Supply Chain Collaboration: Myth or Reality?

Today’s supply chains are more complex than ever before. And, due to a lack of collaboration, the supply chain sector is realizing a negative impact resulting from the increased time it takes to make critical decisions. This is why supply chain collaboration (SCC) is such a vital topic when it comes to outpacing the competition. But, are the key concepts of collaboration a current reality or a myth?

Transparency between partners is essential.

While there is a strong willingness to share data between distributors and retailers, most do not share business planning processes. When partners do not have access to each other’s objectives and how they plan to achieve those objectives, it decreases the effectiveness of the collaboration and can foster distrust.

Data should be accessible to all parties anytime, anywhere.

Many times that data is not in an environment or the organizations do not have tools that enable all parties to easily view the data. This lack of accessibility to the information hinders collaboration. However, employing a cloud-based centralized data repository would provide users with a consolidated data view critical to a successful collaboration.

Effective and sustainable collaborations are based on a common set of goals.

While there is a limited number of retailers and manufacturers that engage in joint business planning which includes setting goals together, many continue to have a purely transactional relationship. Generally, the relationship becomes less transactional the longer the partnership. However, there is still some element of “is this really going to be good for both of us?”

Reliable data is needed for accurate actions.

The completeness, consistency, and delivery of data is becoming progressively reliable. However, there are two things standing in the way of 100-percent reliable data. For a variety of technical or business practice reasons there can still be errors when the data comes into a supply chain management (SCM) system. In addition, companies now have the ability to process a broad range of metrics–each employing different methodology and measurement base for those metrics. Therefore all parties need to adhere to data cleansing and harmonization best practices so all parties have a common view of the truth. In addition, your supply chain management solution should have the ability to recognize where errors or incompleteness occur and absorb corrected data when it arrives.

Collaboration requires all parties to trust one another.

While there remains some level of mutual distrust, the situation today is substantially better than it was 10-15 years ago. More companies are collaborating on vendor management inventory (VMI) initiatives, where the vendor will manage the order and deliver the product to the retailer with really no input from that retailer. The retailer has to have the trust that the manufacturer is not going to use that quality to overload them with inventory so they can make their quarterly numbers.

Partners should leverage each other’s unique data and expertise.

Years ago there was a distinct gap between the level and depth of information manufacturers had on consumers and the information retailers could obtain about their customer base. Today, that informational gap has closed. In fact, retailers now have more access to granular data than manufacturers. And, retailers and manufacturers have learned to leverage each other’s strengths for the common good. For example, manufacturers are sharing extensive data on consumer trends while retailers are sharing their point of sale and loyalty program data.

While it seems there are still some aspects of SCC that are part of mythology, the industry as a whole is moving in the right direction. A key to making these KPIs a reality is to keep pushing forward.

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