Monday, April 16, 2012
A new report titled, “Collaborative Execution: Speed, innovation and profitability” suggests that in “truly collaborative” trading relationships, targeted operational metrics, such as inventory days, total landed cost, and cash-to-cash cycles, can be expected to improve by 50 percent over those without collaborative execution capabilities.
“Collaborative execution is defined as working together to improve supply chain performance by continuously solving real problems with better information,” said Fahim Afghan, Vice President of Research at SCM World. “We saw from a majority of responses that, by harnessing this collaboration, supply chains can be leaner, with less inventory and lower costs. At the same time, we saw the expectation that risk can be reduced and innovation increased, with a rapid rate of learning.”
By a ratio of nearly two to one, supply chain professionals agreed that one of the biggest barriers to collaborative execution is a slow issue resolution process. This was identified as a systemic problem related to quality of information flow, in terms of both the granularity and timeliness of data shared.
Similarly, 92 percent of respondents agreed that rapid problem resolution was part of good collaboration, with an underlying theme that true collaboration can be defined in terms of speed, both in problem solving and in organizational learning. More than half of the responses indicated that speed of response in truly collaborative relationships was twice as fast or faster, with learning curve improvements more than 50 percent greater than in non-collaborative trading partner relationships.
Summary of Key Findings:
-- Information sharing is the vital element of collaboration, with 73% and 83% respectively asserting that customers must share demand data and that suppliers in turn must disclose availability information
-- Trust and governance are not key concerns for collaborative relationships, with less than one-third of respondents concerned with partners using information in a negative way
-- Effective collaboration creates cost efficiency, with an overwhelming 80% strongly agreeing that they derive this benefit
-- Eighty-two per cent of respondents believe collaborative relationships enhance the innovation process, enabling more effective experimentation
-- The rate of learning increases by at least one-and-a-half times in a collaborative framework, according to 70% of respondents.
The SCM World study, based on a survey of 374 supply chain professionals, concludes that truly collaborative trading partner relationships are critical to establishing defensible competitive advantage through supply chain strategy not only to save costs and reduce inventory, but also to support better value chain performance through experimentation and innovation, risk mitigation and organizational learning across key trading partner relationships. Recommendations include to name an individual or team tagged to provide dedicated problem solving resources to key trading partner relationships and to consciously map information flows across trading partner relationships to assure consistency of granularity and timeliness of data.