Google “collaboration” and “supply chain,” and see what you get. I just did – 10.1 million hits. On that basis alone, one can conclude that collaboration and supply chain go together like a ‘horse and carriage’.
I see a lot of evidence that companies are following quickly along the path of collaboration, attempting to build better business processes between themselves and their supply chain partners.
But maybe too quickly, because in many cases, these companies haven’t spent enough time aligning themselves internally before they try to collaborate with their partners.
That’s like putting the ‘carriage before the horse’.
Inside many companies, the various executives don’t speak the same language, and have not clearly translated business strategy into supply chain strategy. Functional objectives still remain in conflict. Here’s one example.
The CFO sees collaboration with supplier partners as a way to lower inventories and better manage the risk – perhaps through various lean initiatives and Vendor Managed Inventory programs with key suppliers. However, at the same time as pursuing this supplier collaboration path, the company is also rolling out a new product line with high market share expectations but due to its new innovations also – a high demand uncertainty. Therefore, the vice president of sales and marketing suggests an initially high level of product availability to compensate for an uncertain, but expected high level of excitement and wants to capture that crucial lead market share position!
What’s the supplier supposed to do? When the supplier looks at the MRP output and recent historical demand the suggested inventory is much less than what the buyer has indicated after his recent and heated discussion with the VP Sales who has suggested the demand in MPS is “conservative” ? The supplier has received two mixed messages – both stemming from high level executives at this important customer! It’s an impossible choice that has only one result- making one executive happy at the expense of another.
With gaps like that in internal alignment, the external collaboration will be more difficult, more costly and more at risk of confusing both customers and suppliers.
Companies need to place as much emphasis on aligning internally as they do on collaborating externally. And – in that order!
Let us know what your experience has been.
Leave a Reply
While you're at it, please subscribe to Friday Best of Blogs, TFI's free e-newsletter
Contact TFI | 2000 Santa Clara Avenue, Alameda, CA 94501 USA. Phone 1-510-601-9107
Copyright © 2010 Technology Forecasters, Inc., all rights reserved. | 
RSS Feed | Friday Best of Blogs
Conflicting goals are not by accident. I used to work for a very large telecommunications company with a CEO that felt conflicting goals drove his people to come up with innovative solutions to achieve their results. They’re no longer in business.
I don’t know where business leaders get this brainstorm (I got my MBA at Northwestern, they don’t teach it there), but demanding inventory low while simultaneously demanding immediate responsiveness is pretty common. Too bad they don’t understand they’re just letting their suppliers make these tradeoffs for them, and ultimately charging them more for it…