Friday 28th Oct 2016 - Logistics Manager

Time for togetherness

In the dark days of Nazi-occupied Second World War France, collaboration was a dark word as, first the Vichy government then, increasingly individuals worked with the enemy against the good of the French people.

In the brighter days of twenty-first century supply chains, the word collaborate has an altogether different connotation for most people, as companies seek to extract ever more commercial advantage from their operations.

Martin Christopher once famously maintained that the future is about supply chains rather than companies competing on a global scale.

For many years, UK logistics operations have yielded cost savings and efficiency gains as stocks and therefore working capital has been dramatically reduced, handling revolutionised and holistic systems developed. As the incremental savings/efficiency gains peaked for internal operations, managers moved to managing the supply chain as a series of supplier/customer relationships.

Initiatives such as “collection by store returning vehicles”, pioneered by Marks & Spencer and Gist’s predecessor many years ago, are now commonplace to extract maximum value from the supply chain.

Such examples are relatively straightforward where they are contained within a single supply chain because they can be handled through a series of customer/supplier relationships. The grocery retailers have spectacularly gained absolute control of their supply chains through that process.

However, the real challenges for modern day collaboration have come from the need to collaborate across supply chains.

There is an important evolution process here which runs as follows: maximise the efficiency of your own operation then maximise the efficiency of the supply chain in which you operate, then identify other, non-competing supply chains and collaborate with companies in those and finally – and this demands a very mature approach – collaborate with your competitors.

First let’s look at collaborating with noncompeting supply chains. In many ways, this is the lot of the canny haulier or 3PL as backloads are sought for one-way flows.

There are some good examples of this within the United Kingdom as trains carrying groceries to Scotland head back south filled with Scottish products.

For some years now, especially on a European scale where the prizes of collaboration are that much more obvious, a number of companies have been inching towards embedding collaboration into their supply chains. A good example is the arrangement between Kimberly-Clark and Nestlé.

Such non-competing supply chains, both ending in food retail outlets, are good examples of a bad cliché – a win-win situation.

The next and final stage in the evolution is collaborating with your competitors.

I can think of many a boardroom where the suggestion of such collaborations would be instantly dismissed. However, such collaborations do exist, albeit over non-competing parts of the supply chain. A well known example is Scandinavian paper producers collaborating on joint transport by sea to southern Europe and then resuming competition between their supply chains from the inbound port onwards. So there is scope for such collaboration between competitors but is there more scope still by identifying noncompeting functions on which to collaborate.

Clearly, some functions such as finance and pricing are no-go areas because there will always be a fine line between collaboration and anti-trust.

However, skills development and maybe some wider aspects of human resource management do lend themselves to collaboration across the board.

While some more junior managers often see skills development as a purely competitive area, more senior managers in larger companies, in my experience see the collaborative benefits of “fattening all the fish in the pool”.

So two thoughts to leave you with. One: is skills development a collaborative or a competitive issue? Two: possibly more importantly, what skills do we need to develop in our supply chain managers to make the most of collaboration opportunities into the future?

Certainly, if the logistics sector is to “do its bit” in enabling a low carbon economy, there will be a premium on well honed skills of collaboration.