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2013

In my last entry I discussed how collaboration supports and even drives the velocity of change.  I think this is a very important concept that seems to fit with all the pieces and results of collaboration.  I think that collaboration drives new ideas, concepts and even products because of the combination of various backgrounds and experiences in the collaborative network.  In today’s entry I am going to cover what I think about the relationship between collaboration and large organizations.  I think that the evidence regarding collaboration in a large organization points to the difficulty and challenges that come from the politics and internal cultures in a large organization that can block collaboration.  Another hurdle to collaboration in a large organization can be security compliance and security concerns. 


These challenges to collaboration in a large corporation can also be directly related to the challenges to collaboration with your extended supply chain partners.  Your abilities and actions to overcome the hurdles and roadblocks will go a long way to overcoming your challenges with collaboration in your extended supply chain.  In my opinion there is a paradigm shift required to overcome the hesitation to sharing and information security requirements.  This requires changing the question from ‘Why should I share information/processes with you?’ to ‘Why shouldn’t I share information/processes with you?’  There was a similar paradigm shift during the infancy of the EDI age and vendor managed inventory. 


So, where do we start with this shift?  I think the first place is to focus on developing robust and mutually beneficial partnerships.  These partnerships are the foundation of a robust collaborative network.  You have to break free of the single minded focus on WIIFM (What’s In It For Me).  You have to focus on the long term benefits that can be realized through a mutually beneficial partnership.  A partnership is different than the ‘customer/service provider’ relationship.  A partnership is built on the foundation of mutual benefits.  Mutual benefits in my opinion means that every side must believe they have achieved a benefit to their organization.  Mutual benefits in my opinion means that every side must also share the same level of risk to success.  This combination of sharing both the risks and the rewards is the foundation of a successful partnership.


In order to move into a collaborative culture and extended supply chain we must first focus on developing partnerships. I suggest that the large corporation has the perfect test environment practice and develop the skills required to built strong partnerships.  The silos that are common in many large corporations are the perfect testing ground for developing partnership skills that can be extended to your outside supply chain partners.  There is a common rally cry in the trade articles and seminars that we must break down the silos in large corporations in order to be successful.  I say we should use this cause to help develop partnering skills.


And now for the audience participation portion of the show…

How do you view your outsourcing providers; do you view them as true partners or only low cost service providers to squeeze savings?  How would you describe the difference between outsourcing and collaboration

With all of my recent discussions regarding collaboration and the importance of collaboration in your extended supply chain I started thinking about how collaboration has supported the increased level of change and discontinuous change.  It seems like a day doesn’t pass without seeing a story or television show related to the increased level of change.  Just as often as stories related to the increased level of change I see stories related to the drag of conventional wisdom, things like thinking outside the box are great topics for stories.  I’ve been combining the two topics lately, as many stories and shows are doing and I also started to connect these activities, or more accurately results, to the concept of collaboration.  This lead me to the begin thinking about how collaboration may be supporting the increase volume of change and the more common concept of thinking outside of the box.


I think that there are many signs leading to this beginning with the identification of new practices in both the business and social world.  It seems to me that one major addition to both business practices and social practices is collaboration.  Based on this observation I think that it can lead to the realization that collaboration can drive the increase in the velocity of change and also drives discontinuous change into the world.  I also think that you must be very careful to nurture and support the collaboration, especially in larger organization.  You must be open to change and recognize potential opportunities when they cross your path.  Steve Jobs and Henry Ford come around once in a lifetime and they have a huge impact on the business world.  You cannot wait and hope for a Steve Jobs, or a Henry Ford to burst onto the scene to change the world.  You can however, encourage sharing and collaboration to develop these changes within your business.


These are very interesting times that we are living through - collaboration is the buzz phrase today for success and you see many stories in trade journals hawking the benefits of collaboration.  Yet there is not a very high level of acceptance of full collaboration and developing mutually beneficial collaborative extended supply chain.  While I was thinking about this discussion I also came to another realization.  Outsourcing at a pure level should be an extension of collaboration.  This is what I’ve been discussion in my collaboration series - Identify a partner in your extended supply chain network that can perform a service and correlate with that partner to deliver the service.  While outsourcing can be a type of collaboration, unfortunately, the standard implementation of outsourcing simply a method to purchase services as the lowest price possible.


This brings an interesting dilemma when it comes to outsourcing.  Outsourcing can be executed as a type of collaboration, unfortunately though, I think that outsourcing from the large enterprise perspective is simply viewed as a cost cutting measure and this I believe limits the true potential.


