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Allfresh 2012 lin
This document discusses collaboration in the fresh fruit supply chain. It begins by defining collaboration and providing examples. It then discusses why companies collaborate, considering both shared and conflicting goals. It examines the types of partners companies may collaborate with, such as customers, suppliers, competitors, or non-competitors. The document also explores different models of collaboration, such as one-to-one or many-to-many relationships. It provides a schematic of the fresh fruit supply chain and asks which role readers play within it. Finally, it discusses enablers and forms of both vertical and horizontal collaboration within supply chains.
Allfresh 2012 lin
- 1. Collaboration in the FreshFruit Supply Chain Danie Schoeman 2 October 2012
- 2. Collaborate collaborate kə-ˈla-bə-ˌrāt intransitive verb 1:to work jointly with others or together especially in an intellectual endeavour 2: to cooperate with or willingly assist an enemy of one's country and especially an occupying force 3: to cooperate with an agency or instrumentality with which one is not immediately connected Other forms: col•lab•o•rat•ed; col•lab•o•rat•ing — collaboration noun — collaborative adjective or noun — collaboratively adverb — collaborator noun Examples 1. The two companies agreed to collaborate. 2. He was suspected of collaborating with the occupying army. Merriam-Webster Online Dictionary
- 3. Easy Peasy … …Not! Jbid Arsenyan, Gülçin Büyüközkan, Orhan Feyzioğlu; Modelling Collaboration Formation with a Game Theory Approach, WCE 2011, July 6 - 8, 2011, London, U.K.
- 4. Why collaborate? • Isthe driving force to establish a collaborative relationship truly a shared goal, like improving on-shelf availability, or is it more selfish in nature such as… …to improve sales and/or profits of your company? …to take market share away from your competitors? …to reduce your company’s supply chain costs? …to eliminate or reduce investments in physical assets? …to transfer costs and risks to other parties in your supply chain? …to create a more flexible and responsive supply chain? • How can parties in the supply chain organize themselves around a shared goal when they also have many conflicting objectives? • Do conflicting goals get in the way of collaboration? • Can you really collaborate if everyone wants the benefits but none of the risks, costs, and assets?
- 5. Who to Collaboratewith? • When you take into account the potential benefits of a prospective collaborative relationship, and how easy or difficult it will be to set up and manage, which type of partner provides the best opportunity for success? – Collaborating with a customer? – A supplier? – A competitor? – A company outside your industry? – A 3PL?
- 6. How to Collaborate? •Which model works best, and in which cases? – One-to-One within Industry: Direct relationship between your company and one other company in your industry (customer, supplier, etc). – One-to-One outside Industry: Direct relationship between your company and one other company outside your industry. – Many-to-One within Industry: Relationship between your company and several other peers to serve a single, common customer (likely facilitated by a third party). – Many-to-Many within Industry: Relationship between your company and several other peers to serve multiple common customers (likely facilitated by a third party). – Many-to-Many outside Industry: Ad-hoc or structured relationships between your company and a network of other companies from different industries facilitated by a third party. So many questions, so few answers … Adrian Gonzalez, (2011), “Unravelling the True Meaning of Supply Chain Collaboration”, logisticsviewpoints.com
- 7. Schematic Representation ofthe Fresh Fruit Supply Chain Packer Landside Transport Grower/ Producer Cold Store Re-packerFreight Carrier Regional Warehouses Distribution Retailer Consumer Importer Activities (Demand Side) Exporter Activities (Supply Side)
- 8. Question • Which roledo you play in the supply chain? 1. Shipper 2. Logistics Service Provider (3PL/4PL) 3. Transportation Carrier (Air, Ocean, Road or Rail Carrier) 4. Solutions/Technology Provider or Consultant 5. Other
- 9. A Framework forSupply Chain Collaboration in the Agri-food Industry Managing Trust Supply Chain Collaboration Managing Power Designing & Governing SC Activities Establishing & Maintaining SC Relationships Managing Dependence Sharing Risks Selecting Partner (number of entries) Selecting Information & Data Sharing Techniques & TechnologiesCollaboration Width (SC activities) Collaboration Depth (Strategic, tactical, operational) Sharing Rewards Adapted from A. Matopoulos, M. Vlachopoulou, V. Manthou, B. Manos, (2007),"A conceptual framework for supply chain collaboration: empirical evidence from the agri-food industry", Supply Chain Management: An International Journal, Vol. 12 Iss: 3 pp. 177 - 186
- 10. Enablers That CanFacilitate Supply Chain Collaboration • Common interest – both parties have a stake in the outcome of the collaboration to ensure ongoing commitment. • Openness – collaboration partners must openly discuss their practices and processes. Sometimes this means sharing information that is traditionally considered propriety. • Mutual help – when addressing supply chain problems or opportunities, look for cross-company solutions. • Clear expectations – all parties need to understand what is expected of them and the others in the relationship. • Leadership – without a champion, collaboration will never be accomplished. Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
- 11. Enablers That CanFacilitate Supply Chain Collaboration • Co-operation, not punishment – focus on jointly solving problems, not looking for someone to blame. • Trust – this must be evident throughout both organisations – at every management level and functional area. • Benefit sharing – in a truly collaborative relationship, partners share the pain, the risks and the losses. • Technology – advanced technology is essential to enabling a collaborative relationship across the supply chain. Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
- 12. A Framework forSupply Chain Collaboration in the Agri-food Industry Managing Trust Supply Chain Collaboration Managing Power Designing & Governing SC Activities Establishing & Maintaining SC Relationships Managing Dependence Sharing Risks Selecting Partner (number of entries) Selecting Information & Data Sharing Techniques & TechnologiesCollaboration Width (SC activities) Collaboration Depth (Strategic, tactical, operational) Sharing Rewards Adapted from A. Matopoulos et. al.
