Some describe automated communications between partners as collaboration, even if the information being exchanged is purely transactional. Others believe that true collaboration should include such elements as mutually agreed upon business objectives and performance metrics as well as enterprise-spanning processes. A few say the word "collaboration" doesn't reflect what is happening in the marketplace and ought to be thrown out altogether.
"We banned the use of 'collaboration' internally three years ago," says Lorenzo Martinelli, executive vice president of E2open, Redwood City, Calif. "The truth is that in supply chain and procurement, people don't want to collaborate. What they want is visibility and control-the kind of control they used to have when supply chains were primarily internal. They are not interested in some 'kumbaya, let's all get together' kind of thing."
Such differences may be partly a matter of semantics and partly a reflection of the market's immaturity. Bill Read, a partner in the supply chain practice at Accenture, McLean, Va., says Accenture's research shows that about half of the companies involved in trading partner collaboration are fairly advanced, but the other half are in the very early stages of implementation- either at the planning stage or just getting under way. "It's clear that there is still a lot of room for improvement in this space," he says.
Read takes the more expansive view of collaboration. "Companies have been exchanging automated information for years; that's nothing new," he says. "To my mind, true collaborative relationships are ones that have clearly set out the business objectives that both organizations want to achieve and have put in place the actual process elements to achieve them."
Additional studies confirm that few companies are yet at this level. In a survey last year conducted by Capgemini, Georgia Southern University and the University of Tennessee, less than 10 percent of 2,300 respondents were found to be capable of "true collaboration," which the surveyors defined as comprising real-time data sharing with key customers and suppliers, alignment of people and organizations and alignment of processes and practices. This study attributes the low number to the complexity of today's global supply chains, which "create much higher information demands than domestic movements."
Another reason for the slow progress, says Read, may be the lack of a strong, documented value proposition. Only 15 percent of companies implementing collaborative programs that Accenture has studied describe the benefits as "high," he says. Another 55 percent say benefits have been moderate to low, while 30 percent don't know. "If 30 percent of the people engaged in collaboration don't know if they have realized benefits, that is a major challenge and a major opportunity," Read says.
|"When we started working on this solution we quickly learned that it has to be an any-to-any environment."|
- Lorenzo Martinelli of E2open
|HP Improves 3PL Connections|
|Hewlett-Packard, Palo Alto, Calif., has developed a collaborative process to work more efficiently with its third-party logistics providers. The solution is called LEGO, after the children's toy. "Historically, HP was tightly coupled with its 3PLs, meaning we gave the 3PL our system and they had to use our system for transactions," says John Daniels, business solutions manager for worldwide logistics. "With LEGO, we are moving to a loosely coupled relationship."|
Instead of giving 3PLs a system they have to use, LEGO provides modular components that include business processes and standard messaging formats, Daniels explains. The real key, however, is standard business content. "What we are really doing is standardizing the way we talk with our partners," he says. "We will talk whatever language our partner needs us to talk. But by standardizing content, even though we are using different languages, we still get the same answers in and out of both our systems."
An example might be the requirement for including country of origin, he says. Before, some systems would require this, some would not. "We have standardized content on shipping notes, such as whether something has to be shrink-wrapped, and even content on value-added services," he says. This makes doing business a lot easier for everybody and it should reduce costs. "Just not having to train somebody on a specific system and being able to have flexibility in moving employees around will enable our 3PLs to be more efficient," he says.
Standardized content also makes it easier for HP to manage by exception, he says. "All of our messages with partners are integrated so we always know what our inventory levels are at our 3PLs and what their cycle count accuracy is-things like that. But we are able to manage it from afar, as we should. The whole point of outsourcing logistics is to have this done by experts."
HP's logistics providers are very happy with this solution, he says. "We have a large number of messages that we exchange with our 3PLs, and LEGO drastically cuts down their design time, development time, testing and implementation time. Things go faster on their side with lower IT requirements, because once you have done this the first time it is like a cookie cutter."
Enjoy curated articles directly to your inbox.