Fabio Duque In today’s highly opinionated world, there’s a huge difference between endorsing something and actually buying into it. Just ask the billions of people who routinely hit Facebook, Instagram or Twitter’s like or re-tweet buttons every day.
Or look at the state of supply chain collaboration.
While research suggests that more than 90 percent of large companies hope to be part of this phenomenon, only a fraction of them are actually practicing it. And even fewer are doing so on anything more than an opportunistic, short-term basis.
The question is why? What makes companies so willing to claim they want collaborative relationships yet so reluctant to take the plunge and make such relationships happen? And how can your organization pave the way for considerably better collaborative success?
Being Too Particular When Searching for Partners
Part of the answer lies in the list of candidates that companies are willing to consider as collaborative partners. To wit, many supply chain executives seem to think that in order for a logistics collaboration to be viable, all participants and their supply chains must be identical or very nearly so, and that no other candidates need to apply.
The problem with this perspective is that finding such matches is harder than it looks, and even if they exist, there’s no guarantee that these ideal candidates will want to team up.
Just as important, insisting on working only with doppelgangers could be causing companies to miss out on many other collaborative opportunities that could be just as beneficial, if not more so. These include: partnering with a shipper that has a manufacturing plant located near the end of your company’s delivery routes, collaborating with companies that need specialized warehousing services in an area where your company hopes to establish distribution operations, or teaming up with a company that has a reverse distribution challenge associated with the same retailers you deliver to.
As long as there aren’t any DOT regulations that prohibit the co-mingling of your products (sorry firework and match manufacturers) and assuming the qualities associated with your inventory (such as a heavy scent) won’t alter the qualities of theirs (such as food products), there are probably many kinds of shippers that could prove to be excellent candidates for your shared logistics initiatives. So for best results, cast your collaborative net wider.
Not Working Hard Enough to Close the Deal
The way companies go about “selling” specific collaborative opportunities could also be a root cause of collaboration’s failure to gain traction, because collaborative discussions are often couched in such general terms that prospective players can’t always readily see what’s in it for them.
Much like convincing a highly sought after bachelor or bachelorette to become your spouse, getting potential collaborative matches to commit often requires more than just simply showing up at their doorsteps with a generic proposal. In short, it often calls for a considerably more specific and optimized solution — one that quite literally shows prospects the savings or particular performance improvements they stand to gain by agreeing to participate.
It also may require offering up the equivalent of some bling in the form of a temporary discount or incentive that will enable participants to realize savings right out of the gate. For example, if your company is working towards a collaborative warehousing arrangement, it may wish to offer prospective partners lower rates than they’d pay at a comparable 3PL warehouse, at least during the initial phases of a relationship.
And it may call for you to obtain the advance blessing of some key players whose cooperation could make or break a proposed collaboration’s success. Consider, for example, that if your collaboration involves co-loading shipments, some of your shared customers may have to agree to alter the way they order from your two companies. And bear in mind that they may not think “you’ll really be helping us out” is a compelling enough reason to cooperate. In some cases you may have to sweeten the pot by offering them something such as a rebate or per-pallet discount for every joint order they make.
Forgetting to Nurture the Partnership
Finally, there is the very real challenge of trying to make two or more different companies’ supply chains work like one well-oiled machine in the areas where they’re collaborating. It is often a complicated form of alchemy that is not for the faint of heart.
For one thing, in order to make a collaborative relationship work, all participants must be willing to do a number of things that don’t always come naturally when dealing with “outsiders”: sharing detailed information about their practices and processes, being candid about weaknesses, and permitting shared visibility. For another, any time two independent forces combine — no matter how professional, credible and cooperative they are individually — there is always the potential for many less-than-perfect behaviors that can result in misunderstandings, infighting or outright failure. In fact, this fear of failure is probably the biggest reason why so many companies are hesitant to try collaborating.
The good news is there are several tactics your company can employ to minimize suspicion and reticence and maximize the possibility of success
It is, for example, imperative that you get every participant to sign and abide by a watertight non-disclosure agreement, as it will make everyone considerably more willing to exchange the levels of detail they should.
It’s also wise to invest in top-notch legal expertise that can help you create clear and definitive contractual language about everything from how your collaborative relationship’s workloads and financial obligations will be split to how and when savings will be awarded; it will go a long way toward keeping everyone on the same page and leave far less room for surprises and complaints along the way.
In addition, there’s no substitute for having a champion who’s committed to moving the collaboration forward, whether this champion is the chairman of a cross-functional collaboration team with representation from each participating organization or a 3PL that is serving as a matchmaker and/or integrator. And if that player is also able to provide a technology platform that creates cohesion between every participant’s systems, that’s even better.
Last but not least, don’t underestimate the value of two deceptively simple but highly effective collaboration ingredients — time and trust. Although it is tempting for many of us to look for the nearest exit as soon as we hit the first bump or fail to see the immediate results we were promised, it’s far smarter to exercise patience and give things a chance to play out, because often even perfectly compatible partners need some time to adapt before they’re functioning at full capacity.
The Final Word
These are by no means the only keys to successful supply chain collaborations. In fact there are so many others that it would require several additional articles to detail them all. Nevertheless, I hope that the thoughts I’ve shared will inspired your company to give collaboration more than just a superficial stamp of approval and become one of its actual users.
Like Facebook’s most well-known relationship status, logistics collaborations can indeed be complicated. But with the right players, they can also be incredibly rewarding.
Fabio Duque is Global Head Of Consumer Vertical For APL Logistics.