Expert Insight: Guest Contribution
By Tim Albinson,
CEO, Aravo Solutions
Date: October 28, 2009

The Top 3 Reasons You Need to Improve Supplier Collaboration

 

Collaboration Benefits Include Reduced Cycle Times, Better Contract Management, Improved Data Administration, Streamlined Processes

Collaboration. Everyone is talking about it. John Chambers, CEO of Cisco, recently linked collaboration with empowerment for the 21st century enterprise. At the 2009 Biotech Supply Chain Conference in October, every speaker, whether discussing risk, compliance or talent management, emphasized the importance of internal and external collaboration. Even Microsoft stresses collaboration in its new Windows 7 commercials.

But exactly how can collaboration benefit your company?

At Aravo, we manage more than 1 million suppliers and buyers, so we know plenty about where buyer-supplier relationships succeed—and fail.  These days, we’re seeing that collaboration risk management and the overall sharing of business information and operational metrics are absolutely imperative for managing secure, efficient and transparent supply chains. If the recession did anything, it underscored the critical symbiosis between buyers and their suppliers. Good collaboration can improve time-to-market performance, reduce inventories and shrink order fulfillment cycle times.  Plus, as demand, supply and regulatory conditions continue to shift, companies need solid, collaborative supplier relationships to help them successfully navigate market volatility.  

Need more convincing? Here’s my list of the top three reasons you need to improve supplier collaboration.


1. Collaboration ensures reduced management and transactional costs

 

Pressure to reduce costs, coupled with volatile market conditions, require ongoing changes and negotiations related to pricing, shipment schedules and product obsolescence. In addition, the speed at which you and your suppliers react is directly related to the speed at which information and data are accessible and shared between you. Of course, you’ll also improve response time related to fast-developing issues (e.g., product safety and food contamination crises) if you know even basic information about your suppliers‘ supply chains. What’s more, when you and your suppliers have a consistent communication process and framework for updating credentials, certifications, financials, etc., transactions will flow more accurately and efficiently, and you’ll benefit from fewer errors in invoice and payment processing, lowered banking charges and shortened payment intervals.


2. Collaboration supports supplier self-service empowerment

 

Collaboration and data sharing is not just a one-way street, where suppliers provide all the information. When you provide suppliers with better real-time visibility of the procure-to-pay processes and data, you’re helping them appropriately plan capacity and production.

 

3. Collaboration streamlines business processes

 

For successful buyer-supplier collaboration, both sides must support more efficient data sharing:

  • Have a SVOT (single version of truth) that enables you and your suppliers to view the same, accurate and updated data.
  • Provide a communication framework where the people who know the information—or know where to find it—can easily add data to the SVOT. Then, you’ll spend less time and effort on non-value added activities.
Final Thoughts


Collaboration. It’s more than just a marketing term. Done right, regular communication and cooperation between buyers and suppliers can have benefits in many areas—from reduced cycle times and better contract management to improved data administration and streamlined processes. Your supply chain is dynamic. Collaborate with your suppliers, and you’ll have more success in both mitigating today’s concerns and navigating future risks.

Agree or disgree with with our guest contributor's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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About the Author

 

Tim Albinson is Founder, CEO, and chief visionary of Aravo Solutions. With a technology background dating back to the early 1980s, he has held cross-functional positions in marketing, product strategy, and sales management.

Mr. Albinson has been an advocate for conservation and sustainability for over two decades, and has worked with organizations including World Wildlife Fund, The Nature Conservancy, American Forests and Fundacion Natura, Ecuador’s leading conservation group.

Mr. Albinson holds an MBA from the Haas School at the University of California at Berkeley. He also holds a BA in English literature from the University of Colorado at Boulder.

 

For more information visit: www.aravo.com or email:info@aravo.com

 

Albinson Says:


Good collaboration can improve time-to-market performance, reduce inventories and shrink order fulfillment cycle times.


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