Beware the Big Words, Like 'Collaboration'

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Given the choice between two words with like meanings, journalists are taught to pick the simpler option, which in English tend to be words with Anglo-Saxon/Germanic roots. These words are apt to have fewer syllables, for example: "ask" (Germanic) vs. "inquire" (Latinate); "begin" vs. "commence"; "fill up" vs. "replenish"; "leave" vs. "depart"; "match" vs. "correspond"; "wage" vs. "salary." You get the idea.

Of course such variety contributes to the vitality of the English language. But when it comes to managing the supply chain, people who like to use words like "collaboration" have always struck me as trying to make the simple idea of "working together" more complicated that it actually is.

To review, "supply-chain collaboration" as a management concept came into vogue in the late 1980s and 1990s as companies—large retailers in particular—began to leverage customer demand data being collected by their point-of-sale systems. Collaborative relationships have grown as computer software and the Internet have developed. Along the way managers have learned firsthand how hard it is to actually integrate their processes and align their goals with those of their trading partners, be they suppliers, logistics service providers, transportation carriers or customers.

Today there's a tacit understanding among supply chain and logistics managers that everyone stands to benefit if they can work together to use inventory efficiently and keep it as low as possible, even if they've only been able to establish a few such relationships. Not to diminish the technical challenges, the key barrier for expanding supply-chain collaboration isn't getting computer systems to share information. The key challenge is building trust—there's a word with solid Germanic and Old Norse origins—between people and organizations. This, quite simply, takes time.

To facilitate such relationships, in the mid-1990s representatives from the largest retailers and their manufacturer suppliers developed the formal process of "collaborative planning forecasting and replenishment" (CPFR). It establishes a framework for building the relationships to make supply-chain collaboration work, in addition to creating guidelines for synchronizing and exchanging data. Those efforts have evolved into a business reference model and even a certification program administered by—get ready for a real mouthful—the Voluntary Interindustry Commerce Solutions Association (VICS, www.vics.org).

Such involved initiatives may serve the needs of the largest companies but, like the word "collaboration," they make working together to achieve supply chain efficiencies more complicated than it has to be. This can make managers at smaller, less sophisticated companies that make up 90% of the U.S. economy think that such efforts are beyond them, or for managers at large companies to overlook more basic opportunities. This is why it was refreshing for me to hear Mark Albright, v.p. of corporate logistics for The Sports Authority (www.sportsauthority.com), a large, privately held sporting goods retailer with over 200 stores, share some of his thoughts on collaboration at Supply Chain World (www.supply-chain.org) in Philadelphia a few weeks ago.

Albright spoke as part of a discussion about how shippers can manage the long-term challenges of increasing traffic congestion, fuel price increases, rate increases and driver shortages. His primary metric: cost per mile. His primary strategy for reducing those costs: filling empty trucks. To do that he has to fill empty lanes for his fleet, which means finding other companies with loads going in the right direction. That requires some footwork. He talked about searching local yellow pages online and calling shippers one at a time.

"Most shippers have smart transportation people, who really know their costs," said Albright. They're as interested in reducing their costs as you are. Such basic collaborative relationships always start with a test phase, but are fairly easy to manage once established. Technology can be an enabler, he added, but people are what really make it work.

So the next time you hear someone start extolling the benefits of supply chain collaboration, ignore the fancy words and bring it down to what you do every day. There are simple things you can do to work with your supply chain partners to save money and reduce costs per mile for everyone.

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