And now for the audience participation portion of the show…

How do you view your outsourcing providers; do you view them as true partners or only low cost service providers to squeeze savings?  How would you describe the difference between outsourcing and collaboration

In this entry I will be discussing development and the importance of governance in your collaborative extended supply chain network.  I’ve covered many points in these recent discussions regarding the importance of analyzing and prioritizing your services and providers, including the importance of selecting the initial partners to start building your collaboration extended supply chain network and most recently suggestions and methods for selecting these initial partners.  I also spoke about guiding principles and their importance in developing the trust and performance in your extended network.  These guiding principles along with your mission and objectives form the basis for effective governance in your collaborative extended supply chain network.  Governance is also the final piece of the puzzle making up the critical framework and foundation to a successful collaborative extended supply chain network.  I firmly believe governance provides the basis for building a mutually beneficial collaborative extended supply chain network.  I also firmly believe that a strong and mutually beneficial governance program will provide the encouragement required for your partners to participate.


In a recent discussion I mentioned that guiding principles can be viewed as a type of Bill of Rights for your collaborative extended supply chain network.  That comment got me to thinking about governance and the importance of defining your methods of governance from the beginning of developing your collaborative extended supply chain network.  As I mention above, your mission, objectives and guiding principles form the basis for effective governance.  Governance provides the means to measure the effectiveness and fairness of your collaborative network, it is really the basis for building and verification of the trust that is required to build and grow a strong and mutually valuable collaborative network.

Due to the fact that we are discussing development of a collaborative network with external members that make up this network, it is critical to start with a strong governance model.  I look at the collaborative extended supply chain as a type of federation of partners with a common goal or objectives.  This federation requires a minimum of a consensus to come to a decision to guide the entire network.  This federation requires mutual benefits to all members of the network in order to encourage the continuity and growth of the collaboration.


The guiding principles provide the ‘rules of engagement’ that forms the basis for decision making in your collaborative network.  The guiding principles provide the framework to build strong partnerships in your collaborative extended supply chain network.  Very often I believe that guiding principles are either ignored, or defined so vaguely that they will not provide the guidance that can make them valuable.  You may think that I am over dramatizing in this statement - your guiding principles can provide the single greatest factor that ensures your success.  I think that the greatest obstacle to success is the trust amongst your collaborative network partners.    Developing meaningful guiding principles provides the basis for developing and growing the trust across your collaborative extended supply chain network.  This is achieved initially by defining your guiding principles and second by following and supporting, publicly and privately, your guiding principles.


And now for the audience participation portion of the show…

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?

In my most recent series I’ve been discussing the many aspects that I believe are extremely important to building the most valuable collaborative extended supply chain network.  I feel these concepts and methods I’ve been discussing are extremely important especially in the early stages especially because the concepts of a collaborative extended supply chain network is new.  You might think that collaborative networks are not new, and you are absolutely correct.  Many are participating in this discussing via LinkedIn which is a very powerful collaborative network.  I say that the collaborative extended supply chain network is new and requires additional focus and effort to succeed because the simple fact of the matter is that businesses have, and are, very hesitant to share what they consider their differentiating factors or proprietary practices that make them better than their competitors.


I believe that these generally accepted assumptions and practices are no longer generally applicable.  I believe that 20 years ago these assumptions and practices were applicable.  This was a time when supply chain software packages were in very early stages and there was a lot of truth in the belief that practices and methods could be important differentiating factors.  However, that was twenty years ago and supply chain software capabilities have dramatically improved since then.  So now almost any company can implement industry best practices and capabilities without the investments in engineering and analysis that would have been required twenty years ago.  These facts bring us to a point where key to success is the ability to execute these practices and capabilities.


Now we are at the point where your supply chain network is extended around the world and across many partners.  Based on the assumption that the critical factor to your successful extended supply chain network is the ability to execute, it follows that your extended supply chain partners play a critical role in this success.  This is why I say that collaborative concepts and methods are so important.  The most effective way to improve execution across an extended supply chain is to focus on improving collaboration across the many partners involved in this extended supply chain network.  However, I’m sure that you are also aware of a problem that can come about in a collaborative network, namely coming to a consensus in a large collaborative network.  Another point that you must be careful of is that the more people involved in a discussion, the harder it can be to come to a consensus.


This is the reason why I suggested earlier that you analyze your supply chain network and services to identify the best candidates for starting this effort.  This analysis should identify the partners that provide a good cross section of key services and are open and interested in collaborating to improve execution and capabilities.  In addition it should be a small number of partners to start with so you can work through the early stages of developing the collaboration practices more efficiently.  Not only will this allow you to develop the collaborative practices more efficiently, it will also allow you to test and deliver benefits early on to help to build momentum and acceptance at the senior management levels.   


And now for the audience participation portion of the show…

Have you contemplated the key partners and functions that make up your extended supply chain?  How do you measure the results across the extended supply chain?