Guest Post: The Rewards of Collaborative Supply Chains, Part 2
Last week we looked at the three features of collaborative relationships between supply chain partners that, in our experience, are essential to the success of these cross-company groups.
To recap, Miami, FL, based Independent Purchasing Cooperative (IPC), a purchasing cooperative owned by franchisees of the Subway food outlet chain, and Berry Plastics, a packaging company headquartered in Evansville, IN, have developed a successful partnering arrangement in the logistics space.
In this final post of our two-part series, we consider the benefits of collaborating with a customer or supplier. It takes hard work and resources to establish this type of alliance; what are the returns that justify such an effort?
The opportunity to get to know each other is one of the main reasons.
Obviously, you know the companies that you do business with, but how familiar are you with these enterprises? Creating a collaborative group with the express purpose of establishing an open dialogue and sharing best practices takes the relationship to a higher level. Exploring each other’s experiences and operational nuances gives both parties an intimate sense of the respective challenges—both positive and negative—that they face.
This sharing of information also builds trust. For example, knowing why a customer or supplier reacts in a certain way in a given situation—or gaining a deeper understanding of the logistics landscape in which they operate—helps to eliminate misunderstandings and puts the relationship on a firmer footing. While it is very difficult to translate trust into a quantifiable metric, trustworthiness tends to improve both responsiveness and operational performance.
Being exposed to the other company’s experiences gives you a fresh perspective. Here’s an example from our collaboration. Berry Plastics has a transactional freight transportation model, whereas IPC uses a dedicated model. Having experienced some challenges with their model, particularly during periods when truck capacity was constrained, Berry was interested in finding out more about the dedicated side of the business. The relationship with IPC provided a unique opportunity to do this. Berry was able to gain first-hand insights into dedicated freight transportation issues and costs from a seasoned user—intelligence that is hard to find elsewhere.
New perspectives also encourage the participants to question accepted practices, and weigh alternatives. It is possible to benchmark your network against another in an open forum. Moreover, the experience of a collaborative partner is generally a better guide to the right course of action than trial-and-error implementations.
A key benefit—probably the most pertinent given the reasons why companies come together in this way—is improved KPIs and lower costs. This partnership has enabled us to develop innovative logistics solutions that would have been difficult to identify during routine, day-to-day communications between Berry and IPC personnel.
Logistics teams are under increasing pressure to raise the performance bar and find ways to lower costs. Of course, collaborating with customers and suppliers is not the only route to a more efficient freight network, but it is one that we believe offers huge opportunities.