supply chain
1-2 days 1-2 days 1-2 days 1-2 days
Total: 4-8 days
Demand-driven
supply chain
The flow of information and products across a hypothetical supply chain
Demand
spikes
250%
Product flowInformation flow
Real time information – no delay in passing information across the supply chain
Adapted from John Budd, Claudio Knizek, and Robert Tevelson, (2012), “The Demand-Driven Supply Chain: Making It Work and Delivering Results”, bcg.perspectives
35. The Value of Shared Information
Average Maximum
Numerical Study 2.2% 12.1%
Simulation Model 3.4% 13.8%
Gérard P. Cachon, Marshall Fisher, (2000) “Supply Chain Inventory Management and the Value of Shared Information”, Management Science, Vol. 46 no. 8, pp. 1032-1048
Percentage SC Cost Reduction of Full Information Policy vs.
Traditional Information Policy
• Traditional Information Policy = exchange
order information only
• Full Information Policy = exploit shared
information
36. The Value of Shared Information
Average
Half Lead Times 21%
Half Batch Sizes 22%
Reduction of lead times and batch sizes due to
faster and cheaper order processing
• Implement IT to accelerate and smooth the
physical flow of goods through a supply chain
Gérard P. Cachon, Marshall Fisher, (2000) “Supply Chain Inventory Management and the Value of Shared Information”, Management Science, Vol. 46 no. 8, pp. 1032-1048
37. Case Study
Apple 12,5 kg equivalent to Europe in week 14 (Rand Values)
Value Chain Element Rand Value
Retail Selling Price 175.00
Retail Profit 42.00
Efficiency driven SC Costs 48.94
Other SC Costs 38.57
Gross Farm Income 45.49Europe transport; R 4,25
Importer’s commission; R
8,65
Europe logistics; R 13,00
Europe duties; R -
Freight; R 26,88
Insurance; R 0,75
Exporters commission; R 5,10
Port cost; R 2,26
Wharfage;
R 0,42
Transport to port; R 2,13
Finance charges & Interest
advances; R 1,00
Levies; R 0,30
PPECB/Inspections; R 0,36
Packing materials; R 11,08
Packing charges
(Tipping Cost); R
11,33
Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
38. Value Chain Element Rand Value
Retail Selling Price 126.75
Retail Profit 29.25
Efficiency driven SC Costs 30.31
Other SC Costs 24.09
Gross Farm Income 43.10
Case Study
Grape 4,5 kg equivalent to Europe in week 52 (Rand Values)
Europe transport; R
6,50
Importer’s commission; R
7,28
Europe logistics; R 5,85
Europe duties; R -
Freight; R 13,40
Insurance; R 0,75
Exporters commission; R 4,00
Port cost; R 0,50
Wharfage; R 0,16
Transport to port; R 3,90
Finance charges & Interest
advances; R 0,50
Levies; R 0,36
PPECB/Inspections; R 0,30
Packing materials; R 8,60
Packing charges
(Tipping Cost); R 2,30
Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
39. Case Study
Citrus 15 kg equivalent to Europe in week 27 (Rand Values)
Value Chain Element Rand Value
Retail Selling Price 159.25
Retail Profit 42.97
Efficiency driven SC Costs 56.66
Other SC Costs 42.17
Gross Farm Income 17.45Europe transport; R
10,59
Importer’s commission; R
5,60
Europe logistics; R 13,00
Europe duties; R -
Freight; R 25,93
Insurance; R 0,63
Exporters commission; R 5,36
Port cost; R 5,00
Wharfage; R 0,23
Transport to
port; R 1,91
Finance charges &
Interest advances;
R 0,90
Levies; R 0,32
PPECB/Inspection
s; R 0,22
Packing materials; R 11,08
Packing charges (Tipping
Cost); R 18,06
Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
40. Case Study
Saving due to
efficiency driven
by Information
policy
Saving due to
acceleration and
smoothing the
physical flow of
goods
R1.07 to R5.92 per
carton
R10.27
R0.66 to R3.66 per
carton
R6.36
R1.24 to R6.85 per
carton
R11.89
FPT Analysis based on data from M.C. Dodd & G.P. Cachon et. al.
41. Question
• What are you willing to share with companies in a horizontal collaboration
relationship?
