As companies digitize and integrate their enterprise and implement advanced analytics, they are learning that collaboration is the key to market leadership. Collaborative channel relationships are transforming the buyer-seller relationship from transactional to strategic. Working together to integrate and share process information, partners experience performance improvement by focusing on the least landed cost at every point in the channel versus leveraging price. Regulatory compliance for track, trace and authentication can only be realized through digitization. -Rich Sherman, Senior Fellow, Supply Chain Centre of Excellence, Tata Consultancy Services

As companies embrace digitization and Industry 4.0 technologies, collaboration will experience a new level of maturity as well. Collaboration 4.0 leverages the convergence of digital technologies by creating a “digital thread” that connects all of the participants across channels. A Connected Age is emerging as the data is collected from deploying the Internet of Things starting with mobility followed by sensors and other monitoring devices.

Past collaboration efforts have been constrained by the reliance on human-to-human communications, intensive data collection requirements, lack of data harmonization, and other constraints that are being eliminated through digitization. Advanced cognitive analytics and machine learning are enabling trading partners to focus on achieving least landed-cost-based strategic relationships versus margin-based transactional pricing and adversarial relationships. With Collaboration 4.0, companies work together to manage and control the flow of goods in the channel based on consumption demand versus stocking goods in anticipation of demand.

By implementing predictive analytics, demand sensing systems are anticipating variability at all levels of the channel and eliminating latency and demand amplification. As unexpected variation of actual demand from planned demand is identified, operators are electronically notified of the variance to collaborate to bring the flow back in line with actual. Partners digitally collaborate as business as usual versus being “blindsided” by variance and costly firefighting. Like statistical process control, partners agree to a range of product flow to manage variability based on shared risk and cost optimization. Gains are shared and profitability is achieved through improved operational performance across the channel.

Operators take corrective actions as unexpected variability is encountered and their actions are recorded. As a history of corrective actions is developed, prescriptive analytics are developed to guide operators to collaborate and respond to the variability. Over time, machine learning enables process control algorithms to be applied to automatically resolve process variation as it occurs. Partners can use simulation to test new demand-shaping initiatives such as promotions and social media incentives to increase demand or shift demand to slower-moving products.

As more companies automate and integrate their information systems, they become a single market ecosystem that senses, shapes and responds to demand. The capability to track items, their attributes, and their condition throughout the channel provides the visibility to comply with emerging regulations for product safety and authentications. If a disruption occurs, it can be identified and isolated quickly to avoid the significant threat and cost of disruptive proliferation and recall. Products can also be automatically authenticated to avoid counterfeiting. Leveraging digital technologies, collaboration can scale to include all partners in the market ecosystem efficiently.

The Outlook

In 2018, companies will continue to leverage and exploit digital technologies. As they manage and control their master data, they will harmonize the data with their trading partners. Global standards such as the SCOR framework from APICS Supply Chain Council and data communication standards from GS1 facilitate integration. As shared information becomes more available, companies will evolve their relationships to embrace the principles and promise of Collaboration 4.0.