Front End I Electronic Components Supply Network
The seven stages of collaboration
Collaboration is vital to the successful operation of an effective supply chain. However, to achieve that you need to build on the twin pillars of faith and trust, according to Pascal Fernandez
M
any academics, research organisations, and consulting firms have done a great job of quantifying "collaboration", one of the most crucial aspects of operating an effective supply chain. For example, in the 1980's Oliver White highlighted how collaboration in the form of sales and operations planning (S&OP) was crucial to achieving a greater degree of control within the company's operations. This evolved to provide an external focus upon collaboration defined in a white paper in 2011, with "Four Stages of Progression to S&OP/integrated business planning (IBP)" as follows: 1. Improved communications 2. Problem solving 3. Problem prevention 4. Strategic and tactical decision making
In 2011 Gartner also defined levels of S&OP maturity as follow: 1. Reacting 2. Anticipating 3. Collaborating 4. Orchestrating
The levels and stages above are complementary, and the progression represents targets for many organisations and supply chains. I believe in the real
debate over how we can practically enhance and improve collaborative practices to the benefit of all supply chain partners involved. The seven stages for Supply Chain Collaboration are as follows: • Accidental – Accidentally engaging with a partner whose culture and appetite for collaboration matches yours is the business version of love at first sight. Provided the value proposition is relevant, this may be a historical milestone for your business. For example, one of our suppliers came to me five years ago looking for help in supporting one of their largest accounts in the Shenzhen area. At that point we hadn't had any real collaboration. This request enabled us to develop contracts, processes and a collaborative mutually beneficial relationship. It started by accident … Lesson learned? Pay attention to every opportunity; don't take for granted established business relationships. • Erratic – When frequent exchanges
and sufficient time are not devoted to collaboration, the long term value can't be seen beyond the short term issues that exist. Collaboration at this level can identify great ideas and opportunities for improvement but may lack the needed time to realize their true value. The risk is losing track of the other party's strategic interests and not realizing they may have changed before it's too late. I have found over the years that collaboration is like potluck dinners - everybody contributes something to the party. The overall outcome will directly relate to the quality of your contribution. • Reactive – Reacting to information
world we are faced with a different set of maturity levels when it comes to collaboration, and with 25+ years of experience watching supply chains develop, I would like to share with you my take on collaborative supply chains. The seven steps I outline below do not
represent quantifiable levels, nor do they necessarily progress in a strict order, rather they provide a summary of behaviours intrinsic to the level of maturity that I have observed. I present these with the intention of sparking discussion and
8 September 2014
requests, but not seeing the bigger picture of what value ongoing collaborative practices holds may give you a secure feeling of performing to expectations Yet this feeling generally precedes losing the customer to competition. Being reactive is not good enough in supply chain management. One needs to always be on the front foot, over perform vs. expectation, answer the questions that were not asked, walk the extra mile to better cover a potential shortage risk. • Complacent – No longer looking for
incremental improvements in the working relationship and therefore missing opportunities and not identifying risks play a significant role in being overtaken by competing supply chains. It's much more expensive to win a new customer than to
Components in Electronics
retain an existing one. Customer retention is imperative at this point. Let paranoia be your best friend. If you think everything is running smoothly, you are most likely mistaken. • Tactical – Sharing tactical information
on a regular basis and acting upon it. This can be through established Electronic Data Interchange (EDI) and business to business (B2B) processes. At this level, the horizon for collaborative planning is limited. This is perfectly acceptable when all parties have realized the limits of their partnership and defined their involvement in the relationship with regard to the ROI they will receive. It's important to validate mutual expectations regularly and adapt accordingly. • Forced/Unbalanced – In the mid 1980s, when computer companies were still manufacturing their own products, I remember a leading French computer manufacturer who had posted a gigantic sign across the hallway to the purchasing department which read, "Good Morning Partner". This appeared to deliver the promise that a balanced partnership was indeed to occur. Rather, at the first meeting I was given 24 hours to confirm 20% cost reduction, extended payment terms and … oh yes free freight! Collaboration is not a unilateral declaration; it's rather the acceptance that both sides interests are deemed equally as important. Forced cooperation can be an imposed and inefficient process for the other party, BtoB non standard protocol or a cost transparency requirement. This will drive one of the parties to disinvest, disengage, or die. There needs to be a frequent validation of what's in it for everyone involved. • Strategic – This includes sharing long- term visions, plans, collaborating on new systems, products etc. Strategic collaboration beyond the factual recognition of a mutual interest always starts with leaders on both sides being
smart enough to recognize that in the "give and take" relationship "giving" is what matters most. At the same time, this is also about understanding and respecting the other party's limits and constraints as being your own. A classic example is on- time delivery to a customer request. If an unreasonable market demand is part of dayto-day reality, in a strategic collaborative mode the supplier would be part of an advanced/extended S&OP process, receiving the very latest demand patterns and market trends and in return, sharing the existing possibilities and limitations. It does not weaken commitments made it just makes the energy spent much more efficient. The real stress test for strategic collaboration is not sharing profit but sharing losses when things go wrong. I believe the true value of collaboration
comes from developing mutually beneficial relationships throughout the supply chain. When the parties involved understand and play to the strengths of one another with the goal of increasing the value added by the supply chain as a whole, both parties win. In a world where supply chains are stretched across many players and geographies, efficient end-toend collaboration mitigates the risk associated with the weakest link to the benefit of all players.
In all human enterprises, faith and trust
are crucial for a successful engagement. Avnet Core Values (Integrity, Customer Service, Accountability, Teamwork and Innovation) provide the framework for strategic supply chain collaboration. This partnership needs to be developed and cultivated with passion over time. If done correctly, it is worth more than a million handshakes.
SPDEI |
www.spdei.fr
Pascal Fernandez is VP Business Development at Avnet Velocity and President of SPDEI.
www.cieonline.co.uk
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