Collaboration, Trust & Sustainability: The Catalysts to Transform a Value-Chain
These were, perhaps, the three most impactful words at ProcureCon’s Berlin conference last year: collaboration, trust and sustainability.
Ton Guerts, (CPO at Bekaert) put it well when he said “If you think in ‘sustainability’ you rejuvenate and transform your value-chain.” But as others such as Pieter Swarts (CPO at KPN) pointed out, that transformative power is dependent on your ability to collaborate, which in turn is dependent on high levels of trust.
It is not surprising that these three words are increasingly seen as the catalysts to drive change, create shared value and build a sustainable competitive advantage for businesses:
- Sustainability provides a new lens through which we can address underlying supply-base cost, inflation, and inefficiency; risk to brand reputation; legal compliance; and security of supply. It also provides a pre-competitive opportunity to align values between organisations and give permission to suppliers to collaborate with you and each other.
- Collaboration is essential to addressing many of the challenges of managing a sustainable business. Companies cannot mitigate risk to their brands and manage the environmental costs to their business without close collaboration with their suppliers (after all, for some companies, up to 80% of their costs, impacts and risks lie upstream). But more than that, collaboration between suppliers themselves, unleashes, collective capability and know-how to solve problems, which is otherwise hidden as isolated and siloed best practice in the supply-base.
- Trust is both a pre-requisite of collaboration and a beneficial result. It can be nurtured through collaborating around sustainable ways of doing business together and then, as Jeffrey Dyer highlights in his book “Collaborative Advantage. Winning through extended enterprise supplier networks”, it can be leveraged to create greater transparency, reduce transaction costs, address hidden challenges and position you as customer of choice to benefit first from supplier enabled innovation
"Supplier trust is worth $2bn in operating profit per year to Chrysler. Jeffrey Dyer, Collaborative Advantage. Winning through extended enterprise supplier networks”
But the whole is far greater than the sum of the three parts. In combination, collaboration, sustainability and trust enable the supply-chain as a whole to compete better. The combination makes a supply-base more resilient, the weaker links learning from the best practice of the stronger, the brand promise nurtured along the supply-chain by organizations with aligned values, and efficiencies gained across the whole supply-base, not just within individual suppliers. And this, of course, means that the customer’s and risks and costs are lower and much better managed too.
Earlier this year, we surveyed food-manufacturing suppliers involved in one of our ‘fully-linked’ collaboration programs to see what affect collaboration and trust had, and whether, in tandem, they would make a difference to investment and savings in energy, waste and water. We compared the suppliers involved in our program with a control group of their peers not engaged in advanced collaboration. The results shown in the infographic below are startling.
I hope you found Issue 1 of Shared Thoughts stimulating. Below are some of the future we have planned:
- Why supplier-to-supplier collaboration is significantly more powerful than just customer-to-supplier collaboration.
- The simple steps to take to enabling fully-linked collaboration across your supply-base
- The Art and Science of Collaboration
- How to facilitate collaboration between thousands of businesses