Walking the Walk on Collaboration

If there’s one thing that the economic woes of 2008 and 2009 taught us, it’s that collaboration – that oft-used (and often over-used) word in supply chain and outsourcing circles – must be more than lip service and feel-good fodder for slick annual reports.

It’s fair to say that collaboration is an essential key to survival and bottom-line prosperity.

Global companies know this but they still struggle mightily with the challenges of integration and collaboration across their increasingly complex and widespread networks.

A new study, sent to us courtesy of Peter Moore, vice president, Government Services of Celerant Government Services Inc. underscores this point. “Most companies know that a global supply chain needs to be in touch with all partners involved,” he says, “but very few companies out there are actually doing it.”

But it’s even more than that: It used to be that collaboration was the innovation – maybe it still is for many companies – but nowadays companies need to collaborate to innovate.

The Business Performance Management (BPM) Forum and the Chief Marketing Officer (CMO) Council released “Greater Innovation Through Closer Collaboration” in early December. Sponsored by Sterling Commerce and AT&T, the 48-page report is based on a survey of more than 400 executives and managers whose companies do business around the world, and about 36 percent of the respondents represent companies with revenues of more than $1 billion.

“Twenty-first century business models are more dependent than ever on complex, cross-company collaboration for business innovation, product and service delivery and customer satisfaction,” said Liz Miller, vice president of the BPM Forum and CMO Council.

The survey illustrates this point: Nearly 70 percent of the respondents say that business partners are essential to their companies’ go-to-market processes, customer experience and competitive position. And more than half say their partner networks are becoming more global and complex.

Yet, only 6 percent of survey respondents believe their companies are highly effective in integrating, coordinating and optimizing their business partner networks.

“Most companies are struggling to collaborate with partners and almost universally believe there is a significant deficiency in the way they integrate information exchange and processes across their partners networks,” says the report.

More findings:

  • Only 5 percent of respondents said they have end-to-end data and process integration across their networks, although 51 percent report some level of integration with select partners.
  • About 64 percent say they have either no ability or an unsatisfactory ability to extend and leverage their internal systems to selling and service partners.
  • Some 75 percent have either no or unsatisfactory ability to extend and leverage their internal systems to suppliers and outsourced service providers.
  • Only 30 percent say they effective in sharing customer data and insights with partners to enable innovation.

Those are some pretty lackluster results about the state of collaboration in 2010, especially the last point. It seems that trust is still a thorny hurdle – as in establishing it from the get-go.

Quoted in the report, Lisa Ellram, Professor of Distribution Management at Miami University of Ohio, said: “A lack of trust (in one’s partners) causes companies to insert extra assets all over. For example, they will have extra inventory everywhere and more suppliers than they need.”

Ellram’s thought jibes well with what we talked about last week, based on the research and work of Nobel laureate Oliver Williamson and his Transaction Cost Economics, particularly in coming to terms with supply chain  “maladaptations” and the bounds and rationality of contracting.

That is where Vested Outsourcing can change that game by getting into the ‘What’s in it for We’ mindset from the very start of the relationship.

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