- 13. Forms of SupplyChain Collaboration Suppliers External Own Company Internal Competitors External Customers External Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008) Non-Competitors External
- 14. Own Company’s ValueChain Outbound Logistics Inbound Logistics Operations Marketing and Sales Services Firm Infrastructure Procurement Human Resource Management Technology Development Primary Activities SupportActivities Michael Porter, (1985), Competitive Advantage
- 15. Own Company’s ValueChain Outbound Logistics Inbound Logistics Operations Marketing and Sales Services Firm Infrastructure Procurement Human Resource Management Technology Development Primary Activities SupportActivities Michael Porter, (1985), Competitive Advantage
- 16. The Value Systemfor the Company Supplier’s value chains Firm’s value chain Channel’s value chains Buyer's value chains
- 17. Typical Vertical SupplyChain Collaboration Supplier’s value chains Firm’s value chain Channel’s value chains Buyer's value chains
- 18. Evolution of SupplyChain Practices and Inter-organizational Governance Retailer’s store Retailer’s warehouse Manufacturer’s warehouse Manufacturer’s factory Raw materials Consumer Product flowInformation flow Low HighBenefits and Costs of Collaboration Relational contracting Standard contracting CRP DRP CPFR ECR Vertical integration
- 19. Forms of SupplyChain Collaboration Suppliers External Own Company Internal Competitors External Customers External Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008) Non-Competitors External
- 20. Typical Horizontal SupplyChain Collaboration with a Competitor Supplier’s value chains Firm’s value chain Channel’s value chains Buyer's value chains • To bundle complementary goods • To bundle non-related goods • To share information
- 21. Typical Horizontal SupplyChain Collaboration with a Non-Competitor Supplier’s value chains Firm’s value chain Channel’s value chains Buyer's value chains • To bundle complementary goods • To bundle non-related goods • To share information
- 22. Typical Horizontal SupplyChain Collaboration with a Non-Competitor Supplier’s value chains Firm’s value chain Channel’s value chains Buyer's value chains • To bundle complementary goods • To bundle non-related goods • To share information
- 23. Specific Horizontal SupplyChain Collaboration with a Non-Competitor • Exchange of knowledge
- 24. Question • What isyour current experience with horizontal collaboration? 1. Collaborated with competitor (complementary goods) 2. Collaborated with competitor (non-related goods) 3. Collaborated with competitor to share information 4. Collaborated with non-competitor (complementary goods) 5. Collaborated with non-competitor (non-related goods) 6. Collaborated with non-competitor to share information 7. At pilot stage of horizontal collaboration 8. Researching horizontal collaboration 9. Considering research into horizontal collaboration 10. Waiting to see what other companies are doing 11. No interest in horizontal collaboration at the moment
- 25. Shippers’ Experience withHorizontal Supply Chain Collaboration 0% 5% 10% 15% 20% 25% 30% No interest in horizontal collaboration at the moment Waiting to see what other companies are doing Considering research into horizontal collaboration Researching horizontal collaboration At pilot stage of horizontal collaboration Collaborated with non-competitor to share information Collaborated with non-competitor (non-related goods) Collaborated with non-competitor (complementary goods) Collaborated with competitor to share information Collaborated with competitor (non-related goods) Collaborated with competitor (complementary goods) European Supply Chain Horizontal Collaboration Report (2010)
