Sometimes it might happen that companies come together for supply chain collaboration but the senior management does not show much enthusiasm towards this collaboration. Hence the whole motive is diluted while passing it down from the senior management to the middle management. Thus, the resources are not used optimally and result is collaboration failure. The senior management might be involved in various other important works and the handling collaboration might have been assigned to the middle or the lower management. The middle and the front management do not see a bigger picture, and then are not able to envisage the benefits which the collaboration might produce in future.
In order to make the collaborations work, the companies should navigate their differences and apprehensions in the organisational culture and structure and try to align the objectives as per the organisational goals. However, it might happen that the history between the two organisations might make the management reluctant to share vital information. The information might be critical for the collaboration to work. The companies’ not sharing information start working in their separate silos which results in failure of the collaboration.
The collaboration has many benefits. The benefits include lower out of stock levels, lowering of transportation and warehousing cost, lead time would be shorter. Customer demand would be clear, quick decision making and similar benefits. The benefits surpass the efforts which the company needs to put in for the collaboration to work. The cost of inventory and warehousing comes down drastically. The only pitfall being that the collaboration should work out so as to reap the benefits. In the middle, if the differences arise, then it will affect the working of the two firms negatively and all the benefits would go in vain as the collaboration would not work out.
Steps to coordinate supply chain as a whole entity
Companies should collaborate in areas with strength:
Companies sometimes collaborate in order to fill up the gaps in order to strengthen the areas of weakness. This is however not the right approach. Collaborations based on strengths rather than on weaknesses are often successful. And in such cases, both the collaborating firms have a lot to learn. The company might not have control on the collaboration, but if the collaboration is built on the strength, then the area of strength would automatically give the firm control over the collaboration. Leveraging on the strength would give the firms impetus to understand the capabilities earned due to the collaboration and what value additions will the collaboration bring on the table for both the firms.