Wednesday 21st Feb 2018 - Logistics Manager

Sleeping with the enemy

Collaboration, a new thing? Older hands may think we’ve been here before. Ten or more years ago, the buzzword was partnership or and while that movement effected a real sea-change in the way we view strategic supplier relationships it was, as so many buzzwords are, oversold.

The problem was that although partnership was undoubtedly an approach to a fairer sharing of costs and benefits in a business relationship, companies were still tied into existing power structures (which will always exist). It is not reasonable to expect, say, a global FMCG manufacturer with unique brands to treat with local bottlers or transport companies – or second division retailers for that matter – on equal terms. Even if the will and the profit motive are both there, there are only so many relationships that even the best-staffed megas can sensibly cope with.

Collaboration has more limited aims but may have a more far-reaching impact. As we have seen over the years with the European Supply Chain Excellence Awards process, few companies or organisations are excellent across the supply chain (and if they are, what have they to gain from partnering?). But many, organisations are great at particular aspects of the supply chain and have an inherent capability to extend that limited excellence – it might be in procurement, or transport, or backloading, or fulfilment – to a wider circle than that represented by their current, direct, customers. Users, too, may have ace organisational capabilities in, say, planning, that could be extended beyond the present supply net.

And the point is that these capabilities, while vital to the health of an organisation, are not necessarily discriminators in the competitive environment. A consumer isn’t interested in the price a retailer paid for a product, she is interested in the price at which she can buy it. A resident is unimpressed by the cost of transport – they are interested in how many trucks are going down their road. Governments, at last, are ceasing to worry about whether ‘their’ carriers are shipping the goods, or whether ‘their’ taxpayers are getting grotty jobs in warehouses, and concentrating on wider (ie European or global) benefits to consumers and producers.

So collaboration is a project by project, thing.

But at the same time, it isn’t exclusive. Partnership implies a special relationship between, typically, two parties – and so will tend to exclude everyone else. Collaboration can cover whole networks of suppliers and customers if there is a common need or requirement to be addressed and there is no direct effect on competition as perceived by the end-user or consumer.

That last point is worth making – one of the biggest obstacles to collaboration is the fear that regulatory authorities will deem such arrangements anti-competitive. Given the sometimes bizarre positions that competition authorities adopt, that must always be a risk. But in general, if you disclose your plans to, in the UK, the Office of Fair Trading, it is up to them to object. And many of the issues where collaboration is most effective are precisely those areas where national or European government is demanding action – reducing environmental impacts, alleviating road congestion, curtailing the demand for greenfield sites on which to build large DCs etc. Governments and peoples want these things and provided that collaborative arrangements are open – both in the sense that the people know what is going on and in the sense that they do not preclude other organisations joining in, there should be few legal problems.

And the alternative of each organisation or supply chain painfully groping towards their own individual solutions is not pretty. European supply chains face major and growing challenges. The Working Time Directive, planning restrictions, fuel duties, tolls; a widespread and often uninformed concern in the public eye about the environment, quality of life, globalisation, off-shoring, outsourcing… you name it.

Collaboration can help us prove that this industry takes these issues seriously and is prepared to buy in to best practice. But if we can’t get our heads around this as an industry, solutions will be imposed by national or European governments. And the funny thing about government solutions is that they usually end up being more like problems.

 

Briefing points

  • Partnership tended to mean that you bought into the good and the bad of a partner organisation and worked in a one-to-one relationship
  • Collaboration implies working with the best bits of other organisations and on an open access basis
  • The barriers to collaboration are not primarily legal; they are questions of organisational culture
  • For almost all of the business and social challenges that supply chains face, someone out there has at least a partial answer. Most of the issues are common in impact to all the players so their resolution should be market-neutral but socially and macro-economically beneficial
  • Collaboration must be made to work or politicians are likely to impose less optimal ‘solutions’