1. Truckloads via a carrier
2. A third party's warehouses
3. Company's own warehouses
4. Nothing - not collaborating
5. Reverse logistics
6. Demand planning information
7. Another company's warehouses
8. Another company's fleet
9. Forecasting information
10. Inventory information
11. Assembly
12. Fleet
13. Order management systems
14. Repairs
15. Other
42. What Shippers Share During
Horizontal Supply Chain Collaboration
European Supply Chain Horizontal Collaboration Report (2010)
0% 5% 10% 15% 20% 25% 30% 35% 40%
Other
Repairs
Order management systems
Fleet
Assembly
Inventory information
Forecasting information
Another company's fleet
Another company's warehouses
Demand planning information
Reverse logistics
Nothing - not collaborating
Company's own warehouses
A third party's warehouses
Truckloads via a carrier
43. A Framework for Supply Chain
Collaboration in the Agri-food Industry
Managing
Trust
Supply Chain Collaboration
Managing
Power
Designing & Governing
SC Activities
Establishing & Maintaining
SC Relationships
Managing
Dependence
Sharing
Risks
Selecting Partner
(number of
entries)
Selecting
Information
& Data
Sharing
Techniques &
TechnologiesCollaboration
Width
(SC activities)
Collaboration
Depth
(Strategic, tactical,
operational)
Sharing
Rewards
Adapted from A. Matopoulos et. al.
44. Managing Horizontal Supply Chain
Relationships Is Not Easy!
• 4 of the top 5 hurdles for horizontal supply chain
collaboration is about establishing & maintaining
supply chain relationships
– Competition between partners plays up from time to time
– Is there enough trust and dedication between partners?
– Chain dominance is an issue – who keeps the collaboration
going?
– Discussion about “fair” division of collaboration benefits
– Linking operational processes and information systems
takes time
Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008)
Information system related
45. Trust and Dedication is Essential for
Horizontal Supply Chain Collaboration
Samewerking in de logistiek, Kees Verweij, TNO (2008)
“Collaboration is of strategic
importance for us …”
Collaboration is ‘hot’, but
choices have to be made …
“… but it should be profitable
within a year”
“You are our
collaboration partner …”
“Partners are of the greatest
importance …”
“We are totally committed to our
partners …”
“… so the price has to
go 20% down”
“… therefore we have
a 100 of them”
“… and to all their
competitors”
… Otherwise collaboration
will be difficult in practice
46. Question
• Why would you not participate in a horizontal collaboration relationship?
1. Fear of information disclosure to competitors
2. Lack of widespread acceptance of the idea
3. Difficulty establishing relationships of trust
4. Difficulty finding appropriate partners
5. Lack of industry case studies
6. Lack of internal knowledge
7. Lack of legal framework and contract templates
8. Don't want to work with competitors
9. Lack of support from top management
10. Lack of IT infrastructure and/or support
11. Lack of support from logistics service providers
12. Lack of gain sharing models
13. Lack of regulatory framework
14. Lack of exit strategy from legal standpoint
15. Lack of support from carriers
16. Enough improvement with internal efficiencies
17. Lack of clarity over who is in charge
18. Lack of support from operations management
19. Against company policy
47. Barriers Stopping Shippers from (Further)
Investment in Horizontal SC Collaboration
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Against company policy
Lack of support from operations management
Lack of clarity over who is in charge
Enough improvement with internal efficiencies
Lack of support from carriers
Lack of exit strategy from legal standpoint
Lack of regulatory framework
Lack of gain sharing models
Lack of support from logistics service providers
Lack of IT infrastructure and/or support
Lack of support from top management
Don't want to work with competitors
Lack of legal framework and contract templates
Lack of internal knowledge
Lack of industry case studies
Difficulty finding appropriate partners
Difficulty establishing relationships of trust
Lack of widespread acceptance of the idea
Fear of information disclosure to competitors
European Supply Chain Horizontal Collaboration Report (2010)
48. Using the Cluster Framework to Foster
Collaboration
• What is a Cluster?
– According to Michael Porter: a cluster is defined as geographic
concentration of inter-connected companies and institutions
working in a common industry
– In addition, clusters encompass an array of collaborating and
competing services and providers that create a specialized
infrastructure, which supports the cluster’s industry
– Finally, clusters draw upon a shared talent pool of specialized
skilled labour
• The economic cluster model, represents a synergy, a
dynamic relationship and a network between not only the
companies that comprise a cluster but also the successful
partnering of the stakeholders such as government,
education, and other supporting organizations vital to a
regions economic success
49. Porter’s Model of Competitive Advantage
a.k.a. The Diamond Model
Firm Strategy,
Structure and
Rivalry
Related and
Supporting
Industries
Factor
Conditions
Demand
Conditions
Chance
Government
Michael Porter, (1990), “The Competitive Advantage of Nations”
50. The Successes of Clusters
• Many successful clusters have established a
greater competitive advantage and wealth
creation for their regions when compared to
companies not in a cluster
• It is because of this success that more and
more policy makers and regions are
considering fostering cluster development as
building blocks of regional economies
51. Creating a Cluster Framework
• The following steps aim to create a cluster framework that is demand-
driven, inclusive, collaborative, strategic, and value-creating:
1. Mobilization
– Building interest and participation among different constituencies needed
to carry out the cluster initiative.
