Logistics collaboration is often cited as an effective way to improve supply chain performance. But in many of the case studies cited it seems that one party is in a stronger or dominant position and that their collaborators are more submissive and compliant. Perhaps that’s where the secondary definition of collaborator comes from; “a person who cooperates traitorously with an enemy”.
There are typically two types of supply chain collaboration, vertical and horizontal. Vertical is a collaboration between supplier and customer. Whereas horizontal is collaboration between organisations in similar but parallel supply chains.
There are many more cases of successful vertical collaboration than horizontal. I think this partly comes from the commercial necessity to work vertically with customers and suppliers. But again there seem to be more cases where one party is more dominant in the vertical supply chain.
Horizontal collaboration is much less common. And many examples of success seem to arise where there is little commercial value at risk but substantial mutual benefit. Health and safety for example is an area where horizontal collaboration has been very successful.
But how to organisations put aside potential commercial competitive conflicts and realise horizontal collaboration? Professor Chee Yew Wong at Leeds University cites “trust, commitment, openness and honesty” as the top factors that contribute to collaboration success.
While I worked with the European Petrochemical Association we identified trust and transparency as common factors in many of the case studies cited in their “Sustainable Chemical Supply and Logistics Chains: The Path Forward”.
In reality for two or more parties to collaborate they all have to believe that the benefits substantially outweigh the costs. If everyone is going to get more out than they put in then fundamentally logistics collaboration cannot be a zero sum game.
This may sound like a statement of the obvious but I make the point not arithmetically but culturally and conceptually. Senior management must have faith that the pie is so much bigger from collaboration so that a smaller slice is still much greater overall. Otherwise the environment will never be right for success.
Have you some good examples of successful logistics collaboration? Or have you experienced good intentions fail?
Neil is experienced in helping businesses develop and grow global markets through strategy, outsourcing and international supply chain.