When scrolling through my news feed Friday, I found this article from SCN: "Collaboration Key in Creating Competitive Advantages Through Supply Chains". The article describes research recently published by the University of Tennessee, Knoxville's Global Supply Chain Institute. There were some interesting ideas that came out of this study, like how collaboration in supply chain management is key to success. While some may be obvious to you, others you may find insightful.
"As complexity and consumer and shareholder expectations increase, CEOs and supply chain professionals must retrain their focus on contributing to strategic initiatives instead of solely on fulfilling demand as cheaply as possible."
I love this concept. So many times we've seen what were once excellent companies that focused on customer satisfaction and quality goods, fall prey to the siren call of "cut costs at the expense of all else".
The problem with this approach is that if cost cutting is the only metric, you soon start making decisions that impact the quality of your product and the reliability of your supply chain. For example, choosing the lowest cost supplier over one that provides better quality and delivery guarantees. So, if cost cutting isn't the focus, what is? As the article points out, great companies start and end improvement projects with the customer. As Apple has shown us, it’s possible not to be the low cost vendor and still be fantastically successful by selling on quality and innovation.
"The supply chain cannot be integrated unless the end-to-end supply chain activities that must be integrated are fully understood."
This is a key idea. How do you collaborate with people in other plants, departments or using other systems if you can't see the end-to-end data in a consolidated system? If one plant uses one version of SAP, another plant uses a different version and your warehouse uses Oracle, how does collaboration happen between these systems? Typically by e-mail and Excel…hardly an advanced collaboration approach!
"In order to collaborate with other supply chain disciplines, business functions, and external partners, teams must have the tools, systems, and data to enable the work. These tools and systems must be efficient and the data easy to understand. "
Similar to the previous point, collaboration doesn't happen on its own. There are numerous factors that drive successful projects to bring about business improvements through enabling collaboration, not the least of which are tools that enable this collaboration. Tools for video conferencing, team collaboration and in the near future virtual reality and augmented reality, along with Supply Chain planning systems can (and should!) enable collaboration. Wait…what? My supply chain tool enabling collaboration? That's crazy talk! Yes, actually, supply chain planning tools CAN enable collaboration…if you choose the right tool. So, what collaboration capabilities should you look for in your supply chain planning system?
- Scenario based simulations - A key part of collaboration is about understanding the tradeoffs of various decisions. The best way to understand these tradeoffs is through multiple what-if simulations where you model the changes, score them against key corporate metrics and compare the results to drive to the best overall solution.
- Fast, In-memory analytics - Related to the first capability, modelling different approaches simply won't work if it takes your ERP system several hours (or worse, an overnight batch run) to calculate and report the impact of these changes. Your planning tool must be able to calculate the results of changes across the entire supply chain in seconds.
- End-to-end visibility - As mentioned above, a key component of collaboration is knowing that you need to collaborate. If there’s an issue preventing a delivery goal that exists at a feeder plant, but all you can do with your planning system is view your own plant, the only collaboration option you have is Excel and e-mail. But, what if you had a planning system that could bring data together from multiple ERP systems into a single view and at the same time emulate the planning logic from each of those systems so that the results you saw in a single system matched the results expected from each ERP system? Furthermore, what if you were given visibility and drilling tools that allowed you to identify the root cause of delays with a few clicks of the mouse, even if that delay is in a different plant using a different ERP system? This capability is what truly enables enterprise wide collaboration.
- Responsibility - Just as end-to-end visibility is crucial to understanding the root cause of a delay, it's equally important to find out WHO is responsible for that part so that you can start the collaboration process. For example, let's say you are a customer service rep at HQ and you've discovered a critical customer order that was previously on-time is now going to be late. Using the end-to-end visibility capability described above to determine what part is causing lateness, you see that it’s a feeder plant three tiers down the supply chain. Who do you contact at that site? What if your supply chain planning tool could provide the name and contact information for the person responsible for that part?
- Collaboration - Continuing from the previous point, now that you've identified the person responsible for the part, what if you could share with them the exact view you are looking at and have them view the exact same information on their system, complete with links and references to other planning data? What if other people could be invited to join the collaboration as needed? Furthermore, what if this planning tool included a running log of the collaboration activity, including comments, screenshots and decisions? And even further, what if this tool tracked the progress of achieving the goals of the collaboration, and all of it could be archived and reviewed down the road?
Many companies haven't fully embraced the power of collaboration across the supply chain because they (wrongly) believe there are no supply chain planning tools that enable collaboration, and as such, are missing out on the capability that can take their supply chain to the next level. I'll leave you with another quote from the report that hits the nail on the head:
"If your procurement, operations, and logistics functions aren’t world class or aren’t aligned to work together seamlessly to delight your customers while minimizing excess cost and working capital, you may be leaving money on the table. Even worse, your company may be at risk"
What do you think? How does your company collaborate on supply chain issues? Comment back and let us know.