By Nancy Marino, Columbus Consulting
Multi-Tier Supply Chain Collaboration – New Way to Drive Value!
Columbus Consulting consultant and supply chain expert, Nancy Marino, moderated a retail industry leadership discussion on how supply chain collaboration can not only lower inventory levels and reduce costs, but deliver stronger customer engagement.
TOPIC OVERVIEW: why supply chain collaboration is a top retail challenge and initiative
In today’s dynamic business environment successful collaboration with suppliers is essential. It highly affects customer responsiveness, response reliability, ease of production and overall supply chain resilience. The complexity of today’s supply chain makes it more prone to the impacts from disruptions. Due to this, many organizations have put supply chain resilience as a top priority. Retailers are looking for ways to handle disruptive events without breaking the processes in the supply chain and in order to manage this feat, they must get better at collaboration.
WHAT IS SUPPLY CHAIN COLLABORATION?
Supply chain collaboration is a hot topic today and no wonder: companies that collaborate effectively across the supply chain have enjoyed dramatic reductions in inventories and costs, together with improvements in speed, service levels and customer satisfaction. Supply chain collaboration is the practice of collaborating with internal and external partners to help optimize the flow in the supply chain in order to meet the demand and ensure on-time delivery.
Supply chain collaboration, a practice that is growing in popularity, is exactly what it appears, autonomous businesses working together to improve operations in their supply chain.
Collaboration between companies – joint initiatives that go beyond their normal course of day-to-day business, with the aim of delivering significant improvement over the long term. With pricing under pressure, the temptation for retailers to transfer the pain upstream to their suppliers by passing on price reductions and forcing them to bear an increasing share of the costs.
On the supply side, however there is less and less room for manufacturers to absorb additional costs as volatile input process put pressure on margins and the marketing investment required to differentiate branded products from private label competitors continues to rise.
DEFINING YOUR SUPPLY CHAIN GOALS
While the benefits of supply chain collaboration are many, you need to be clear on your goals before you approach other businesses about forming a partnership. This will not only help you set the specific parameters but will also enable clear communication on goals and objectives to foster an atmosphere of trust.
There are two main types of supply chain collaboration: horizontal and vertical.
- Vertical collaboration brings two of more businesses from different stags in the supply chain together, increasing productivity and performance.
- Horizontal collaboration allows organizations at the same stage of the supply chain to share the burden of demand and optimize costs.
Both horizontal and vertical supply chain collaboration can bring your business powerful benefits, many of which are further enhanced by utilizing end-to-end shared digital platform to manage sourcing and supply chain efforts.
As the popularity of supply chain collaboration is growing exponentially, there emerge new and innovation ways to make every aspect of it more efficient. Cloud based quality management software plays an important role as it can bring suppliers, vendors, warehouses and even companies with common business interest under on digital roof as a unified platform enable daily collaboration seamlessly.
BENEFITS OF SUPPLY CHAIN COLLABORATION
Knowledge is power and in the case of supply chain collaboration, sharing information leads to enhanced knowledge across the chain that allows you to achieve:
- Improved customer service metrics
- Lower transportation and warehousing costs
- Lower out-of-stock levels
- Shorter lead times
- Reduction of long-term costs
- Improved product quality and safety
- Better ethical standards through multi-stakeholder collaboration
- Earlier and quicker decision-making
- Lower inventory levels and higher inventory turns
- Visibility into customer demand and supplier performance
- A sustainable competitive advantage such as cost, agility, responsiveness, and scalability
Turning supplier collaboration into a core competency is not an easy task, but when properly structured as an initiative to develop it as a key capability it can boost margins by 5% through a combination of increased sales and reduced costs, improve on-time delivery by more than 15%.
Where is your organization on the collaboration scale?
It is time to evaluate your internal and external processes and take a fresh look at how the supply chain works as a partner in the overall retail organization. Pivoting from a siloed tactical department to a profit leadership role is a first step in recognizing systematic improvements, value enhancement and cost reductions that drive a more unified approach to today’s multi-channel retail world.
Columbus can help. Contact us for initial insights and an exploratory call to learn more: https://www.columbusconsulting.com/contact-us/
Learn more about Nancy Marino here: https://www.columbusconsulting.com/team/nancy-marino/