The return of supply chain collaboration

Enterprises report they are collaborating more than ever and on-demand software solutions are making it possible.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 6/5/2007

Collaboration has made a comeback over the last few years. That’s the conclusion of “B2B Collaboration: How On-Demand Platforms Accelerate Value and Impact Total Cost of Ownership,” a report on supply chain collaboration from the Aberdeen Group.

In fact:

• 80% of the companies surveyed about B2B collaboration by Aberdeen reported that their emphasis on customer collaboration has increased during that same time period.
• 75% indicated they are engaged in some type of forecast collaboration, and
• 66% conduct some sort of inventory collaboration with their partners.

Just what is supply chain collaboration?
“It can be anything from picking up a phone or faxing a spreadsheet to conducting business with your trading partners electronically,” says Beth Enslow, Aberdeen’s senior vice president of enterprise research. “What’s important is that you’re exposing more information than before to your trading partners. In turn, you’re asking them to use that information to do more than in the past for you, whether it’s inventory management, manufacturing, transportation or product design. It’s a rethinking who does what pieces of the process.”

The return of collaboration
The concept, of course, never went away. But following the economic downturn in 2001, collaboration projects certainly moved to the back burner at many companies.

The reasons for the change are familiar to anyone competing in the global economy: The pressures to reduce supply chain costs are relentless, yet sourcing from a low-cost country like China, India or Brazil is much more complicated than producing and distributing product from your own plant and warehouses.

On-demand makes it happen
On-demand technology platforms, or solutions that are hosted and maintained by a software provider, are one of the reasons collaboration is possible today.

“On-demand solution providers tend to have greater resources and experience in getting trading partners onto the collaboration platform than a company has in-house,” says Enslow. What’s more, she adds, in areas like transportation management, many on-demand providers already have pre-connected suppliers and carriers, which further reduces rollout times and increases trading partner acceptance.

Still, Enslow says that despite the gains in collaborative efforts, there’s still a ways to go. “Most companies are still struggling to scale their efforts across all of their trading partners,” she says. “The majority of companies we surveyed have been unable to scale their processes beyond more than 10 trading partners.”