2020 = The Decade of Collaboration
There are two macro trends that are poised to dramatically change our commercial Supply Chains:
- Technology
- Collaboration
The New York Times had a fun article about the rise of the internet enabled toaster oven. They tout the ability to use the internet to make the lowly toaster oven a “must have” tech gadget. What does this say about technology and the Supply Chain in 2020? Is the lowly toaster oven the newest supplier collaboration tool? What if we were able to integrate Technology and Collaboration in a groundbreaking way for the Supply Chain?
Technology
In the 70’s, the smartest people went into engineering, in the 80’s and early 90’s it was banking and finance, and now it is technology. We are now seeing some fundamental changes in technology driven by:
- Cheap memory and storage
- 2 decades of digitization
- Talent in the technology sector
- Financial backing of technology & innovation
Supply Chain Challenge & Technology
The big challenge for technology in Supply Chain applications is that no one player has all of the information (data). Until recently, Only the largest players have been able to create ‘closed loop’ data systems because they spent a lot of money and time getting the information into their one system. When the shipper, the consignee, the trucker and the 3PL all have unique data elements and all use different systems, how do you get the relevant data into one system where all of the data elements can be viewed in a comprehensive way?
Collaboration is a Challenge
Modern Supply Chain theory talks about “collaboration”. As early as 1990, collaboration in sourcing had already reached “buzzword” status. Management books are filled with case studies of Supply Chain collaboration providing dramatic reductions in cost and fantastic increases in service. For the most part, these success stories are either very large companies with large sticks to force partners to provide information, or unique situations where the partners and suppliers all have something to gain from the effort. Each of these cases required a visionary who wields a lot of power and has the resources to figure out the puzzle. For the most part, the disparate systems and lack of a way to knit data together has prevented large scale collaboration in the Supply Chain space, until recently.
What is Collaboration – Really?
We tend to confuse teamwork and cooperation with collaboration, but it’s important to remember that there is a difference. Teamwork is working together for a common goal. Cooperation is sharing information on related goals while collaboration is sharing ideas with one another without ego to achieve a common outcome for the greater good of the organization(s). Collaboration, In the Supply Chain space, means sharing information and working across multiple organizations, some of whom may be competitors.
Simply put if you are collaborating in the Supply Chain space, actors are working to optimize the entire system:
- suppliers
- logistics providers
- focus company
- etc
for the benefit of the end user. All parties must work together to share information. This collaboration results in a reduction of cost & complexity, and increases flexibility & responsiveness for the end user.
Opportunity – Collaboration
Of the changes in technology listed above, the most important one for collaboration is the ability to link disparate systems together to provide value. This is driven by the digitization that has taken place in the last decade or two, combined with the talent to figure it out. For Supply Chain practitioners, it is a bit of a dream come true. The ability to get relevant data from multiple partners in a comprehensive and cohesive way, at a reasonable cost.
2020 and Beyond
Supplier Collaboration is a huge opportunity. There is so much opportunity to do things better, but it all starts with:
- access to the data
- understanding of what the information means
- tools & ability to visualize the outcome.
Small steps are already being taken in the transportation technology sector. While some of the steps are small, important linkages are being made that create cornerstones for the next round of innovation. For example – the ELD (Electronic Data Recorder), located in the cab of nearly every truck is not yet being used to its fullest capability. The ELD unit provides automated data for compliance and potentially for tracking loads across many different systems. These small steps in compliance and tracking begin to build the scaffolding required for more comprehensive solutions.
There will always be the problem of people and companies trying to hold onto the past and trying to protect their particular advantages. (You got it, “Silo’s” was the answer to buzzword bingo!) However, the relatively low cost of technology, and the increasing value it provides means that the medium sized players now have an opportunity to compete effectively with the larger players. I am ready for a collaborative decade – are you? If that doesn’t work, at least we can buy an internet driven toaster oven!
Merry Christmas and Happy “Collaborative” New Year.
Reference: Gadget of the year: The Toaster Oven from the New York Times, Dec. 18, 2019 by Brian X. Chen.
About BEI Global
BEI Global is a Supply Chain and Logistics consulting firm focused on implementing solutions that drive improved value and profit. Learn more at www.BEIGlobal.com. If you have a response to this blog, please let us know what you think by e mailing: jim.matcham@beiglobal.com or kyle.alexander@beiglobal.com.