The Collaboration Conundrum: Risks, Rewards, and the Right Partner
Be honest – to what degree are you really collaborating with your trading partners? Are you sharing information with a few companies? Working together to develop new products and services? Or sharing knowledge to solve problems and boost customer satisfaction?
Supply chain collaboration is a hot topic today. As explored by The Economist Intelligence Unit in a recent paper, “No Business Is an Island: How companies collaborate with trading partners and the opportunities for improvement,” our economy is an intricate network of business processes and value chains that constantly cross organizational boundaries. So it’s no surprise that collaborative supply chains are considered by business leaders as vital to remaining competitive. In fact, 93% of those surveyed said they are creating value through collaboration.
But if collaboration drives such significant benefits and is now so easily enabled, why aren’t more companies seeing broad-based economic gains driven by a surge in enterprise productivity?
That’s the question that The Economist Intelligence Unit sought to answer through a study involving nearly 300 executives spanning 19 industries and 33 countries. And the findings were fascinating, for example:
- Businesses are indeed collaborating, but in a limited and rigid manner – and with a small subset of their trading partners.
- Most often, they are collaborating by simply sharing information, such as demand and supply forecasts and business strategies. This builds trust, extends situational awareness, and allows both parties to provide greater value to one another.
- They are investing in people, but less in enabling technology. And because firms lack sufficient technology, they lack insights needed to identify and mitigate the risks associated with collaboration, such as product quality issues, reputational damage, and impacts due to a partner going out of business.
And finally, the study found that most companies are not adapting their collaboration strategies based on market conditions and events. Nor are they pursuing innovation in the way they collaborate. For example, if credit markets are so tight that a supplier lacks the working capital needed to produce parts ordered, buyers could get creative and modify their terms to reduce the capital required. The possibilities are endless for companies willing to think outside the box.
The Future of Procurement
Looking ahead, we will all be participating in an increasingly networked economy. In this networked world, commerce isn’t created through manufacturing alone, but through the simultaneous use of technology to open new routes to market, the curation of unique products, and the ability to innovate and deliver a superior customer experience.
And based on this study, the future of procurement lies in technology-enabled collaboration that helps companies innovate, work smarter, reduce risk, and broaden both the scope of the trading partners they collaborate with. Business networks will provide the best technology platform to support this deeper level of collaboration. For example, by providing access to industry-leading technology, proven process expertise, and community-shared best practices, the Ariba Network – the world’s largest business network – liberates trading partners from slow and costly paper-based processes. They can safely share compliance, risk, performance, and transaction information. And armed with greater visibility and intelligence, they can align business decisions and react to changing market conditions with agility.
When empowered by business networks, Chief Procurement Officers effectively become Chief Collaboration Officers responsible for organizing resources and collaborating within the enterprise and across the supply chain in the most efficient and effective way. Their focus will shift from bringing a specific category under management to controlling all types of spend. Their focus will shift from squeezing an extra percentage in price reductions from their suppliers to maximizing value across the supply chain. And their focus will shift from imposing standard payment terms on suppliers to mitigating supply chain risk through a more collaborative payment approach.
These are just a few examples to show how effective collaboration can drive smarter procurement. To learn more about what the Future of Procurement will look like, join me for a free webinar exploring how collaborative tools can transform procurement into a smarter, high-performing value-generator on February 26 at 2:30 pm EST.
So when will you stop contemplating and start collaborating?
Ceylan Thomson runs marketing for SAP Business Networks. You can follow her on Twitter at @ceylanthomson.