What you need to know about Collaborative Supply Chain

Today we are living in a collaborative economy. This concept is present in many industries, like transport, technology, lodging, among other sectors that are making people share costs and get help and support for other persons. This trend is also creating a new economy, where society is finding different alternatives to do things with a lot of benefits.

The collaborative concept is also being a trend for the supply chain management due to the competitiveness that companies must have these days. Today, every business must watch for its effectiveness and process improvement, because this is what gives them a competitive advantage, saving costs and increasing its resources. In a global economy, organizations must take advantage of what growing markets give to leverage their strategies, establishing solid networks to improve their procedures, especially in the supply chain. Currently, if a company has global aspirations, it has to create alliances and be collaborative with those businesses around the world with the same purpose and commitment.

In conclusion, a collaborative supply chain lets companies to establish relations and working networks with other businesses around to the world, improving their processes, reducing costs and increasing their incomes.

Collaborative levels

To talk about supply chain collaboration, it is very important to define three different levels. These levels describe the relation that a company can have with its allies. They do not have a specific order or priority.

  • Operation integration

This is considered the most basic level, because it has just transactional operations, in other words, here the relation between companies does not go beyond the exchange of operational tasks and procedures that simplify some processes in the associated companies.

At this level, companies can share buying or selling orders, invoices, payments, among other elements purely transactional, making some rudimentary working procedures easier. Presently, the most used channel for this is the internet.

Related: What you need to know about digital supply chain by David Kiger

  • Information sharing

At this level, companies go beyond transactional operations. Here, businesses share different data with their allies, giving to them the opportunity for taking better decisions. Elements like market trends, competitor’s information, product features, production reports, service levels, inventories, among other things, helping companies to understand in a better way how they are in the industry and improving their working procedures. Put differently, the information sharing level gives to interrelated organizations the opportunity to get better data for helping them to take appropriate decisions for the benefit of both.

Companies who are at the information sharing levels, are more engaged between them and have higher levels of confidence.

  • Strategic collaboration

In this stage, companies have a great level of confidence and mutual knowledge. At this level, interrelated organizations can take decisions together, sharing success and failure, besides, they can also share some risk in different initiatives. In addition, with strategic collaboration businesses are making a part in the strategic planning of their partners and sharing information beyond operational data.

The strategic approach not only gives to interconnected organizations the possibility of functioning together for better planning and working networks but also fortifies the supply chain processes, making them more effective and efficient. Besides, companies can strengthen their relations with customers and providers. Put differently, a strategic collaboration between businesses gives them the opportunity for improving both in technique and commercial areas.

It is important to highlight that collaborative tactics also lets associate companies learn one from another, giving them the chance to acquire knowledge and new ways for doing things.

pexels-photo-167676_logistics_transportation_collaborative-supply-chain
Image courtesy of Klaus at Pexels.com

Collaborative supply chain implementation

For a correct and optimal implementation, it is very important that companies select their allies based on their capabilities and commitment. The company who wants to improve their supply chain management processes through collaborative strategies must seek partners that accomplish what they want and need. In addition, in a collaborative strategy, businesses must choose their associates for their potential and goals, determining if the are on the same path or not.

It is also important that organizations analyze the human, technological and infrastructure needed, so they can establish the ideal working plan. That is to say, that companies who have clear what they require for being in a collaborative environment, can have more success probabilities than those who do not estimate their capabilities.

Finally, for a good collaborative supply chain implementation, companies must think for the long term. This kind of working ways do not give results in days, but months or years. Having this clear, businesses know where they have to apply their efforts, what their priorities are and the roadmap for reaching their goals.

As a conclusion, it is correct to say that a collaborative supply chain is a perfect strategy for those companies who want to go global and learn new things, because, through this, they can find the support they want for reaching outlined goals. Besides, it is a great approach for improving supply chain processes and customers’ relations.

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