Gattorna Says:
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This
is the part where many
executives are either
out of their depth or
simply in denial. Why,
because they either don’t
understand or don’t
want to delve into this
abyss where all the forces
of darkness exist, in
their own organizations.
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do you say? Send
us your comments here
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“Collaboration”
is one of those concepts that
is over-used in the supply chain
vernacular. The reality is that
for any product or service category
in a given market, it is very
likely that no more than 25%
of customers at best will have
truly collaborative buying
values. By this I mean that
they seek close relationships
with their key suppliers; tend
to single-source; are brand
loyal; will share information
freely; are price tolerant;
and above all are very forgiving.
In other words, the perfect
customer profile. Yet
what do many suppliers do? They
ignore these genuine customers
and relentlessly pursue the
more demanding unpredictable
customers who have none of the
virtues listed above. Worse
still, suppliers take advantage
of their loyal customers by
cross-subsidizing their more
costly efforts in servicing
demanding customers.
De-bunking
Some Supply Chain Collaboration
Myths
In
the early years of ‘Lean’
manufacturing as introduced
and practiced by Japanese manufacturers,
it was taken for granted that
suppliers would collaborate
in the systematic effort
to eradicate cost, rather than
just move it up and down the
chain. This was a given, and
all the parties to these selective
arrangements benefited.
However,
as globalization evolved and
supply chains became longer
and more complex, something
was lost in the translation.
Today, while there are still
supply chains where the parties
collaborate, there are also
many other supply chains where
this is not the case. Indeed,
the various generic types of
supply chains co-exist in parallel
to provide different supply
experiences for customers in
the same market.
In
my book, Living Supply Chains,
I make the distinction between
those market situations where
customers are genuinely collaborative,
and those that are not. Why?
Because you have to recognize
which is which and deliver different
value propositions via different
network configurations. We are
now operating in a world where
nuances make the difference
between success and failure,
operationally and financially,
and you ignore this reality
at your peril. To avoid confusion,
I have labeled those supply
chains where true collaboration
exists as ‘Continuous
Replenishment’.
Truly
Collaborative Supply Chain Configurations
The
cultural value that is treasured
above all others in a truly
‘collaborative supply
chain is trust, which leads
to close working relationships
for mutual gain. Information
is shared freely; long-term
stability in the relationship
is actively sought, and strategic
partnerships are forged for
mutual benefit. This is the
‘collaborative zone’,
and it is a condition that inevitably
takes time to achieve.
However,
it is also a condition that
depends almost wholly on the’
alignment’ of cultures
between buyers and suppliers,
rather than something more tangible.
This is the part where many
executives are either out of
their depth or simply in denial.
Why, because they either don’t
understand or don’t want
to delve into this abyss where
all the forces of darkness exist,
in their own organizations.
I
have always said that this is
the area we should be focusing
on rather than getting carried
away with Michael Porter’s
competitive analysis. In reality
there has been an unhealthy
preoccupation with competitors,
often to the point of paranoia,
that has distracted executives
from looking more deeply at
the internal cultural capability
of their own enterprises, where
progress and greater understanding
is going to bring greater returns
for the time, effort, and money
invested. We will not be able
to go to the next level of supply
chain performance until this
mountain is climbed and conquered.
Next
week, we’ll look at look
at some of the keys to doing
so.
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