Where can we collaborate in Supply Chain?
Basically, supply chain collaboration can be defined as two or more firm which are
autonomous in nature works jointly or in collaboration with each other to plan and execute
supply chain operations. It is also known as co-operative strategy when one or more business
units work together to create benefits which are mutual.
The potential of supply chain collaboration is very vast in nature and can be implemented
throughout the stages of the supply chain. Generally, the scope of collaboration is of
following types and then it is sub-divided.
Vertical Collaboration
Horizontal Collaboration
Vertical Collaboration- Vertical collaboration is the collaboration which includes
collaboration with customers, internally or across functions or with the suppliers of the
organization.
Therefore, Vertical collaboration is further divided into-
External collaboration (Suppliers)
Internal collaboration
External collaboration (Customers)
Horizontal Collaboration- Horizontal collaboration is the collaboration which includes
collaboration with other organizations, internally or with competitors of the company of
some sort of mutual benefit.
Therefore, Vertical collaboration is further divided into-
External collaboration (Other Organizations)
Internal collaboration
External collaboration (Competitors)
Internal collaboration is more important for the organization as it leads to better internal
integration of the firm as a whole, and also helps to overcome functional myopia within
organization. Ideally, there should be complete integration of departments such as
purchasing-manufacturing-logistics-marketing with join goals and vision.
External collaboration should also be given relevant weightage by the organizations as it also
represents number of potential opportunities which includes Customer Relationship
Management (CRM), Collaborative Demand Planning etc, Supplier Relationship
Management, Supplier Planning, Collaborative Transportation etc.
With whom should we collaborate in Supply Chain?
Collaboration should not be done only with supply chain related functions but it should also
be done by integrating processes for functions such as purchasing, manufacturing, logistics,
marketing commercials and R&D. Collaboration in supply chain should also be implemented
at tactical and strategic levels in an organization across the supply chain. Such integration can
give significant benefit as the benefits are not limited to any particular activity.
Keeping scalability factor in mind we should not collaborate with everybody as collaborating
in supply chain is very resource intensive in nature. Therefore, there should small number of
close relationships rather than trying to collaborate with everyone. Collaboration should be
done at arms length which basically means it should only be done if it is cost effective for
the organization in short as well as long term. External collaboration should only be done
with small number of strategically important suppliers and customers. This is also known as
Segmentation approach.
Supply chain segmentation approach is on the assumption that every customer buy product in
a different way, having different expectation of service and is ready to pay different price
based on the kind of service required. For ex, if a customer is segmented based on its buying
behaviour and service needs, then separate supply chains have to be designed in order to meet
various specific demands and needs of various customers.
The scope of vertical integration in supply chain depends upon inter-organizational and intra-
organizational activities. Inter-organizational activities consist of production scheduling,
supply planning, new product introduction, demand replenishment, collaborative planning,
shared distribution etc. Intra-organization activities consist of purchasing, manufacturing,
marketing, inbound and outbound logistics.
There are also 3 levels of inter-intra organizational integration-
Strategic
Tactical
Operational
Supply chain also depends upon different culture to support different supply chain strategies.
Hence, it is also important to have distinct leadership style to drive culture in supply chain.
For ex, Coca Cola in Japan segmented its customers according to their logistic needs. It could
be possible for some suppliers and customers that they might appear in more than one
segment of supply chain. This implies that customers buy product in different ways and
expectations from each other and in the same way supplier may supply material in different
ways and different service levels and costs.