- 26. Objectives of Horizontal SupplyChain Collaboration Objectives Possible Results Lower logistics cost • Improved use of transport/storage facilities • Economies of scale in deliveries to customers Higher service levels • Shorter throughput times to customers • More frequent deliveries to customers Higher turnover/market share • Collaborative distribution channel to customers • Shared offer for new/potential customers Reduced investments • Shared investment in DCs and handling activities • Shared investment in transport Sustainable logistics • Reduction of CO2 footprints • Improvement in fuel/energy use Knowledge exchange • Exchange of best practices • Shared innovation Samewerking in de logistiek, Kees Verweij, TNO (2008)
- 27. Key Drivers EncouragingShippers to Consider Horizontal SC Collaboration 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Enabling modal shift Reducing congestion Cutting reverse logistics costs Cutting maintenance & operations costs Being amongst industry leaders & innovators Lowering carbon emissions Cutting sourcing costs Cutting storage costs Improving delivery times Reduce empty running Improving overall efficiency Enhancing customer service Cutting distribution costs Cutting transport costs Very Important Quite Important Important Somewhat Important Not Important European Supply Chain Horizontal Collaboration Report (2010)
- 28. Top Success Factorsfor Horizontal Supply Chain Collaboration • Lower logistics costs provides the start, but higher service levels for the customer keeps it going • Collaboration is easier to set-up with non-competitive partners • Benefits should be shared fairly, but this does not have to be transparent • Make clear and timely agreements on stepping in or out of the consortium • Continue to think about each other’s reasons to collaborate • Invest in a fit between people and partners • Reaching benefits of collaborating takes time – be flexible Samewerking in de logistiek, Kees Verweij, TNO (2008)
- 29. Shipper Methods ofFinding Partners for Horizontal Supply Chain Collaboration 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Other With the help of a carrier Searching for partners with same carriers With the help of a consultant or orchestrator Seeking partners with complementary goods Being approached by potential partners Searching for partners that can be trusted Comparing trade flows & delivery information Searching for partners with similar goals Searching for partners with same 3PLs Searching for partners by industry With the help of a 3PL or 4PL European Supply Chain Horizontal Collaboration Report (2010)
- 30. A Framework forSupply Chain Collaboration in the Agri-food Industry Managing Trust Supply Chain Collaboration Managing Power Designing & Governing SC Activities Establishing & Maintaining SC Relationships Managing Dependence Sharing Risks Selecting Partner (number of entries) Selecting Information & Data Sharing Techniques & TechnologiesCollaboration Width (SC activities) Collaboration Depth (Strategic, tactical, operational) Sharing Rewards Adapted from A. Matopoulos et. al.
- 31. Technology Alone isnot the Answer • Benefits can flow from the right technology: – Allow a company to communicate with its suppliers at all levels – Can help a break down barriers between companies – Speed up information flows – Can turn data into useful collaborative information • It should be emphasised that technology in and of itself is not enough – a human contribution is essential
- 32. Inter-organizational Systems for SupplyChain Collaboration Uniqueness of Processes Degree of Inter-organizational Integration (processes, systems, and data) Type of Relationship CustomizedStandardized Tight Loose Many-to-Many One-to-Many One-to-One Third-party Electronic Marketplace EDI/EAI Offline Trade Exchange eProcurement Hub/Portal Web-based Order Entry Offline Auction Shared Collaborative Systems Fax/ Email Phone T. McLaren, M. Head, Y. Yuan, (2002) "Supply chain collaboration alternatives: understanding the expected costs and benefits“, Internet Research, Vol. 12 Iss: 4, pp.348 - 364
- 33. Expected Overall Cost-Benefitof Supply Chain Collaboration Systems Costs (ownership and opportunity costs) Benefits (market responsiveness and supply chain cost reduction) Third-party Electronic Marketplace EDI/EAI Offline Auction eProcurement Hub/Portal Web-based Order Entry Shared Collaborative Systems Fax/Email PhoneLow High High Low Offline Trade Exchange Adapted from McLaren et. al. (2002)
