Humans in the Chain: Part 1 - why supplier collaboration efforts fail
Article by Hugh Williams from Hughenden Consulting - This is the first in a three-part series for eyefortransport on why overlooking the humans in the supply chain causes various initiatives to fail. This post will focus on supplier collaboration.
Supplier collaboration is another one of those trendy topics in our industry that promises to save companies lots of money and improve planning visibility. However it’s also one of those things that’s a lot easier said than done. So why is this?
To begin with, any business wishing to collaborate either up or indeed downstream needs to start with a clearly defined supply chain strategy so that collaboration serves the greater purpose. Doing supplier collaboration just because it’s fashionable or sounds like a good idea, will not provide enough motivation for the troops to rally around a cause that requires so much behavioural change to succeed.
Before starting collaboration discussions, think through carefully what the objectives are and whether they are in line with the supply chain strategy. There are lots of examples where Purchasing and Supply Chain strategies are working at cross purposes. One group wants lower cost per unit, which often can mean buying a greater quantity, the other wants less inventory and greater responsiveness.
Don’t be constrained by traditional thinking. A full truck load does not mean it has to be full of just one thing. Can a full truckload be achieved by collaborating with other companies who need the same route? One day somebody decided that a 40 foot container was the right size, so as a result people are blindly motivated by the goal of trying to fill the container. Is that sort of goal really the right one to dictate how your supply chain behaves?
Every player needs to feel like a winner. Put yourself in the shoes of the companies with which you want to collaborate. What’s in it for them? If you can’t determine the real benefit to them, don’t start discussions. On the other hand, if you can, push hard.
Transparency is vital to success but requires a huge change in mindset. Few companies will want to share information on the margin they are making from supplying your company. One company once told me they operated an open book relationship with a customer, but “we hid the real numbers and made up new ones”. Obviously this is no recipe for success!
Your suppliers’ culture may not be the same as yours. Do not underestimate the amount of time and effort you will need to invest if the supplier has a fundamentally different approach. Culture is set from the top. Find out what you can about your supplier’s leadership team.
Systems are the enabler, not the solution. They rely upon good data and the amount of data needed is expanding rapidly. Systems can harness this issue but it still needs a business process and the will of the people.
Start by honestly evaluating your own internal collaboration. This is normally a good place to look to see if your supply chain strategy is understood and in place. It will also tell you something about your own company’s culture and understanding about what collaboration means.
Above all, making supplier collaboration work is all about influencing human beings to change how they think, work and communicate every day. This means that whoever is driving the effort needs to be extremely persuasive, passionate and committed to every player’s success.