Collaboration Key in Creating Competitive Advantages Through Supply Chains

June 18, 2018
Research confirms cross-functional collaboration and supply chain integration are challenging business goals that many companies deprioritize because the value is difficult to define.

Research recently published by the University of Tennessee, Knoxville's Global Supply Chain Institute, and sponsored by Maine Pointe, identifies collaboration as one of six key elements of creating competitive advantages through supply chains. The study emphasizes that supply chains must optimize efficiency through reliability, shared values, and end-to-end visibility before these advantages can work.

The research indicates that not only does internal collaboration create financial worth; benchmark companies are leveraging collaboration outside their organizations to create competitive advantages. “Companies with the strongest supply chains integrated them from end-to-end long ago and have mastered working across business disciplines,” says Mike Burnette, managing director of the institute and an author of End-to-End Supply Chain Collaboration Best Practices. “They are now using those skills to work with external supply chain partners and find ways to collaborate with non-competitors to create cost-saving opportunities.”

Decades spent pursuing cost savings within internal supply chain functions leaves little room for improvement at this point. As complexity and consumer and shareholder expectations increase, CEOs and supply chain professionals must retrain their focus on contributing to strategic initiatives instead of solely on fulfilling demand as cheaply as possible.

Maine Pointe, the supply chain implementation-focused consulting firm that sponsored the paper, found that driving collaboration excellence across procurement, logistics, and operations yielded a 20 to 30 percent gain in savings for many companies with which they worked. Steven Bowen, the firm’s chairman, and CEO, says that integrating these functions using their the Total Value Optimization™ approach creates breakthrough results in terms of cost, cash, customer service, growth, and profitability. 

“If your procurement, operations, and logistics functions aren’t aligned to work together seamlessly to delight your customers while minimizing excess cost and working capital, you may be leaving money on the table,” Bowen says.

Burnette and his fellow supply chain faculty at the Haslam College of Business interviewed 17 leading companies across eight industries to identify common components of collaboration success. They found that collaboration must be emulated by the supply chain leader and that leader must have a solid understanding of all supply chain and other business functions.

Company culture was another key element, with trust between departments and a value of and means to account for inventory, quality, responsiveness, and time making significant impacts. Benchmark companies used these elements to share systems and data, facilitate external partnerships, and achieve the ultimate collaboration opportunity: creating effective sales and operations planning.

End-to-End Supply Chain Collaboration Best Practices is the sixth installment of the Global Supply Chain Institute’s Innovations in Supply Chain white paper series. The study provides multiple checklists for collaboration opportunities and maturity assessment tools.

You can access the white paper here.