- 34. Benefits of RealTime Information Sharing Retailer’s store Retailer’s warehouse Manufacturer’s warehouse Manufacturer’s factory Raw materials 2-3 days 2-3 days1-2 days 1-2 days 1-2 days 1-2 days 1-2 days 1-2 days Total: 10-18 days Total: 4-8 days Demand spikes 250% Traditional supply chain 1-2 days 1-2 days 1-2 days 1-2 days Total: 4-8 days Demand-driven supply chain The flow of information and products across a hypothetical supply chain Demand spikes 250% Product flowInformation flow Real time information – no delay in passing information across the supply chain Adapted from John Budd, Claudio Knizek, and Robert Tevelson, (2012), “The Demand-Driven Supply Chain: Making It Work and Delivering Results”, bcg.perspectives
- 35. The Value ofShared Information Average Maximum Numerical Study 2.2% 12.1% Simulation Model 3.4% 13.8% Gérard P. Cachon, Marshall Fisher, (2000) “Supply Chain Inventory Management and the Value of Shared Information”, Management Science, Vol. 46 no. 8, pp. 1032-1048 Percentage SC Cost Reduction of Full Information Policy vs. Traditional Information Policy • Traditional Information Policy = exchange order information only • Full Information Policy = exploit shared information
- 36. The Value ofShared Information Average Half Lead Times 21% Half Batch Sizes 22% Reduction of lead times and batch sizes due to faster and cheaper order processing • Implement IT to accelerate and smooth the physical flow of goods through a supply chain Gérard P. Cachon, Marshall Fisher, (2000) “Supply Chain Inventory Management and the Value of Shared Information”, Management Science, Vol. 46 no. 8, pp. 1032-1048
- 37. Case Study Apple 12,5kg equivalent to Europe in week 14 (Rand Values) Value Chain Element Rand Value Retail Selling Price 175.00 Retail Profit 42.00 Efficiency driven SC Costs 48.94 Other SC Costs 38.57 Gross Farm Income 45.49Europe transport; R 4,25 Importer’s commission; R 8,65 Europe logistics; R 13,00 Europe duties; R - Freight; R 26,88 Insurance; R 0,75 Exporters commission; R 5,10 Port cost; R 2,26 Wharfage; R 0,42 Transport to port; R 2,13 Finance charges & Interest advances; R 1,00 Levies; R 0,30 PPECB/Inspections; R 0,36 Packing materials; R 11,08 Packing charges (Tipping Cost); R 11,33 Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
- 38. Value Chain ElementRand Value Retail Selling Price 126.75 Retail Profit 29.25 Efficiency driven SC Costs 30.31 Other SC Costs 24.09 Gross Farm Income 43.10 Case Study Grape 4,5 kg equivalent to Europe in week 52 (Rand Values) Europe transport; R 6,50 Importer’s commission; R 7,28 Europe logistics; R 5,85 Europe duties; R - Freight; R 13,40 Insurance; R 0,75 Exporters commission; R 4,00 Port cost; R 0,50 Wharfage; R 0,16 Transport to port; R 3,90 Finance charges & Interest advances; R 0,50 Levies; R 0,36 PPECB/Inspections; R 0,30 Packing materials; R 8,60 Packing charges (Tipping Cost); R 2,30 Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
- 39. Case Study Citrus 15kg equivalent to Europe in week 27 (Rand Values) Value Chain Element Rand Value Retail Selling Price 159.25 Retail Profit 42.97 Efficiency driven SC Costs 56.66 Other SC Costs 42.17 Gross Farm Income 17.45Europe transport; R 10,59 Importer’s commission; R 5,60 Europe logistics; R 13,00 Europe duties; R - Freight; R 25,93 Insurance; R 0,63 Exporters commission; R 5,36 Port cost; R 5,00 Wharfage; R 0,23 Transport to port; R 1,91 Finance charges & Interest advances; R 0,90 Levies; R 0,32 PPECB/Inspection s; R 0,22 Packing materials; R 11,08 Packing charges (Tipping Cost); R 18,06 Based on data from Malcolm C Dodd, “Transport Logistics and the Fruit Export Value Chain”, Post Harvest Innovation Programme
- 40. Case Study Saving dueto efficiency driven by Information policy Saving due to acceleration and smoothing the physical flow of goods R1.07 to R5.92 per carton R10.27 R0.66 to R3.66 per carton R6.36 R1.24 to R6.85 per carton R11.89 FPT Analysis based on data from M.C. Dodd & G.P. Cachon et. al.
