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The greatest degree of collaboration on the spectrum occurs at the upper right quadrant of our framework synchronized collaboration. In this model, the collaborative relationship moves beyond supply chain operations to include other critical business processes. Partners may invest in In a synchronized joint research and development projects, suprelationship, plier development, and intellectual property (IP) development. The sharing of both physiinformation is cal and intellectual assets may even extend to developed jointly shared personnel. Synchronized collaborations are often called strategic alliances. rather than just In a synchronized relationship, infortransmitted or mation is developed jointly rather than just transmitted or exchanged. Moreover, synexchanged. chronized collaboration tends to focus on a
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CHAPTER 4 Core Discipline 4: Build the Right Collaborative Model
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strategic vision of the future rather than on near-term planning and tactical execution. Long-term commercial commitment is a hallmark of this type of collaboration. Development projects that consider supply chain requirements when developing the product strategy are good examples of synchronized collaboration. A company that includes key materials suppliers or manufacturing partners as an integral part of its development team is far more likely to have product designs that are compatible with best-in-class supply chain performance. Unlike other types of collaboration, in which partners are apt to exchange product data, synchronized relationships usually include a shared product data management system.
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FINDING THE RIGHT PLACE ON THE SPECTRUM
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Each relationship with a supply chain partner has its own place on the collaboration spectrum. As you architect your collaboration strategy, you must identify which partners are best suited for each type of relationship. The collaboration spectrum offers a set of options there s no right or wrong place to be along the diagonal. But there are areas within the matrix that should be avoided when choosing a collaboration model (see Figure 4-4). First, there s the area labeled Low Return. In this quadrant, companies collaborate on a limited basis with a set of supply chain partners. The investment and risk involved in this model are relatively low and so is the return. While financial benefits certainly can accrue from limited collaboration, the Low Return model is not a commercially effective basis for a collaboration strategy, for the benefits are not worth the required investment. The second area to avoid is that labeled Not Viable. In this quadrant, the objective is deep collaborative relationships with many supply chain partners. Interestingly, developers of collaboration tools often describe this as the optimal model, asserting that advanced technologies enable collaboration that is both broad (many supply chain partners) and deep (extensive collaboration with each). While this level of integration is possible theoretically, it s not practical mainly because aligning a large group of partners with your business objectives is extremely difficult. Despite the hype around technologies that claim to support flawless integration among supply chain partners, most of today s collaborative relationships are transactional or cooperative. They tend to focus on basic supply chain activities typically procurement and manufacturing. And even though transactional and cooperative relationships are considered
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Strategic Supply Chain Management
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collaboration, they rarely deliver the benefits of lower inventory levels, better customer service, more efficient use of human resources, and faster, more reliable delivery. Why not Because the investment required of each partner is low, and the resulting value is not enough to advance either company s strategy, enable entry into new markets, or provide access to new technologies or skill sets. Transactional collaboration and cooperative collaboration simply deliver modest improvements in how day-to-day transactions are executed. This is not to say that transactional and cooperative relationships are without value. They re merely a first step in developing more complex, strategic relationships that create a true bond between partners. Advanced collaboration needs a greater investment, continuing maintenance, and ongoing vigilance against circumstances that could harm the relationship. As companies move away from the traditional model of vertical integration, the need for deeper collaboration with select supply chain partners intensifies. Deciding to divest an internal competency doesn t eliminate the need it simply moves the source of the competency beyond your company s direct control. As we saw in Core Discipline 3, the ability to manage these external relationships successfully can become a critical competency. It s a major challenge to balance what s theoretically possible, what s needed to support the business strategy, and what s practical in terms of managing day-to-day operations. The fact that the collaboration spectrum is different for every company means that what s optimal in terms of number and type of collaborative relationships varies widely. Although most companies today are still a long way from their optimal range, the number of cooperative and coordinated relationships is growing (see Figure 4-5). The ability to reach an optimal state of collaboration is limited by the availability of partners prepared to work with you.
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