Keynote Presentation from Elemica's Reveal2014 Conference

1. 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

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• Cost savings
• Risk mitigation
• Innovation
• Productivity
• Strategic impact
– 50% faster organizational learning
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What does collaboration
mean?

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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

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• 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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10. 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

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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

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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

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• NOT a trust problem
• Much more about information synchronicity
• Secondarily about talent
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Barriers to collaboration

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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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18. 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

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... 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

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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

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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

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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

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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

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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

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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

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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

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Senior leaders agree
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Collaboration in action
1 2
3 4

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• Cost savings
• Risk mitigation
• Innovation
• Productivity
• Strategic Impact
– 50% faster organizational learning
Benefits summary
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31. Prioritizing collaboration
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Purpose & impact: choose your battles

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• 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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