Collaboration is like teenage you-know-what

Collaboration is like teenage you-know-what. Everybody talks about it, but few do it, and even fewer do it well. Unlike teenage you-know-what, however, this state of affairs seems not to get better with practice.

The idea of collaboration permeates supply chain thinking in much the same way that quality has for decades. But quality has been institutionalised in programmes like Six Sigma and TQM that have made a gigantic difference in the products we experience as consumers.

Quality may have a vital advantage over collaboration – namely, a clear idea of how to measure it. Quality boils down to defects per zillion units produced, and since that is pretty easy to see, the quest for quality is a clear road to follow. Collaboration (and here I may be stretching the teenage analogy too far) is much harder to grade.

We have lots of data on what you as supply chain professionals think of collaboration. First, we all agree (well, 9 out of 10 of us do) that collaborative relationships should be more cost effective. Eight out of 10 agree that inventory buffers should be lower.

We also think collaboration should make us more resilient to risk (74%), more effective in experimentation (82%) and quicker at solving problems. None of these, however, is the sole mission of collaboration.

When we asked a group of more than 20 senior leaders who will be meeting at General Mills’ headquarters in Minneapolis on 9 September about the benefits of collaboration, they were pretty clear about what came first – innovation. But the data also shows that expectations of who’ll carry the ball on cost efficiency definitely leans toward the supplier.

Collaboration may be desired by all, but apparently expectations of it differ a lot depending on whether you are on the customer or supplier side. Suppliers arrive at the proverbial meeting expecting to learn about their customers’ needs and hopefully sell more. Customers sit down looking for savings and may be willing to hear new ideas, but mainly where those ideas lead to lower costs.

Where is the trust?

Is it any wonder then that the views of this same group of executives contrasts sharply with those of 374 lower-level folks in a field survey we conducted last year, which found that trust was a lesser problem than information connectivity? The leaders coming to Minneapolis see trust as a much bigger issue than anything along systems or process lines.

Neither side is wrong, it’s just that the senior folks are higher up the mountain and can see farther into the distance. Collaboration for people working day to day is often reasonably congenial and usually concentrated on smoothing the flow between companies. They want and know how to use systems for demand and supply visibility, and will keep working to lean things out indefinitely.

At the top, senior leaders see the creation of intellectual property at the junction between businesses. Who deserves the lion’s share of profits from a packaging innovation that can only work with a reformulated product? What’s worth more, a special high-tech polymer or the manufacturing process that turns it into a long-life tyre? What is the value of software without hardware to enable it?

Collaboration on product platforms is the kind of innovation that business leaders care most about. But no one wants to leave money on the table. The casualty is trust.

Trust starts with respect

Academic research on this goes back to Ronald Coase, whose 20th century work on theories of the firm won a Nobel Prize in economics. Game theory comes closest to replicating the supply chain collaboration dynamic, especially where innovation is the goal. It comes down to whether the parties believe each will do the thing that maximises value for both players. In other words, trust.

From what I’ve seen among the best supply chain leaders, I think trust actually starts with something easier to get your head around – respect. Unlike trust, respect is not a leap of faith. It is borne of understanding and appreciation and is available to any of us at any time.

Approach your supplier with a little more respect next time and soon you’ll enjoy the trust that uncorks all the rewards of collaboration.

Kevin O’Marah
Chief Content Officer
SCM World

Please contact me directly with any comments, questions or suggestions. I welcome your feedback.