People: The Key To Successful Supply Chain Collaboration

May 2, 2007
It is ultimately people, not organizations, that collaborate.

Whether it's in the area of inventory replenishment, demand forecasting, promotional event planning or transportation management, the need to collaborate with supply chain partners is becoming more and more ubiquitous. Based on the premise of enhanced supply chain visibility through information and risk sharing, collaboration continues to simultaneously represent one of the biggest opportunities, and challenges, of managing supply chains. Yet, the challenges seem to be outweighing the promise, when one considers the fact that at least 50% of collaboration initiatives reportedly fail.

Such dismal statistics may cause one to "wave the white collaboration flag" and surrender all hopes of leveraging closer supply chain exchange relationships. However, research on the collaboration phenomenon suggests that there is a silver lining in the collaboration cloud. What seems to be the biggest threat to the collaboration agenda is a wide-scale embracing of "collaboration myths."

In studying the collaborative relationships of numerous companies, we have learned that a prevalent misunderstanding stems from the belief that collaboration is a long-term contract. The fact is that collaboration is about people -- and people issues should be viewed as significantly important to successfully collaborating with supply chain partners. I have found that one of the key "people issues" to be mindful of is: Supply Chain Managers should consider the tactical/operational-level staff when pursuing collaboration.

I often ask executives if they consider the implications of pursuing collaboration initiatives. In most cases, the immediate response focuses on operational efficiencies and process integration. When pressed to think about the impact of collaborative agreements on the current exchange environment and "people infrastructure," additional issues begin to surface. At the core of these issues are the all-too-often instances of upper management agreeing to harmony in a world of difference at the operational/tactical level. Hence, while upper management across the supply chain have forged a collaboration agenda, the persons responsible for managing the day-to-day operations at the core of the collaborative agreement don't feel the same level of trust or commitment. As a result, the initiative may result in sub-optimal returns, as the desire to collaborate doesn't trickle down through all levels of the organizations involved.

I have found that a good way to work through these issues is to involve operational employees during the development phase of the collaboration arrangement. All supply chain partners involved should bring their operational point persons along during negotiations and discussions concerning the collaboration initiative. This always seems to bring to light some interesting potential operational "hiccups." But more importantly, the trust and commitment necessary to facilitate collaborative exchange is engendered, as lines of communication are opened and everyone is clear about the objectives.

During my years in industry, I made the mistake of not including support/operational personnel in developmental phases of such arrangements. I eventually learned my lesson after a series of "blow-ups" because of a lack of willingness to share information, a negative response when things didn't progress as planned, or an overall perception that I had "over-complicated" their jobs. Research suggests that lack of strategic commitment by operational-level personnel can sabotage a strategy, and many managers (including myself in a former life) run this risk by not integrating the persons who will actually do the day-to-day collaborating into the process early-on.

The key is that people are the essence of collaboration, as it is ultimately people, not organizations, that collaborate. So, once it is decided that collaboration with supply chain partners is strategically appropriate, developing and managing such relationships may require human resource strategies to ensure that the collaborative arrangement is facilitated and supported at all levels. This should involve communication of objectives, training, and if at all possible, involvement during the collaboration development. In the end, a contract may not be enough to ensure full collaboration at all touch-points with supply chain partners, so focusing on the people issues that are necessary to drive the collaboration agenda should be a paramount concern.

Terry Esper, Ph.D., is assistant professor of logistics at theUniversity of Tennessee. His research interests include supply chain relationship management, interorganizational learning, and supply chain personnel issues. He has published in several academic journals and teaches in the University of Tennessee Center for Executive Education.

For over 50 years, University of Tennessee (UT) faculty have played a major role in the supply chain/logistics arena -- conducting innovative research, publishing leading-edge findings, writing industry-standard textbooks, and creating benchmarks for successful corporate supply chain management. Programming is top-ranked in

Supply Chain Management Review, U.S. News & World Report and Journal of Business Logistics. Certification is available.

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