What happened to collaboration?

Before the Internet bust, collaboration was going to revolutionize business. After several false starts, some leading companies are learning how to collaborate with their trading partners.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 6/4/2007

Collaborate or die.

That sounds like a stark choice. But as anyone who lived through the Internet boom and bust remembers, those were the options that seemed to be facing major manufacturing and distribution enterprises confronting new challenges from global competitors of all sizes thanks to the Internet, e-marketplaces and exchanges.

Companies were either going to collaborate—meaning create new relationships with their trading partners that included exposing more information that was traditionally kept in-house—or they were going to be handed walking papers.

In fact, collaborate or die was the slogan used in an advertising campaign by what was then one of the five largest ERP software companies in the world.

So what happened?

For one: That ERP provider is out of business. Collaborate or die indeed.

For two: Collaboration proved a bigger challenge beyond simply connecting the software systems of trading partners, according to Beth Enslow, senior vice president of enterprise research for the Aberdeen Group, and an analyst who lived through the collaboration boom and bust.

“Collaboration requires a cultural mind-shift,” says Enslow. “You had to go from viewing your trading partner as a supplier who could be coerced into doing what you wanted, or a customer who could demand that you do something they wanted, to viewing them as partners in a win/win situation.”

This challenge, Enslow says, was also technological. A number of companies in the late 1990s introduced collaborative software solutions, including electronic marketplaces where entire industries could collaborate, that were very successful in pilot programs.

“But only a handful of companies were able to scale those solutions up to enable collaboration with a hundred trading partners,” says Enslow.

The result: The effort required to implement a collaboration program that involved more than a few key trading partners was deemed not feasible for most organizations.

Today, Enslow adds, a few companies have turned the corner on collaboration.

“Most of those are manufacturing companies doing low-cost country sourcing,” says Enslow. “They’re collaborating on a few processes, including inventory management, product design and transportation management, especially supplier inbound management where better shipping rates might be available by collaborating.”

What has made this shift possible is a combination of global competition, that dictates removing inefficiencies from the supply chain, and the refinement of on-demand collaboration platforms.

“The leaders have fundamentally re-thought their business relationships and processes in a way that allows them to do everything electronically,” says Enslow.