- 41. Question • What areyou willing to share with companies in a horizontal collaboration relationship? 1. Truckloads via a carrier 2. A third party's warehouses 3. Company's own warehouses 4. Nothing - not collaborating 5. Reverse logistics 6. Demand planning information 7. Another company's warehouses 8. Another company's fleet 9. Forecasting information 10. Inventory information 11. Assembly 12. Fleet 13. Order management systems 14. Repairs 15. Other
- 42. What Shippers ShareDuring Horizontal Supply Chain Collaboration European Supply Chain Horizontal Collaboration Report (2010) 0% 5% 10% 15% 20% 25% 30% 35% 40% Other Repairs Order management systems Fleet Assembly Inventory information Forecasting information Another company's fleet Another company's warehouses Demand planning information Reverse logistics Nothing - not collaborating Company's own warehouses A third party's warehouses Truckloads via a carrier
- 43. A Framework forSupply Chain Collaboration in the Agri-food Industry Managing Trust Supply Chain Collaboration Managing Power Designing & Governing SC Activities Establishing & Maintaining SC Relationships Managing Dependence Sharing Risks Selecting Partner (number of entries) Selecting Information & Data Sharing Techniques & TechnologiesCollaboration Width (SC activities) Collaboration Depth (Strategic, tactical, operational) Sharing Rewards Adapted from A. Matopoulos et. al.
- 44. Managing Horizontal SupplyChain Relationships Is Not Easy! • 4 of the top 5 hurdles for horizontal supply chain collaboration is about establishing & maintaining supply chain relationships – Competition between partners plays up from time to time – Is there enough trust and dedication between partners? – Chain dominance is an issue – who keeps the collaboration going? – Discussion about “fair” division of collaboration benefits – Linking operational processes and information systems takes time Adapted from Samewerking in de logistiek, Kees Verweij, TNO (2008) Information system related
- 45. Trust and Dedicationis Essential for Horizontal Supply Chain Collaboration Samewerking in de logistiek, Kees Verweij, TNO (2008) “Collaboration is of strategic importance for us …” Collaboration is ‘hot’, but choices have to be made … “… but it should be profitable within a year” “You are our collaboration partner …” “Partners are of the greatest importance …” “We are totally committed to our partners …” “… so the price has to go 20% down” “… therefore we have a 100 of them” “… and to all their competitors” … Otherwise collaboration will be difficult in practice
- 46. Question • Why wouldyou not participate in a horizontal collaboration relationship? 1. Fear of information disclosure to competitors 2. Lack of widespread acceptance of the idea 3. Difficulty establishing relationships of trust 4. Difficulty finding appropriate partners 5. Lack of industry case studies 6. Lack of internal knowledge 7. Lack of legal framework and contract templates 8. Don't want to work with competitors 9. Lack of support from top management 10. Lack of IT infrastructure and/or support 11. Lack of support from logistics service providers 12. Lack of gain sharing models 13. Lack of regulatory framework 14. Lack of exit strategy from legal standpoint 15. Lack of support from carriers 16. Enough improvement with internal efficiencies 17. Lack of clarity over who is in charge 18. Lack of support from operations management 19. Against company policy
- 47. Barriers Stopping Shippersfrom (Further) Investment in Horizontal SC Collaboration 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Against company policy Lack of support from operations management Lack of clarity over who is in charge Enough improvement with internal efficiencies Lack of support from carriers Lack of exit strategy from legal standpoint Lack of regulatory framework Lack of gain sharing models Lack of support from logistics service providers Lack of IT infrastructure and/or support Lack of support from top management Don't want to work with competitors Lack of legal framework and contract templates Lack of internal knowledge Lack of industry case studies Difficulty finding appropriate partners Difficulty establishing relationships of trust Lack of widespread acceptance of the idea Fear of information disclosure to competitors European Supply Chain Horizontal Collaboration Report (2010)
- 48. Using the ClusterFramework to Foster Collaboration • What is a Cluster? – According to Michael Porter: a cluster is defined as geographic concentration of inter-connected companies and institutions working in a common industry – In addition, clusters encompass an array of collaborating and competing services and providers that create a specialized infrastructure, which supports the cluster’s industry – Finally, clusters draw upon a shared talent pool of specialized skilled labour • The economic cluster model, represents a synergy, a dynamic relationship and a network between not only the companies that comprise a cluster but also the successful partnering of the stakeholders such as government, education, and other supporting organizations vital to a regions economic success
- 49. Porter’s Model ofCompetitive Advantage a.k.a. The Diamond Model Firm Strategy, Structure and Rivalry Related and Supporting Industries Factor Conditions Demand Conditions Chance Government Michael Porter, (1990), “The Competitive Advantage of Nations”
- 50. The Successes ofClusters • Many successful clusters have established a greater competitive advantage and wealth creation for their regions when compared to companies not in a cluster • It is because of this success that more and more policy makers and regions are considering fostering cluster development as building blocks of regional economies
- 51. Creating a ClusterFramework • The following steps aim to create a cluster framework that is demand- driven, inclusive, collaborative, strategic, and value-creating: 1. Mobilization – Building interest and participation among different constituencies needed to carry out the cluster initiative. 2. Diagnosis – Assessing the industry clusters that comprise the economy and the economic infrastructure that supports cluster performance. 3. Collaborative Strategy – Convening stakeholders (companies in each cluster, as well as public and private supporting economic institutions) into working groups. The intent is to identify priority challenges and action initiatives that can address shared problems. 4. Implementation – Building commitment of cluster working group participants and regional stakeholders to actions. Implement the actions identified as results of the collaborative process. Additional implementation activities included the identification or creation of an organization to sustain implementation.
