Creating a More Collaborative Supply Chain

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Creating a More Collaborative Supply ChainNew sales channels powered by the Internet, build-to-order scenarios, increased competition and more demanding customers are changing the face of manufacturing. To sync up with these changes, traditional supply chains are evolving into “value chains” that truly share and integrate information.

According to Gartner, collaboration between vendors and suppliers ultimately increases value to customers and “to provide profitable commitments, each enterprise in the demand chain must increase the level of information it share with the others.” Manufacturers must adopt a collaborative business model to anticipate the changes that occurs both upstream and downstream in their supply chain.

Given the rising collaborative nature of supply chains, especially as any manufacturers work with dozens of vendors and suppliers, sharing and integrating information is no longer optional – it’s essential.  Manufacturers need to have the ability to collaborate with every member of their supply chain, and they must have the analytics needed to assist them in being as competitive as possible.  In order to truly collaborate with their supplier and vendors, manufacturers need to be able to share information down and across the entire supply chain at a moment’s notice.  

To add value through collaboration, manufacturers must:

  • Adopt common metrics – Use mutually agreed-upon metrics to evaluate progress and measure the supply chain’s contributions. This is especially important as your supply chain crosses borders and technologies to ensure that everyone is using the same information.
  • Improve exception management – Create a vehicle for managing exceptions related to demand and inventory. With better information sharing there are fewer surprises for your vendors to manage.
  • Promote communication and build relationships – Inform supply chain partners about time-sensitive information and ensure they have the most up-to-date information at all times.
  • Establish collaborative business processes – Perform collaborative planning with your partner’s supply chain partners.

Sharing information across vendors and having a concentrated focus on collaboration ensures that manufacturers are able to make optimal use of supply chain information to help fulfill demand more quickly within order cycle times.  For instance, with more accurate forecasting data, manufacturers can keep their vendors better equipped to accommodate seasonal demand, promotions, slow-moving items, causal variables, outliers and much more.  As a result, no one vendor can become a bottle neck since everyone’s working with the same information and towards the same goal.

And with greater visibility to key metrics, manufacturers can also become more agile at demand planning, address production and quality issues more quickly, and have the information needed to reduce lead times, lower inventories, eliminate stockouts, and identify poor-performing products.

Perhaps more importantly … according to Gartner, enterprises that provide their customers and trading partners with visibility to orders, shipments and events across the extended supply chain experience as much as a 15 percent increase in profitability from resulting reductions in inventory and increased customer satisfaction.  Now that’s a percentage that’s hard to ignore!

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This post was written by Pat Hennel