This is the third and final part to our series on collaboration in practice. In Part One, we laid out a framework for viewing collaboration across the product and customer lifecycles (See Figure 1 below) and then described collaboration in the product conception and design phases. Part Two of the series focused on ‘operational collaboration’ that occurs as companies test, roll out, ramp up, and then deliver and fulfill demand for products and services. The article below covers managing risk, bringing the voice of the customer into the collaborative processes, and where we are going next — the latest trends in collaboration.
Managing Risk
The recent tsunami drove home the point that many of a firm’s risks of disruption reside in their supply chain. As supply chains have become faster, leaner, and more global, disruptions are much more likely, and hurt much sooner. Here, it is critical to work with suppliers, and often multiple tiers, to ensure continuity of supply. Managing supply chain risk can take many different forms. For example, the use of structured contracts with range forecasts communicates to the supplier the level of uncertainty in the forecast being provided and puts a precise price on the value of production volume flexibility.
Customer-specific Demand Management, Merchandising, Promotions
Beyond visibility into aggregate POS data, it is valuable for manufacturers to understand who the customer is, who is buying what products, and what their demographic is. Retailers that can effectively share this information and jointly act on it with their suppliers can realize an advantage.
Another area of collaboration is in category management. In fact, sometimes a retailer brings in a manufacturer to manage a category, which requires a high level of trust.
Promotions are an area with tremendous room for improvement where collaboration can help. This can include much better sharing of information during the planning phase, when things are often changing daily. In addition, visibility into suppliers’ deliveries and retailers’ actual execution on the retail floor can help bring accountability across the process. This provides both parties with the ability to measure and correlate promotion outcomes with their respective actions.
Omni-Channel Management, Social Media
Finally, we have frequently mentioned the importance of managing across multiple channels — web, catalog, bricks and mortar. Equally important is taking advantage of information obtained directly from consumer devices, as well as social media and blogs. This represents a huge, largely untapped treasure trove of insights about what the end customers are saying, thinking, and doing.
Challenges to Collaboration
In spite of all the benefits, true collaboration is much rarer than it should be. Here are just a few of the challenges:
- Complex virtual enterprises are hard to manage: Crossing time zones, cultures, languages, and organizational boundaries makes it harder to collaborate.
- Collaboration can create IP risks: By sharing techniques and making your contract manufacturer better, you may be creating your next competitor — it has happened many times. (See To Trust or Not To Trust: What To Share with Trading Partners)
- Creating a Culture of Collaboration: This is key, not just in your own firm, but also helping critical trading partners move down that path.
- Finding and Retaining the Right Talent: A lot of this comes down to creating the right team. Our 2011 business priorities survey found that attracting and retaining talent is one of executives’ top challenges.
- It takes time to build collaborative relationships: You can’t always switch partners often, or rapidly. At the same time, you need to create relationships that can quickly adapt to changing markets and competitive conditions.
The Road Ahead: Collaboration Trends
In our research, we have observed a number of trends:
- Business Virtualization and Specialization — will continue unabated. The ‘atomization of the supply chain’ into ever tinier pieces, with ever increasing numbers of players involved will continue. These are not necessarily tiny companies, but they are highly specialized.
- ‘Pop-up Supply Chains’ — Technologies are getting to the point where supply chains can be assembled on a per project or per product basis, much like a Hollywood crew is assembled to make a movie then dissolved and the players move on to the next project.
- Avalanche of Data — The instrumented supply chain (RFID, sensors across the supply chain) is becoming more of a reality every day. This promotes sharing of much higher volumes of more detailed data. This will increase the need and the value of analytics, which we see on the ascendance.
- Leveraging Social Networks and Blogs — People are blogging, tweeting, and facebooking what they like and hate about your products and services. Tapping that can help you get a jump on the next hot trend, or identify product issues much earlier in order to quickly fix problems and avoid negative publicity before it spirals out of control.
- Supply Chain Resilience Becoming a Competitive Differentiator — Disruptions have a huge potential to determine long-term market winners and losers. We have seen cases in which a single disruption caused the downfall of an existing market leader and the rise of a new leader.
We can see that collaboration is many-faceted. It has huge potential, but frequently has significant challenges and obstacles to actual implementation, as well. It is no wonder that vendors keep selling it and we keep talking about it. We humans have evolved to both cooperate and compete. That dichotomy might explain why we continue to strive for collaboration in spite of the difficulties.
To view other articles from this issue of the brief, click here.