An article outlining the differences between cooperation and collaboration in supply chains, specifically the automotive supply chain. Published in the November 2009 issue of autoMOTIVE Logistics Leaders magazin: http://www.logisticsleaders.org/

1. Defining
Collaboration
Once and for All
By Marc A. Brazeau, Principal – AutoDiversity Management Inc.
(ADMi Consulting)
Industry Frustration common experiences that bind us together,
There’s no shortage of opportunity for than most other industries.
participants in the automotive industry’s While that closeness has resulted in a
supply chain to get together. We are, in fact, relatively well run global supply chain, with
a very small community, with a finite number manufacturing parts, service parts and vehicle
of original equipment manufacturers (OEMs) distribution networks coming from far and
that are, or will be shortly, competing on a wide, as an industry that prides itself on
global scale. The very high requirements continuous improvement, the call for more
demanded of service partners and logistics and more collaboration seems to get louder
service providers (LSP) to participate in the and louder every year. The comments we’ve
supply chain makes for prohibitive barriers to been hearing at the various industry events
entry for new players. The commercial recently are either “…we collaborate, and
relationship between OEM and LSP requires a we’ve been collaborating for years…” or
high degree of familiarity and an equal “…we’re not collaborating fast enough…”
amount of accessibility between the two to be and there never seems to be a consensus on
successful and, with the number of industry the direction that we need to be going in. But
associations, annual conferences and what are we truly talking about when we refer
common interest initiatives attended by most collectively to collaboration? Although we use
players, we have more opportunities to collaboration and cooperation
interact with one another, and share the interchangeably, could the disconnect

2. between our definitions be hindering us from exceptional’ is the level of cooperation
taking advantage of breakthrough between the players in accomplishing a
opportunities for innovation and common goal; the damage-free delivery of the
improvement? vehicle. That cooperation takes the form of
A common understanding of the effective forecasting and notification from the
terminology among the OEMs and LSPs would OEM to the carrier base, the coordination
help to focus all parties on opportunities to between services, terminal operators and
either cooperate or collaborate, with properly modal service providers to ensure capacity
defined priorities and expected outcomes that availability and interchange efficiency.
can be pointed to as successes in continuous Performance is directly impacted by, and
improvement and supply chain efficiency and dependent on, each participant in the process
finally answer the question of whether we are cooperating with those both upstream and
or aren’t ‘collaborating’ enough as an downstream from their individual
industry. responsibilities. As cooperation improves,
performance improves and, conversely,
Cooperation or Collaboration performance is hindered by poor
The dictionary provides us with the cooperation. So, when LSPs comment on the
following definitions: pace of cooperation and argue that they
• Cooperation: The act of working currently cooperate at a high level their
together, or jointly, for a common purpose or assessment is quite true and accurate.
benefit. The term ‘collaboration’ on the other hand
• Collaboration: The act of working one is more suitable when referencing the
with the other to cooperate, usually willingly, cooperation between participants of a more
with an adversary or enemy nation. similar company or activity profile, such as
Although very similar in meaning, there is OEMs collaborating with OEMs and LSPs
a distinct difference in that collaboration goes collaborating with LSPs. In this example,
further in suggesting that the relationships rather than cooperating operationally to
among those attempting to collaborate may achieve a common task, participants would
be adversarial, whereas there is no such collaborate to identify broader strategic
qualifier in the definition for cooperation. opportunities and/or close comparative gaps
With these definitions in hand, let’s go in industry processes or best practices. As an
further in our attempt to properly define our example, OEMs could collaborate on volume
cooperative activities by using examples from mixing processes, commonising co-loading
our industry. and handling standards and other network
Let’s think of cooperation as the practice improvements that would provide the LSP base
that allows for the effective, and sometimes with less complexity and more opportunity for
exceptional, transportation of vehicles consolidating volumes and operations. As for
between the manufacturing plant and the the LSPs, truck haulers already collaborate
dealer. What makes the process ‘sometimes within their modal competitive set when they

