IN THIS first of an ongoing series of exclusive market insight brought to Fooptrint readers courtesy of Reynolds' The Marketplace publication, Sion Roberts describes how business can develop meaningful partnerships and supply chain collaboration to help address growing issues around raw material sourcing and sustainability.
The world we live in is changing rapidly and with growing pressure on supply chain efficiency and sustainability the need to collaborate is ever greater.
That’s the easy part, the theory; trickier is making it work in practice. There are plenty of examples of successful partnerships between organisations – whether vertically up and down supply chains or horizontally between competitors – which leverage competitive advantage, reduce operating costs, increase service levels, reduce price volatility, reduce waste, provide security of supply and help meet the growing sustainability challenge.
Collaborative opportunities are widespread. Two competitors collaborating on haulage to reduce the number of empty wagons on the road can deliver both cost and environmental benefits for each. Waste is reduced, fuel use is reduced and the efficiency of deliveries is improved.
And there are good examples of partnerships up and down supply chains that are delivering real benefits for all involved. You’ve only got to look at the prevalence of retailer/farmer supply partnerships in milk to see how retailers have pushed for closer collaboration with farmers, helping their farmers become more efficient and improve sustainability, whilst delivering security of supply and pricestability for all involved. Marks & Spencer, who pioneered this approach, has not only built strong relationships with its farmer suppliers but have also been able to deliver a differentiated product with less saturated fat, from a supply chain that has delivered reductions in packaging waste. Similar examples exist in the grain market, for example the collaboration between J Sainsbury’s and Camgrain to secure British wheat for use in the retailer’s in-store bakeries, delivering a point of difference on the shelf and resilient supply chains for the benefit of all involved.
There are also great examples of where collaboration between packaging suppliers and processors delivers cost savings and a more responsive supply chain. Witness the number of milk processing facilities with on site packaging plants, or can manufacturers who set up production facilities adjacent to food processors todeliver secure long-term business for both parties. The benefits of partnerships seem clear – and businesses are increasingly seeking opportunities to collaborate on a wide range of fronts. Yet whilst the potential payback from a partnership can seem obvious, it is not always as simple to deliver collaboration as it might seem. “All too often businesses rush into strategic partnerships with the best intentions, but don’t consider what they really want out of the relationship nor how the two parties will really work together,” explains Denyse Julien, Senior Lecturer in Supply Chain Management at Cranfield School of Management.
And there are many reasons why collaborative endeavours can face difficulties. Whilst the principles seem clear, often the devil is in the detail. “Organisations will often be reluctant to share information, lack trust, or feel that the benefit or risk in any collaborative venture are not going to be equally shared – all of which can be major stumbling blocks.”
What’s more, factors such as business culture, management style, size and location can all prevent organisations realising the potential benefits of collaborative working. Take, for example, if one business works with a very empowered and dynamic culture, delegating responsibility to individuals, whilst a potential partner is very hierarchical and keeps decision- making at senior management level. These two businesses may well be able to identify opportunities to save money or improve efficiency by working more closely together, but their respective ways of doing business would probably prevent much progress.
Equally two businesses may share very similar cultures yet if the key personnel involved in a collaborative project are based a great distance apart then progress may be slowed considerably simply due to the logistics of getting together.
So what can be done to prevent collaboration failing? “The most important thing is to be completely open and honest about what you want from the proposed partnership at the outset,” Denyse suggests. “This needs frank disclosure so that each party knows where the other is coming from.”
Denyse and her colleagues at Cranfield use a well established and proven model, developed in the mid 1990s by Doug Lambert and his colleagues at Ohio State University’s Global Supply Chain Forum, to help potential partners examine collaboration opportunities.
This partnership model sets out a number of key steps that managers from organisations considering collaboration can undertake to identify the level of partnership appropriate for their particular initiative.
“It is often easy to see how collaboration with another supply chain partner could deliver benefits to your own organisation, but it is important to focus on how this can work for both parties. This requires everyone involved to understand the real business drivers of each potential partner and how these can be aligned,” Denyse reckons.
And it is openness and joint working in the early stages that will often define success or failure. If you know what you are all trying to achieve, are open to the potential hurdles, and jointly commit to addressing them, then you are well placed to think about the approach required to deliver your goals.
“It is easy to think that collaboration is all about very strategic relationships or even joint ventures, where businesses become tightly embedded with each other and are committed to mutual success,” Denyse said. “But that isn’t always required, especially not in the early days of collaborative working. Sometimes a simpler less complex type of partnership will deliver and can be quicker and simpler to initiate. And, as relationships develop and businesses evolve, partnerships can be re-evaluated to ensure that they are still fit for purpose.”
What seems clear then, is that collaboration needn’t be complicated and lead to disappointment. If all parties involved are open about the drivers for change, agree a shared vision, identify the facilitators for the relationship, and are prepared to adapt, then successful collaboration can bring massive benefits.
With the food sector under increasing pressure to reduce waste, improve sustainability, cut costs and meet the growing demand for food from a rising global population, the reality is that businesses can’t afford to work alone. Even the largest, most successful organisations are reliant on suppliers and supply chain partners for on-going success. And in a world with increasing porosity of information due to the prevalence of social media and citizen journalism, failure to work closely with others can result in significant reputational threat.
Collaboration is definitely the future, then. But open and honest dialogue from the outset is critical to avoid problems down the line.
The opportunities to address significant challenges such as sustainability, waste reduction or cost savings are all there for the taking if you can develop effective partnerships with other organisations. It would be a waste not to try, wouldn’t it?
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