Optimizing the Value Chain in a New World:
It All Begins with Manufacturing

By B. Zrimsek

Collaboration in manufacturing planning requires enterprises to extend bedrock capabilities to the supply chain. Gartner presents performance indicators to help enterprises rate performance and discover opportunities.

Manufacturing enterprises can measure the impact of collaboration by starting with the best practices of traditional manufacturing planning, then extending them to all members of the supply chain. A major benefit of collaborative commerce (c-commerce) is reaped when enterprises become capable of applying their own winning measurements of manufacturing proficiency to their key suppliers. That requires manufacturers to open up their best practices to suppliers and treat them as an essential part of the enterprise, demanding no more or less from them than they would ask of their own employees. Developing this inclusive mind-set will enable the timely sharing of critical information, so that production decisions can be made with the best interests of the whole supply chain in mind, not just the needs of the enterprise or channel master.

Enterprise performance within the context of the supply chain remains important to collaboration as fundamental business practices are extended from the enterprise to customers and suppliers. For many manufacturers, however, the least visible link in their supply chain is their own facilities. Turning to c-commerce may seem like an easy way around the problem, but if internal performance can't be measured, moving measures outside the enterprise will only further muddy the waters. The indicators depicted in Figure 1 are keys to overall enterprise and collaborative success.

Necessities: Accuracy and Trust

Any supply chain, collaborative or not, is only as strong as its weakest link. Driving performance improvement via these metrics will improve the capability of the enterprise within the supply chain. In addition, quantifying these metrics before implementing collaboration initiatives will create a baseline from which subsequent business improvement can be identified and measured.

Enterprises that roll out collaborative processes and applications face issues as simple as data accuracy and as complex as interenterprise trust. Information must be accurate as it passes through the supply chain. If it is not, the faulty data will undermine all transactions and erode the trust of supply chain partners. Trust is the greatest inhibitor to (and enabler of) collaboration – it is essential for overall success. Trust and collaborative capability become directly proportional. Enterprises must trust suppliers with potentially sensitive data to facilitate collaborative planning. Enterprises must trust suppliers to act in the best interests of the supply chain and not just themselves. Because of the importance of these relationship issues, enterprises should choose only a few key suppliers for inclusion in full collaborative initiatives. Such a manageable "short list" of suppliers will enable enterprises to hedge their bets against collaboration failures with other suppliers.

Bottom Line: Enterprises must provide information and expectations to suppliers and treat them as an essential part of the enterprise. The failure to treat key suppliers with trust and commitment will erode relationships and make collaboration impossible. Enterprises should analyze their planning environments and, by using Gartner's offered indicators of collaboration, determine their potential for planning successful collaboration.

This research is part of a broader article consisting of a number of contemporaneously produced pieces.

Gartner's Manufacturing Applications Strategies Commentary COM-13-3853, 29 May 2001.

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