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?