- 52. Cost Benefit Modelfor Supply Chain Collaboration System Implementation and Integration Cost Process Coordination and Integration Cost Data Translation and Integration Cost Partnership Instability Cost Switching Cost Total Cost of Ownership of System Costs Partnership Opportunity Cost Responsiveness to Market Benefits Costs and Benefits Process Cost Reduction Market Intelligence Gains Service Level Gains Cycle Time Reduction Inventory Cost Reduction Performance Measures Results Product Cost Reduction Net Benefits of Collaborative SCM Supply Chain Cost Reduction T. McLaren, M. Head, Y. Yuan, (2002) "Supply chain collaboration alternatives: understanding the expected costs and benefits“, Internet Research, Vol. 12 Iss: 4, pp.348 - 364
- 53. Benefits of SupplyChain Collaboration • The greatest benefit that can be expected is financial: – Reduced inventory – Improved customer service – More effective use of human resources – Better delivery through reduced cycle times Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
- 54. Benefits of SupplyChain Collaboration • Non-financial benefits: – Faster speed to market of new products – Stronger focus on core competencies – Enhanced public image – Greater trust and interdependence – Increased sharing of information, ideas and technology – Stronger emphasis on the supply chain as a whole – Improved shareholder value – Competitive advantage over other supply chains All of these benefits eventually affect the bottom line, whether directly or indirectly. Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
- 55. Collaboration Impediments -Factors to Fail • Doing things the old way – there is a natural resistance to change that confronts any broad initiative such as supply chain collaboration. • Conventional accounting practices – focus on the traditional accounting role of determining the value for a single firm, rather than measuring cross-company values and providing the measurement tools necessary to guide collaborative efforts to share these gains, will undermine collaboration. • Tax laws – dictate the need for a clear “price paid” and “price sold” to determine profitability – all of which obscures the synergistic, and often indirect, cost savings that are primary drivers of supply chain collaboration. • Competition/Anti-trust laws – information shared for the purpose of supply chain collaboration may be considered collusive activity. Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
- 56. Collaboration Impediments -Factors to Fail • Limited view of the supply chain – this is a residual effect of the traditional silo organisational structure in which people think only about their own functional areas. • Annual negotiation process – annual negotiations consume time and energy, plus they are usually adversarial. There is no room for adversarial relationships in collaboration. • Time investment – collaboration takes time and a lot of hard work. To get people to make the necessary effort, they have to be clearly shown the potential benefits. • Inadequate communications – when communication between supply chain partners is non-existent or inadequate, the potential for problems increases exponentially. • Inconsistency – behavioural attitudes and operational execution must be consistent at all interfaces in the supply chain relationship. • Betrayal – lying, misleading, misrepresenting – these may be the ultimate barriers to a successful collaborative relationship. Dr John T Mentzer, (2001), “Managing Supply Chain Collaboration”, Supply Chain Management, pp 83 - 84
- 57. In Conclusion • Collaborationis not easy • Collaboration has two main aspects to it – Designing & Governing SC Activities – Establishing & Maintaining SC Relationships • There are various forms of SC collaboration – Vertical – Horizontal – Network
- 58. In Conclusion • HorizontalSC collaboration gives us the four important things we need to be successful in the fresh fruit industry – Cutting transport costs – Cutting distribution costs – Enhancing customer service – Improving overall efficiency • The fresh fruit industry has the IT systems and infrastructure available –just use it • Collaboration saves us money • Collaboration is all about relationships – we have to work at it constantly • The cluster framework gives us a mechanism to collaborate legally