• Roy Strauss

Supply Chain Profitability – Collaboration

Collaboration to Improve Customer Service and Reduce Costs

Companies can gain a significant competitive edge over their opposition via Supply Chain collaboration with key customers, suppliers, and service providers. Typically, collaboration can result in improved service, reduced costs and a favorable status with customers and key resources. Benefits are magnified when there is an unanticipated problem, key materials are in short supply, there are disruptions in one’s supply chain, or when being treated in a priority way can make the difference between success and failure.

Collaboration is more important than ever with increased complex global logistical issues, increased demand volatility, short supply of products in high demand, lack of visibility over domestic and global supply chains, increased demand for service, and cost fluctuations for raw materials and fuel. Additionally, there are more multiple tiers within a Supply Chain throughout a product’s life-cycle and for services provided than ever before.

Key methods of collaborating include working with suppliers and customers to:

- Work together with your suppliers to forecast future inventory and service requirements over various possible scenarios and then plan together for normal business, heightened business, and to overcome potential obstacles.

- Collaborate on improved technology for required internal and external visibility as well as exception alerts through all tiers and geographical locations in the common supply chain. If you can provide tighter feedback loops with improved speed, your collaboration partners can react timely and immediately to problems which will reduce their costs and ultimately yours as well.

- Improve internal speed and accuracy. If your customers know you will provide whatever they need in a timely fashion with 100% accuracy they will reward you with more business. When your suppliers take note of this growth you will become a favorite customer and be serviced first, especially when resources are low. The more one learns in a timely fashion from partners the better their company can be.

- Improve inventory management and related communication systems to let internal resources, key customers and suppliers have timely visibility into your inventory. Customers will then know how to order properly and suppliers knowing your inventory in conjunction with theirs can alert you to purchase to prevent a near future outage of key products or materials. You can alert your key customers as well.

- Determine individual and combined cost benefits for various scenarios including inventory costs, transportation costs, storage costs, and total costs.

Additionally, one can use the following methods to gain additional advantage by getting better service at lower costs:

- Collaborate with customers: Our goal is to make it as easy as possible for customers to do business with us and in a most profitable way. If one’s best customers get preferential treatment in a formal relationship, they will be loyal and come to you first for your products or services. Additional ways to make it easy for your customers to do business with you include: studying their purchasing habits and recommend changes to reduce their costs of doing business; warning them of potential future shortages; contacting them on a predetermined schedule; offering quantity based specials that meet their needs; allowing them to place stock orders and always fill them on time. Each customer should have an excellent contact to go to in your organization.

- Collaborate with suppliers: Make it as easy as possible for them to do business with your company. Pay all bills on time, place stock orders, provide forecasts, participate in suppliers’ promotions, and praise your direct contacts at the supplier whenever possible.

- Collaborate with key service providers, e.g. truckers, packaging suppliers, etc.: To get favorable treatment in your common effort one can gain advantage and make it easier for them to provide better service to you by reliably letting them know of your future needs. My client was able to get extremely favorable rates (much better than the competition) from both short haul and over the road trucking companies by showing how much business will be done with each of them and then projecting growth and therefore future potential revenue.

Warning: successful collaboration must be based on complete trust so use key metrics to measure results and listen and be wary of any possible breakdowns.



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