The Next Generation of Supply Chain Collaboration
Collaboration is third on my list of what I have heard at COP21 which should be of material interest to CPOs and others in charge of supply-chains. (I will write No. 2 when we know what the outcomes from the negotiations really deliver.)
Every CEO and senior executive at COP21 is talking about the critical importance of collaboration. Compliance, mitigation, adaptation, innovation, securing supply, resilience, reputation risk management, cost reduction, circular material flows; all headline issues for businesses at COP21 and all these are dependent on collaboration to happen.
However, when people talk about collaboration they are not always talking about the same thing. So let's look at the different ways companies and people might work together and how they deliver value in different ways:
- Multi-Stakeholder: the classic roundtable, industry collaboration addressing issues common to a whole industry or multiple supply-chains e.g. palm oil, soya. This form of collaboration is great for agreeing policy and standards amongst major players and are increasingly important for major brands in guiding procurement and supplier selection. They often involve NGOs as facilitators and for their subject matter expertise. However, their ability to reach deep into the supply-base is limited and they are dependent on other forms of collaboration (see below) to ensure standards and policies are actually implemented.
- One-to-One: deep collaboration between a customer and a supplier. Normally used to drive product innovation, sort out quality and distribution etc. with strategic suppliers. Obviously very important, but it is expensive and time consuming and doesn't address the deep need for collaborating at scale with suppliers to address the systemic and often existential challenges posed by climate change and the other sustainability issues highlighted at COP21
One-to-Many/Hub and Spoke: this is perhaps the most common way in which companies try to collaborate with large numbers of their suppliers. It often involves: newsletters, portals, webinars and conferences. Companies tend to gravitate towards this approach because these are tools with which we are all familiar. However, there are limitations with this approacha) It is better at pushing out information to suppliers than it is at engaging them in deep conversation and problem-solving. As a result, the 'collaboration' is only skin deep.
b) It often struggles to help suppliers deal with their critical operational challenges because it emphasises pushing out the customer's 'know-how' to suppliers and in most cases the relevance of that 'know-how' is limited (e.g. great on policy but not at dealing with practical challenges beyond the customer's experience).
c) Deeper, more practical collaboration is achieved through supplier conferences and events, however, these are not scalable and attendance is often limited to a sub-set of those suppliers who are already well engaged
- Many-to-many/supplier to supplier: this is the most powerful and impactful type of collaboration across a supply-base because it leverages the 'know-how' that already exists. Suppliers in similar industries know more about each others' operational challenges and solutions than their customers. So unlocking best practice which is otherwise hidden in silos is extremely powerful. This type of collaboration especially when convened and directed by a powerful customer and supplemented by expert 3rd party in-put (e.g. consultants and NGOs) has the potential to make significant cuts in costs and impacts, reduce risks and drive innovation. We see it most frequently at supplier conferences when we bring groups of suppliers together into working groups. The challenge with only doing it face-to-face, though, is that (like above) it is not scalable. However, social media technology is changing this. Leading companies like Unilever, Asda-Walmart, GSK, and others are using social media technology to enable supplier-to-supplier collaboration at scale, enabling suppliers to access each others 'know-how' (and that of expert 3rd parties or their customer) to solve problems, on a 24/7 basis, whenever it is needed. This is the level of collaboration we really need to aim for to address those challenges and opportunities highlighted at COP21