Making Collaboration Work For You

Much like fashion, supply chain management has its share of trends, and one of this decade's biggest is collaboration.

The virtues of this practice, which involve two independent companies sharing one or more logistics activities or assets, probably require no introduction. In fact, research suggests that as many as 94 percent of companies are highly interested in collaborating.

Unfortunately the secret to finding and sustaining collaborative relationships is considerably more enigmatic.  Few companies are collaborating on a widespread level, and examples of highly functional, long-term collaborative partnerships remain rare.

In light of that, allow me to offer the following suggestions. Whether your company is already an early collaboration adopter or has just begun to dip its toes in the water, I hope they'll bring you several steps closer to identifying, pursuing and sustaining the co-habit, co-load, co-operative supply chain partnerships that will be the perfect match for you.

Don't get too hung up on finding your clone
It's a commonly held but mistaken belief that any company you collaborate with should have a supply chain that's a facsimile of your own – at least in the areas where you're hoping to work together.

For example, let's assume that your company handles clothing for teens that's manufactured in Los Angeles and that you make door-to-store deliveries to retail locations in nearly 500 U.S. markets.  By this logic, the only company that's a truly good match for you in this particular channel also would manufacture its products (which would naturally be very similar to yours) near LA and deliver to many of the same retailers you serve.

While such a match could indeed work, the odds of your finding such a ready, willing and available partner are probably few and far between – especially if this slam-dunk match happens to be one of your competitors, because research suggests only 40 percent of companies are willing to consider teaming up with their competition.  

But the goods news for you is that there are many other highly promising collaborative combinations, provided you're willing to shift your paradigms a bit.  These include:
  • Partnering with shippers that manufacture close to the retailers you deliver to (because no trucking company relishes having its equipment cover too many empty miles)
  • Teaming with a shipper that's seeking DC space in the same areas where you already have space or want to establish DC operations
  • Or working with a company that needs a reverse logistics transportation provider for the same stores where you make deliveries.
  • Provided the mix of your products and a potential partner's is acceptable per DOT regulations and unlikely to change the condition of your inventory (case in point:  highly fragrant spices and apparel probably aren't a match made in heaven) any company whose logistics locations or activities commonly intersect, closely parallel or are near your own could be a good potential yin to your shared supply chain yang. 

Consider offering special "sales"
In addition to the aforementioned "working with a competitor" concern, there are many theories about why collaboration has failed to gain rapid traction. 
Some experts believe that like penguins, who are known to push one of their own into the water to see if it gets eaten before deciding if it's safe enough to plunge in themselves, many companies are waiting for other companies to collaborate and demonstrate that it's actually as worthwhile and lucrative as advertised.

Others point to the fact that many collaborative initiatives don't just require cooperation from both partners; they also require buy-in from other parties such as delivery recipients, who may have to alter their ordering or receiving processes in order to make collaborative concepts like co-loading work.  And such buy-in isn't always easy to achieve.

Plus there is the very real issue of IT connectivity.  Collaborative relationships require technology-enabled transparency.  But it's often time-consuming and costly to get every player's systems and software on the same page, and even major systems providers admit it's not easy. 

To help offset these barriers – which suggest that while collaboration's potential benefits are compelling, they're not yet compelling enough – your company may want to "up" its collaboration game by offering its potential partners or other stakeholders the logistical equivalent of a coupon or grand opening sale.  For example:
  • If you're looking for co-tenants at a certain warehouse location, think about offering candidates more reasonable DC rates than they'd pay for the same caliber of space in that market
  • To get retailers on board with co-loading, consider giving them a per-pallet discount or rebate every time they order jointly rather than separately from you and your collaboration partners
  • Or try offering possible partners a greater share of the partnership savings than they'd ordinarily be entitled to for a temporary time period such as the first few months of the arrangement.
Such offers could go a long way toward making the prospect of teaming up with your company considerably more appealing. 

Tie your partnerships together with these proactive practices
Just as accessories often "make" an outfit, your collaborative logistics relationships are far more likely to work well if you and your partners of choice are willing to complement them with collaboration-friendly behaviors such as sharing detailed information about your practices and processes, being forthright about any possible Achilles heels either of you might have, and establishing clear parameters about everyone's roles, responsibilities and designated rewards.   

These kinds of behaviors don't always come naturally to most businesses,
especially if said businesses are concerned about working with outsiders.

However, they can be cultivated via proactive practices such as: 
  • Using a neutral third party to serve as your integrator; collaborations need good leadership, and having a go-between such as a reputable 3PL coordinate everything from day-to-day operations to the allocation of savings is an excellent way to ensure that every participant "plays fair"
  • Signing watertight non-disclosure agreements; it will make participants feel considerably more comfortable with disclosing the kinds of sensitive (and often propriety) information that needs to be exchanged
  • Committing to a formal – and frequent  -- communications protocol; this will enable all participants to stay in the loop and pave the way for the essential give-and-take that fuels healthy relationships
  • And giving the collaboration ample time to bear fruit; after all, no matter how well-matched partners wind up being, most usually need some time to warm to each other and establish the comfort level required to  work together as well as they should.
Obviously these aren't the only secrets to productive collaborations.  In fact there are countless other keys ranging from the contractual to the technological – so many in fact it would take another article (or several) to detail them all.  Nevertheless, I hope that the advice I've offered will serve as the impetus you need to try collaboration and make it work for you.

Like Facebook relationships, logistics collaborations often may be complicated.  But more often than not, they're more than worth it . 

Rajiv Saxena is head of global supply chain solutions for APL Logistics, a global supply chain specialist for companies in the Retail/Apparel, Automotive, Consumer, Industrials sectors.  The company has a global network covering all major markets, backed by a multinational workforce of 6,000 employees.  APL Logistics is a member of the Kintetsu World Express (KWE) group, a global logistics services provider.
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