3 Obstacles to Effective Supply Chain Collaboration – And What to Do About Them
- Enterprises are aware of the need for greater supply chain collaboration, but such efforts frequently fail
- Traditional ways of viewing supplier relationships, organizational silos and legacy systems all inhibit effective collaboration
- To stay competitive, companies must be innovative by leveraging supplier collaboration tools and redesigning processes where necessary
Supply shortages, rising shipping costs and cyberattacks on critical infrastructure – welcome to the post-pandemic new normal.
To handle these and other shocks and keep supply chains operating efficiently, enterprises need to collaborate more effectively with their internal teams and with external suppliers and partners.
One of the lessons from the pandemic has been the need for collaboration and innovation to solve new problems, the way some pharma companies such as Sanofi or Novartis are using their facilities to support COVID-19 vaccine production from competitors.
Firms that do not collaborate effectively are likely to see their competitiveness erode in a more disruption-prone post-pandemic world.
However, while many companies recognize the need for increased collaboration with suppliers, there is not nearly enough actual collaboration.
What are the obstacles to achieving greater collaboration in enterprises?
1. Culture and mindset
All too frequently, organizations are hesitant to move away from traditional definitions of supplier relationships. Companies typically don’t manage relationships with suppliers for mutual benefit but for their own, by focusing on cost-cutting. That’s understandable, but one-sided relationships tend to generate one-directional information flows, meaning signals from suppliers don’t flow back up the supply chain.
True bi-directional collaboration enables partners to make the right decisions that will help their business serve their partner’s business too. Getting to that two-way partnership requires tools for real-time data sharing and an organizational shift in how companies work with their suppliers.
2. Organizational silos
Enterprises contain both internal silos – supply chain and procurement, for example – as well as external silos between companies and their supply network.
These silos, created by non-integrated processes, systems and objectives, are the points where collaboration tends to break down.
Supply chain collaboration software is designed to fill the gaps and break down silos to allow for tighter collaboration in a company’s supply network.
Collaboration can’t happen without the processes and tools to create end-to-end and multi-tier visibility across the supply chain and share data and coordinate responses to disruption.
3. Outdated systems
For supply chains operating with manual processes and fragmented ERP systems, lack of real-time information sharing, communication and coordination capabilities make collaboration with suppliers difficult to achieve.
Supply chain collaboration tools connect people, data sources and systems to improve visibility. By achieving greater insight into suppliers and partners and adopting a solve-together mindset, enterprises can ultimately operate with less need to push problems to suppliers through service-level agreements or price negotiations.
For effective supply chain collaboration, enterprises need to transform
With so many levels of risk and disruption affecting businesses, the need for collaboration is not going away.
Digital transformation projects, such as adopting next-gen supply chain collaboration software, can only be effective if there is a corresponding change in the culture and process that will allow users to leverage digital tools successfully.
Establishing visibility by enabling real-time data sharing with suppliers, trading partners and logistics providers is a necessary step for organizations to stay competitive.
Facilitating collaboration and allowing partners to manage their business in a way that achieves a win-win outcome for both buyers and suppliers will be crucial to success going forward.
To do that, enterprises will need to rethink their mindsets, processes and the technologies they use to manage supply chains.