Supply Chain Collaboration

Supply chains by their very nature are made up of a chain of participants and it is very rare these days for a company to have a completely vertically integrated supply chain that involves no other members.

In view of the fact that there are many parties involved it is perhaps surprising to think that there is much antagonism in these relationships and little collaboration beyond the immediate needs of the task. In fact the contractual relationship that is often set up is based on the adversarial basis of English common law. An increased awareness of the advantages of partnership has however begun to change this attitude, helped often by Logistics Consultancies.

Collaboration can be evident in many different aspects of the supply chain and can be encouraged to grow in the already existing relationships between parties that have contractual relationships. Some supply chains have grown to be very complex with multiple stages in the process and information available between one set of partners could be very useful to partners elsewhere in the chain. One example of this could be found in the chains that exist in the food industry where traceability and the ultimate origin of food are becoming very important. These chains are often driven by the large supermarkets and their power to influence partners up and down the chain would be critical in increasing the level of collaboration.

The classic example of collaboration in the supply chain, under a contractual relationship, is the third party logistics provider (3PL) who needs to understand the client’s requirements in order to carry out their deliveries or replenishment activities. This has led to 3PLs managing several separate supply chains often visiting similar locations for different clients with separate partly filled vehicles. There are beginning to be examples of collaboration between companies in similar businesses who have set up vehicle sharing for deliveries, using the facilities of 3PLs to increase efficiency and deliver overall savings. There are similar types of arrangements where other companies delivering in the area can use a 3PLs vehicle servicing facilities such as refuelling to the benefit of all parties.

However the next stage of collaboration is already being envisaged. This could lead to the creation of networks of collaborating companies, perhaps sharing fleets and facilities in areas where they are less well represented and reducing an unnecessary level of duplication. The beginnings of this can be seen in the ideas of consolidation centres, already used in the largest construction projects but this could also be extended to provide services into the most congested and restricted city centres.

These ideas may take some time to come to fruition but are already being considered by major players in the logistics arena and we could well see some exciting developments coming soon.