2. Diagnosis
– Assessing the industry clusters that comprise the economy and the
economic infrastructure that supports cluster performance.
3. Collaborative Strategy
– Convening stakeholders (companies in each cluster, as well as public and
private supporting economic institutions) into working groups. The intent is
to identify priority challenges and action initiatives that can address shared
problems.
4. Implementation
– Building commitment of cluster working group participants and regional
stakeholders to actions. Implement the actions identified as results of the
collaborative process. Additional implementation activities included the
identification or creation of an organization to sustain implementation.
52. Cost Benefit Model for
Supply Chain Collaboration
System Implementation
and Integration Cost
Process Coordination
and Integration Cost
Data Translation
and Integration Cost
Partnership Instability Cost
Switching Cost
Total Cost of
Ownership of
System
Costs
Partnership
Opportunity Cost
Responsiveness
to Market
Benefits
Costs and Benefits
Process Cost Reduction
Market Intelligence Gains
Service Level Gains
Cycle Time Reduction
Inventory Cost Reduction
Performance Measures Results
Product Cost Reduction
Net Benefits of
Collaborative
SCM
Supply Chain
Cost
Reduction
T. McLaren, M. Head, Y. Yuan, (2002) "Supply chain collaboration alternatives: understanding the expected costs and benefits“, Internet Research, Vol. 12 Iss: 4, pp.348 - 364
53. Benefits of Supply Chain Collaboration
• The greatest benefit that can be expected is
financial:
– Reduced inventory
– Improved customer service
– More effective use of human resources
– Better delivery through reduced cycle times
Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
54. Benefits of Supply Chain Collaboration
• Non-financial benefits:
– Faster speed to market of new products
– Stronger focus on core competencies
– Enhanced public image
– Greater trust and interdependence
– Increased sharing of information, ideas and technology
– Stronger emphasis on the supply chain as a whole
– Improved shareholder value
– Competitive advantage over other supply chains
All of these benefits eventually affect the bottom line,
whether directly or indirectly.
Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
55. Collaboration Impediments - Factors to Fail
• Doing things the old way – there is a natural resistance to change
that confronts any broad initiative such as supply chain
collaboration.
• Conventional accounting practices – focus on the traditional
accounting role of determining the value for a single firm, rather
than measuring cross-company values and providing the
measurement tools necessary to guide collaborative efforts to
share these gains, will undermine collaboration.
• Tax laws – dictate the need for a clear “price paid” and “price sold”
to determine profitability – all of which obscures the synergistic,
and often indirect, cost savings that are primary drivers of supply
chain collaboration.
• Competition/Anti-trust laws – information shared for the purpose
of supply chain collaboration may be considered collusive activity.
Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
56. Collaboration Impediments - Factors to Fail
• Limited view of the supply chain – this is a residual effect of the
traditional silo organisational structure in which people think only
about their own functional areas.
• Annual negotiation process – annual negotiations consume time
and energy, plus they are usually adversarial. There is no room for
adversarial relationships in collaboration.
• Time investment – collaboration takes time and a lot of hard work.
To get people to make the necessary effort, they have to be clearly
shown the potential benefits.
• Inadequate communications – when communication between
supply chain partners is non-existent or inadequate, the potential
for problems increases exponentially.
• Inconsistency – behavioural attitudes and operational execution
must be consistent at all interfaces in the supply chain relationship.
• Betrayal – lying, misleading, misrepresenting – these may be the
ultimate barriers to a successful collaborative relationship.
Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
57. In Conclusion
• Collaboration is not easy
• Collaboration has two main aspects to it
– Designing & Governing SC Activities
– Establishing & Maintaining SC Relationships
• There are various forms of SC collaboration
– Vertical
– Horizontal
– Network
58. In Conclusion
• Horizontal SC collaboration gives us the four important
things we need to be successful in the fresh fruit industry
– Cutting transport costs
– Cutting distribution costs
– Enhancing customer service
– Improving overall efficiency
• The fresh fruit industry has the IT systems and
infrastructure available –just use it
• Collaboration saves us money
• Collaboration is all about relationships – we have to work at
it constantly
• The cluster framework gives us a mechanism to collaborate
legally