In a recent discussion I suggested that you should not focus on a return on investment to justify an initiative to implement a collaborative framework for your extended supply chain. While I still believe this and suggest you position this type of initiative as a ‘cost of doing business’, I think that you must also understand that the total cost for this initiative can be very low. Considering the fact that much of the collaboration tool sets are very low cost, or free in the case of Google+, the total cost of this initiative can be extremely enticing. This can actually provide a great return but I certainly would suggest that you focus on building a robust framework rather than on delivering a return on investment. In other words you should focus on building a robust collaborative framework for your extended supply chain partners that will provide mutual benefits to all of your internal and external partners. I believe that this focus will provide a greater potential for long term and a greater level of benefits than a focus on short term or immediate benefits would provide. In fact I’m a little surprised that this has not achieved a greater level of visibility and excitement in the industry at large.
Now that I’ve waxed poetic on the need to focus on doing the ‘right thing’ in developing your extended supply chain collaborative framework and hopefully helped you to understand the underlying and also the potential financial benefits that can be achieved by implementing a robust collaborative framework that supports both your internal and external partners, I would not do this discussion justice if I glossed over the potential hard savings and benefits. This may sound a little at odds with my most recent discussions but I believe that while you should not promise savings and hard benefits you should focus on the things that will bring you the savings and hard benefits. You will get a chance from your leadership to experiment once or twice based on the enticement of minimal to no cost, but you will gain your leadership’s trust and future acceptance if you can generate measurable and continuous cost benefits as a result of your experiments!
In order to get your creative juices flowing I thought I would continue this discussion with a few suggestions of areas to investigate for potential benefits:
- Reduced problem resolution time through collaborative issue notification and resolution capabilities.
- Reduced inventory levels and increased inventory turn through more efficient inventory management and shipment management.
- Reduced labor requirements through increased automation and reduced touch points.
- Reduced transportation costs through improved shipment planning and reduced inventory levels.
Obviously these suggestions require additional analysis in order to validate against your individual plans, requirements and objectives. As I mentioned these are meant only to provide suggestions and areas to look into when evaluating potential benefits. Now the beauty of an initiative that is justified as a ‘cost of doing business’ or as a low cost research initiative is that you can be focus your efforts on potential benefits without the requirement to deliver on the benefits. I still recommend that you take this opportunity and develop a robust collaborative framework that provides a foundation for mutual benefits for all your partners in your extended supply chain.
Now for the audience participation portion of this program…….
Have you contemplated your potential long term and short term benefits that a robust continuous improvement program would provide for both your internal and external partners in your extended supply chain?
What tools do you currently employ to monitor your key performance indicators? In addition, what tools do you currently employ to publish and share your KPI’s? How can you use these tools to measure the potential benefits?
What is your time-frame for starting your collaboration strategy implementation?