3. establish trip-leasing relationships with just different guiding principles that aren’t
competitors to overcome capacity constraints consistent with each other.
in their networks. Furthermore, LSPs in general • Opposing priorities or benefits: How do
can collaborate, and do, on co-production OEMs and LSPs then agree on the
opportunities (particularly with regards to rail collaboration priorities that best benefit the
operations), facility sharing and capital collective? How are the benefits defined in
investments to establish seamless and order to create win-win situations?
transparent networks that improve everyone’s • Purchaser/provider barrier: The natural
bottom line. tension between purchaser and provider
Therefore, both cooperation and when it comes to cost transparency. OEMs
collaboration happen in the automotive want complete cost transparency that LSPs are
supply chain. The confusion arises depending reluctant to provide lest it results in undue
on which side of the OEM/LSP equation you service price erosion.
fall. LSPs and OEMs have been cooperating These barriers tend to disappear, or are
successfully, and there have been certainly minimised, when the collaboration is
collaborative opportunities amongst the OEMs performed between common profile
as well as the LSPs. The problem sets in when companies. That’s not to say that there aren’t
OEMs and LSPs attempt the deeper specific considerations when collaborating
cooperation that collaboration implies. between participants of a similar profile, most
importantly anti-trust regulations around
Barriers to Effective Collaboration specific pricing and market influencing. These
Focusing on collaboration, and the reasons can be overcome more easily by using a
why it’s so difficult to develop effective programme structure that includes legal
opportunities, we need to explore the inherent counsel’s direction on avoiding specific
barriers to OEM and LSP collaboration. issues. This allows for a greater transparency
Strategic collaboration requires a lot more and openness amongst the participants for
transparency and sharing than operational those areas of study that fall outside of the
cooperation does to achieve tangible benefits anti-trust veil.
for all parties, and most times that
transparency is what impedes beneficial Continue Operational Cooperation
collaboration between OEMs and LSPs. and Establish Strategic Collaboration
Specific issues arise from: By using these definitions, tactical
• Dissimilar data and measurements: OEMs cooperation throughout the supply chain
and LSPs measure opportunity in diametrically participants and strategic collaboration
opposed methods. OEMs measure to reduce amongst the supply chain participants, we
overall cost and LSPs measure to improve can look beyond the question of whether we
overall profits. Neither is specifically wrong, are collaborating more or less, and whether
in fact both result in the commercial tension the efforts are paying off or merely wasting
that continuously improves our industry, it’s time.

4. Operational cooperation will continue and
procurement
should be supported by all parties in the
supply chain, and successes should be
promoted throughout the industry to highlight
the importance that everyone has always put
on the continuous improvement, efficiency
your essentialresource
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and productivity required to manage the
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In the end, effective collaboration Why procurement2010 is for you.
programmes should be established amongst
participants of similar profiles by following a
Over 12,500 targeted readers
few common sense guidelines: Handy, accessible on-line format
• Structure: The collaboration programme Updated quarterly to ensure on-going accuracy
Expert market analysis and forecasting for cars
needs to be structured effectively to ensure
and commercial vehicles
that a common issue, problem or opportunity
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Promoted on website, weekly newletters,
of similar profiles to promote transparency
monthly magazine, conferences
through common data, networks and business
and exhibitions
processes. Great value for money
• Dimensions: The specific areas of study
within the supply chain (strategy,
organisation, network design, cost drivers,
external affairs and systems) need to be
agreed upon by all participants prior to With procurement2010
engaging. you’re getting your message
By properly defining what cooperation
and collaboration mean to our industry, we
across to the people who
can avoid the confusion that currently comes matter!
up at industry events all over the world and
better promote the good work that everyone
does every day and the conscientiousness
For further information contact
and integrity of both OEMs and LSPs in
Peter Wooding:
maintaining and improving upon the high
levels of performance that the global
pw@logisticsleaders.org
automotive industry demands from its supply
+44(0) 208 882 1330
chain. a
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