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Software applications will be extended to multiple tiers of suppliers and distributors. While collaborating with multiple customers and suppliers will be the norm, companies will still reserve deeper planning and forecasting efforts for a select set of partners. Collaboration with materials suppliers will continue to be transaction-focused, whereas relationships with service suppliers will be more strategic and focused on planning. Applications will be built on top of an Internet-based architecture hosted externally. Collaboration increasingly will focus on the front end of the supply chain, with heavy emphasis on collaborative forecasting and replenishment models. Use of industry-standard tools, such as RosettaNet PIPs and CPFR, will become the dominant forms of collaborative communication in the electronic and consumer products sectors.
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As a management discipline, collaboration is still in its infancy. We believe that it will change the economics of all companies as business practices, rules, and conventions are adjusted to reflect the realities of integration and increasing visibility across supply chains. Collaboration will allow smaller companies to compete with larger companies, making scale less critical as a competitive differentiator. Collaboration will become an essential discipline and an inevitable part of your supply chain strategy. See Figure 4-6 for a collaboration guideline.
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CHAPTER 4 Core Discipline 4: Build the Right Collaborative Model
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F I G U R E 4 6
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A collaboration guideline.
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You may have a grandiose vision for the future, but your chances of success are small if you try to go for collaboration nirvana from the start. Start with tactical improvements. Focus on a single, unambiguous vision for your collaboration strategy, including clear goals and a purpose. Clearly understand your company s current and future desired core competencies, and ensure that the collaboration strategy is wholly consistent. Start small, focusing on a limited set of capabilities, on selected partner candidates, and on selected tasks. Recognize that early efforts can be supported by a manual infrastructure (phone/fax/email); more extensive efforts will certainly require more advanced supporting systems. So pay close attention to how the systems will need to evolve. Let your business drivers and economic realities shape the nature of your collaborative relationships and the way they will be managed. Advance your technological capabilities only to the level that you expect your partners to be able to manage. Assess the organizational changes that will be needed to support collaboration on a larger scale in parallel with your initial efforts. Align your company s compensation and reward structure to the goals of the collaboration strategy. Effectively manage your collaboration partners; have a comprehensive metrics program in place that allows you to monitor their performance and your own on a regular basis. Don t take people out of the equation. Stories abound about companies who ipped the switch on new collaboration tools, only to nd that the system was recommending actions that made no sense from a business perspective. As your effort gets underway, make sure your organization is populated with skilled professionals that can monitor progress and make necessary midcourse corrections.
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U.S. Department of Defense Profile: Making the Tail Smaller and the Tooth Stronger
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As the U.S. military enters the 21st century, the Department of Defense is recrafting its approach to warfare. It s creating a new blueprint called the Forward-centric Logistics Enterprise (FLE) which will take the best practices of business and integrate them with the best practices of the military, creating a more vital partnership than ever for more agile supply chain performance.
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There is no parallel in commercial industry for what we do today. If we were a private enterprise, we would be number 1 on the Fortune Global 500, noted Diane K. Morales, U.S. deputy under secretary of defense for logistics and materiel readiness, at the time of our interview. She was responding to a question about the scope of the largest supply chain in the world that of the U.S. Department of Defense. At our request, she continued with the stats: Our dollar volume of business is more than double that of Wal-Mart, which is currently number 1 on the global Fortune list. Our supply chains cost nearly $80 billion a year to operate. We employ over 1 million people and deliver more than $400 billion in value to our customers. Every U.S. soldier, sailor, aviator, and Marine is a customer, and every American citizen is a stockholder. We have an active and vocal 535-member board of directors [the House and the Senate]. And we re number 1 in our marketplace the dominant market position that our stockholders demand.
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