by Obella Marie D. Ronsairo and Francis J. Custodio, MAY 2021
With the ever-increasing movement towards online business, all focus has shifted to optimizing the supply chain for greater speed and efficiency. The key, according to management consultancy Logistics Bureau, lies in integrating all elements of the supply chain so that the companies involved in the process are operating as a single network or trading exchange. Integration is about aligning a firm’s logistics operations with other companies, such as suppliers and customers, across its supply chain, the more simple you make your supply chain, the less chance there is of something going wrong. The need to integrate the supply chain by creating a seamless relationship between suppliers, customers, and our own logistics operations is tantamount to achieving cost and service improvements.
With technology driving deeper specialization and the interoperability of products and services, the traditional notion of fixed supply chains is pretty much gone and is being replaced by a new norm of virtual supplier eco-systems.
Modern supply chain management is no longer a top-down, command and control discipline. Teamwork, collaboration, and leveraging complex multi-party relationships are the keys to unlocking value creation for your customers. If you think about how the transformation of raw materials into finished goods and services takes place in your industry, you will probably find many layers of companies each providing narrowly focused (specialized) value-add activities and services.
Rarely will you find one (or a few) companies controlling the vertically integrated end-to-end supply chain? This is a good thing as specialization leads to increased competition, more competitive pricing, and higher quality components. It also provides options for companies to adjust resource capacity to meet changing business demands and re-configure supply chains to respond to risks and opportunities in the marketplace.
As companies leverage suppliers for supply chain activities, one of the biggest challenges is the fragmentation of data and the ability to assemble the big picture perspective of what is going on in the end-to-end supply chain. This makes it difficult to evaluate performance, diagnose problems and optimize cost and capacity. Sharing supply chain information among the different players in the value chain is essential to enabling everyone to see how they are contributing to the end-product provided to the customer.
Visibility of what is going on in your supply chain is great but translating that into operational improvement requires healthy relationships amongst supply chain participants. It can be tempting for companies to rely heavily on contracts, service level agreements, and other formal structures as the basis of brokering cross-company interactions. While these are important tools, they are meant to establish a baseline level of expectations, not to limit other forms of collaboration.
The best supply chain relationships involve an acknowledgment by all parties of the common mission they share and the shared impact of failures at any point in the supply chain. If customers don’t receive the end-product or service they expect, they will get it from someplace else, meaning everyone in the supply chain loses the business. Simply stated, you win together, or you lose together. Teamwork is needed for different companies (with different individual goals) to work together to deliver value-add products and services effectively and efficiently. This starts with underpinning contracts but must also extend to the sharing of information and collaborating to solve problems.
Many companies struggle with cross-departmental collaboration and when you layer in the complexities of working across companies, the task becomes even harder. That doesn’t mean it is impossible and because of the nature of modern supply chains, learning how to facilitate problem-solving across a supply-chain ecosystem is essential to long-term business success. For over 60 years, the problem-solving experts at Kepner Tregoe have been working with clients to develop leadership capabilities, operational processes, and employee skills to enable Operations Excellence.
To improve their organizational effectiveness, many supply chain organizations are looking toward teamwork and collaboration, both internally and with external partners. They see the potential payoff of employees working together and sharing mutually beneficial information with other internal groups and with supply chain partners. Collaboration frequently comes up as a top priority, in the supply chain and beyond. However, collaboration is not something that organizations can simply adopt and be done with. A well-planned collaboration effort must be strategic and it takes work to adopt and sustain.
As with most new initiatives, whether or not they are in leadership, employees need convincing that their efforts are worthwhile. Leadership must be made aware of how teamwork and collaboration can lead to benefits within the business, as well as how collaboration with external partners can lead to further benefits. Leaders can become engaged in collaboration efforts by having a say in the focus of these efforts. Organizations can create steering committees that include members of leadership. Those committees can then take ownership of the organization’s collaboration effort.
To ensure a successful effort, leadership should also make sure that measures across the organization are aligned. At its core, internal collaboration involves cooperation among departments. If measures among departments are not aligned, or if they create competition among groups, employees will not be motivated to work with other groups. Leadership needs to be united in communicating the importance of collaboration. Mixed messages from management can thwart efforts to have employees collaborate with those of other groups.
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”.