by Obella Marie D. Ronsairo and Francis J. Custodio, AUGUST 2021
If you’re new to the supply chain arena, there will inevitably be terms and concepts with which you are not familiar. Some of them can be a little confusing too until you put in some research effort to better understand them, since their names alone may not reveal their contextual relevance to the supply chain.
One such concept is supply chain collaboration, a somewhat overused term that has come to mean different things to different people. By taking a few moments to read this post though, you’ll understand precisely what is meant by supply chain collaboration and how it fits into 21st century supply chain management.
What is Supply Chain Collaboration?
It might be best to begin by letting you know what supply chain collaboration is not:
- Supply chain collaboration is not a fancy term for knowledge sharing, although it does require multiple organizations in a supply chain to make intelligence available to one another.
- Supply chain collaboration does not mean systems integration, even though integrating IT platforms with partners certainly makes collaboration more practical.
So what is supply chain collaboration? In a nutshell, it’s what happens when two or more discrete organizations work closely together to meet shared objectives. These objectives are typically focused on cost reduction, customer service improvement, or raising specific aspects of supply chain performance.
Why is Supply Chain Collaboration Important?
There was a time when supply chains were, in the main, vertically oriented. A single company might have owned the processes of raw material sourcing, manufacturing, distribution, sales, and marketing, with the entire supply chain falling under the direct control of that one enterprise.
The same is rarely true today. Most supply chains are decentralized, sometimes involving dozens of companies, all playing different roles in the demand/supply cycle. With no single entity having complete control of materials, resources, strategy, or service quality, collaboration is the only way to unify the supply chain.
However, the concept of supply chain collaboration is not yet mature. In many cases, supply chains still comprise a mix of companies, some of which collaborate, while others maintain traditional supplier/buyer relationships.
About the writer:
Obella Marie D. Ronsairo. Loves to feature life and see the beauty of every side of the stories. Have been with the newsletter team for almost two years since becoming part of the MPTSouth family. Gained a lot of fun, experience and knowledge through this growing team and helped her to develop more of her skills in writing and creativity.
Francis J. Custodio. Is a Industrial Engineer who loves to think outside the box. Also like the saying “Work Smart not Hard”. Always curious and that curiosity led him to join the Southlink Newsletter. Loves to know “what make things tick”.