Supply chain management concerns itself with recognising, acknowledging and managing key business linkages and relationships. To achieve this, collaboration is the order of the day. But while collaboration is an admirable business objective, it can prove difficult to attain.
To reach it, it is important to have a strategic framework to establish and improve collaborative relationships in organisations of all sizes. Gibson Sibanda, general-secretary of the Chartered Institute of Procurement and Supply’s Zimbabwe branch, unpacks the development of collaborative relationship frameworks, in this month’s SmartProcurement.
Collaborative approaches have been shown to enhance competitiveness and performance, through better cost management, compressed cycle and lead times, more efficient resource utilisation, improved risk management and the delivery of incremental business value and innovation.
Collaborative relationships can be multi-dimensional, they can be individual one-to-one relationships, but more frequently, they are interlinked and networked relationships that often involve multiple parties (external collaborators, partners, alliance partners, suppliers, various internal divisions and, often, customers) working together. These relationships are common in business networks, supply chains, clusters or extended enterprises. It might also be applicable to consortia and joint ventures, where the individual organisations might not be implementing the standard overall.
The key stages of collaborative relationships
The first stage is awareness.
Organisations that value collaborative relationships must have high-level strategic corporate policies and processes which lead to incorporating collaborative working as a recognised approach where it can identify added value. Moreover, appointing a senior executive who spearheads the review and analysis of areas of strategic collaborations goes a long way to ensuring successful implementation of collaborative relationships.
The next step is to have knowledge.
This focuses on developing knowledge around a specifically identified opportunity to create a business case and cost benefit analysis. This should include issues that would influence the overall strategy relating to competencies, training and development, knowledge management, risk management, value analysis and possible exit strategy conditions.
An internal analysis follows after acquisition of knowledge.
This step is intended to ensure that organisations undertake a structured assessment of their capability and maturity to successfully engage in a collaborative initiative. To ensure that collaboration is not established with a bias towards the performance of the external parties, it is important to acknowledge internal strengths and weaknesses.
Partner selection is a crucial stage of collaborative relationship framework.
This underscores the need to undertake a structured approach to identifying, evaluating and selecting appropriate partners. Poor selection of a partner is a recipe for disaster… Assess not only the performance aspects of each collaborative partner, but also the way in which the two organisations can work together with a more integrated approach for mutual benefit.
Working together follows after partner selection.
This focuses on ensuring that the partners establish the appropriate operating structure, governance, roles and responsibilities to effectively and efficiently achieve desired business objectives. At this stage, the organisations establish and agree on a formal foundation for working together, including contractual frameworks or agreement of roles and responsibilities.
Value creation can never be ignored if collaboration is to be successful.
The parties should specifically focus on establishing approaches that seek to build value out of the joint relationship. Openness and continual communication about innovative ways of generating value should be the guiding principles. As parties continue to explore value out of the relationship, there is a need to ensure effective measurement and monitoring of the relationship to maintain its optimum performance. Without proper mechanisms to keep the relationship afloat, it can easily fade away and dissolve.
Finally, there should be a clear exit strategy for either party.
Develop and maintain an effective strategy for disengagement, where appropriate. Care must be taken to develop an exit strategy that does not damage the relationship; a poor exit strategy and poor communication may be costly and might have future damaging consequences caused by prolonged disputes or a failure to recognise the benefits of collaboration.
Developed as described above, collaborative frameworks can boost the performance of supply chain and help organisations remain competitive.
Contact Gibson Sibanda on firstname.lastname@example.org