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10 Steps Towards Establishing Successful Supply Chain Collaboration

Apr 7, 2017

Supply chain collaboration is a highly effective way to reduce inventories and costs while increasing and improving customer satisfaction and retention, production efficiency, profits, and more. Collaboration is essential for long-term business success, enhanced competitive ability, supply chain optimization, and improved brand reputation. It can be especially useful for retail and similar industries. Here are our top ten steps to kickstart successful supply chain collaborations:

 

  1. Select your partners carefully: Consider things other than size when selecting a partner for supply chain collaboration. Assess potential partners based on things like value, common interests, shared strategies, infrastructure and processes in order to find your best fit.
  2. Collaborate in areas of shared stability or success: It’s best to engage in collaborations that take advantage of the strengths that your business and your partner already possess rather than to use collaborations to fill in gaps or compensate for weaknesses.
  3. Define the terms and extent of the collaboration: Make sure that all partners are on the same page as to what the collaboration will consist of, the time period that it will cover, and how it will be executed. Communication is key for establishing and accomplishing successful supply chain collaborations.
  4. Identify mutual goals: Consider what you and your partner—or partners—want to achieve through supply chain collaboration, and how you expect it to benefit your own businesses. Are you looking to increase profits? Accelerate your entry into new markets? Lower acquisition costs? Improve logistics management? All of these things need to be considered and discussed in-depth between partners in order to align priorities and increase efficiency.
  5. Use sophisticated benefit-sharing agreements: In situations where a collaboration benefits one party over the other, both parties can work out a benefit-sharing model that will allow them to profit equally, albeit in different ways. For example, a retailer and a manufacturer who expect unequal benefits from a collaboration can solve this dilemma by setting up a system where the beneficiary agrees to absorb certain costs, offer cost reductions, or provide other types of financial compensation to the other.
  6. Adopt a joint performance management system: Partners need to agree on metrics and methods for managing their performance and ensuring that their businesses and collaboration stay organized. Partners should use the same performance management system, supply chain software, and procurement operations solutions to keep their collaboration on-track and successful, and to enable effective dialogue and communication.
  7. Optimize your workforce and infrastructure: All partners need to ensure that they have the right staff, resources, and organizational systems in order for collaborations to be successful. Front-line staff should ideally be provided with strong support throughout the collaboration. Leaders and management should ensure that communication throughout the organization is strong and that all employees are aware of the vision and goals that the partners share.
  8. Engage in long-term collaboration: Supply chain collaborations, as compared to individual operations, provides partners with more benefits over the long term. Long-term collaborative supply chain relationships can foster innovation in terms of overcoming problems and challenges, as well as in terms of creating new products, services, and opportunities.
  9. Ensure successful communication: Collaboration requires effective communication between all partners. All parties should be aware of any issues or obstacles encountered at any stage of the supply chain and should work together and communicate to eliminate them.
  10. Establish sustainable funding: Costs should be agreed upon and shared amongst all partners (unless the benefit-sharing agreement states otherwise), and should be sufficient to support the collaboration over the pre-determined time frame—or even longer, in response to the probable change in the terms of the collaboration, affected at a later date.

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