Supply chain collaboration is a common practice in the supply chain industry. It occurs when different autonomous firms collaborate or team up to execute supply chain tasks and operations.
Collaboration is a cooperative strategy because two or more business units cooperate to realize mutual benefits. Collaboration can deliver substantial benefits to collaborators because different autonomous firms come together to fulfill supply chain tasks.
Supply chain collaboration is a practice that’s growing in popularity. It’s what it sounds like, two enterprises working together to satisfy shared supply chain responsibilities. There are two common types of supply chain collaboration – vertical and horizontal.
- Vertical collaboration strategy allows two or more businesses in different supply chain stages to share their responsibilities. For example, when a buyer forms relationships with several suppliers or vendors.
- Horizontal collaboration brings together two or more enterprises at the same level of the supply chain to optimize cost and share the burden of demand. For instance, when multiple manufacturers decide to share the delivery infrastructure of their raw materials.
Today, more than ever, companies are prioritizing collaborations with vendors to orchestrate their distribution infrastructure to deal with an ever-growing list of disruptions and risks.
A 2020 Supply Chain Report showed that 42% of manufacturing executives were considering initiating programs to strengthen supply chain collaboration and increase transparency in distribution. According to the report, manufacturing executives and business leaders see collaboration as a sure-fire way to drive business value.
Benefits supply chain collaboration provides
Partner Retention and Supply Chain Talent
Companies see supply chain collaboration as a gold standard for capturing the top talent. The need for collaboration is because businesses understand the importance of customer retention – and the level of competition vying for customer trust and brand loyalty.
However, consumers are not the only thing you need to succeed in your endeavors. You need to ensure that your business can identify and recruit the top talent in the industry and maintain long-term relationships with suppliers.
According to the Global Supply Chain Institute, supply chain talent management is inarguably the most unique of all business requirements. And identifying, recruiting, and retaining talented supply chain managers is the farthest-reaching goal of collaborative efforts. Collaborations yield better talent and enable enterprises to access top supply chain talent.
Lowering Long-term Costs
One-off collaborations have their place in your supply operations. However, long-term partnerships affect the bottom-line most adversely. The benefits of cooperation are long-term and practical. More clearly, the longer you collaborate, the better you understand each other’s weaknesses, strengths, and working methods. This mutual collaboration ensures that you are better at playing to each other’s strengths.
For instance, by retaining suppliers, you increase the possibility of streamlined communication and collaborative experience with them. You forego the extra cost and time to repeatedly learn a supplier’s habits, standards, and operations. When you’re familiar with another supplier’s management processes and operational specifics, you can close costly gaps easily and quickly.
Product Quality and Safety
Delivering high-quality, safe products is the secret formula for customer satisfaction; and something aspired by every retailer and brand. Collaborating with a supply chain partner gives you a deepened perspective of the issues facing product safety and quality in your industry – be it raw materials or new regulations on waste management.
What’s more, working together with your collaborators to eliminate these problems produces faster and more efficient results than each party trying to work alone. Your business, customers, and the entire industry will benefit from robust collaborations. Collaborating in a shared digital platform analyses quality and compliance data, giving you a 360-degree view of your supply chain operations.
Better, Ethical Standards
Ethical, sustainable sourcing practices are currently a priority for most enterprises. But, no matter how committed you’re to improving environmental welfare and human rights, one entity can only do so much.
Indeed, it’s universally known that multi-stakeholder collaboration is key to driving change in supply chains. Collaborating with a trusted supplier allows you to strive towards supply chain transparency, thus promoting higher environmental and ethical standards. Partnering with suppliers enables you to exert leverage over other areas of your procurement that are most resistant to change.
Other benefits of supply chain collaboration include:
- Lower inventory levels
- Higher inventory returns
- Shorter lead times
- Earlier and quicker decision-making
- Visibility into customer demand
- Quicker and informed decision-making
- Visibility into supplier performance.
- Lower out of stock products
- Improved customer service metrics
- Resolves critical supply chain risks
Robust supply chain collaborations yield innovation in product life cycles, reducing considerable stress on organizations’ R&D and reducing budgetary constraints.
ProcurePort – Jumpstarting Your Supply Chain Collaboration
ProcurePort’s procurement and supply chain collaboration software can help you foster meaningful partnerships, giving all parties equal incentives to remain collaborative throughout the supply chain process. ProcurePort’s software provides real-time analytics and data-sharing, helping your company connect with suppliers, communicate freely, and break silos.
ProcurePort’s software equips enterprises to:
- Enhance the agility in which they respond to demand and disruptions.
- Improve the accuracy of forecasts by incorporating real-time data.
- Reduce bullwhip effects across the supply chain.
- Create a foundation for your supply chain orchestration.
- Develop closer relationships with suppliers and vendors.
ProcurePort’s software provides an intuitive solution to foster meaningful supplier relationships, improve performance, and bolster productivity across the supply chain.
Contact ProcurePort to foster long-term supply chain collaborations.