Robert J. Trent, Ph.D. Supply Chain Management Program Director Lehigh University COLLABORATION IN SUPPLY MANAGEMENT

CAUTION!!  Be careful when using the “in” words in supply management unless we really know what they mean….  Strategic  Core competency  Partnership  Teams  Win-win  Benchmarking  Collaboration  ROI  Sustainability  Innovation  Talent management

The essence of collaboration is to collaborate, which typically implies working together at a level that transcends cooperation. What does the dictionary say? col·lab·o·rate : intr.v. col·lab·o·rat·ed, col·lab·o·rat·ing, col·lab·o·rates 1. To work together, especially in a joint intellectual effort. 2. To cooperate treasonably, as with an enemy occupation force in one's country. DEFINITIONS co·op·er·ate intr.v. co·op·er·at·ed, co·op·er·at·ing, co·op·er·ates 1. To work or act together toward a common end or purpose. 2. To acquiesce willingly; be compliant: asked the child to cooperate and go to bed. 3. To form an association for common, usually economic, benefit: When buyers cooperate, they can make large wholesale purchases at a discount.

DEFINITIONS Another view of collaboration is as follows: Collaboration is broadly defined as the interaction among two or more individuals or organizations and can encompass a variety of behaviors, including communication, information sharing, coordination, cooperation, problem solving, and negotiation. (From Intelligence Community Collaboration, Baseline Study Report)Intelligence Community Collaboration, Baseline Study Report

DEFINITIONS While some will interchange the terms cooperate and collaborate, others will (rightfully) argue that a collaborative relationship is the most intense and highest form of supply chain relationship. All collaborative relationships are cooperative but not all cooperative relationships are collaborative, and: By definition, all supply chain alliance should be collaborative, but not all collaborative relationships are alliances

WORKING DEFINITION OF VALUE CHAIN COLLABORATION Two or more enterprises in a value chain closely working together to achieve shared strategic goals that produce greater value for all parties than could be gained by acting alone Shared processes, joint actions Richer interactions than just communicating or cooperating Characterized by mutual trust, high communications, risk- reward sharing CommunicateCooperateCollaborate Degree of Integration between enterprises LowHigh Two-way exchange of information Working in parallel with some level of coordination to achieve individual but compatible goals Joint commitment of people, processes, information, capital (facilities, equipment, cash) and other resources

SOME TYPES OF VALUE CHAIN COLLABORATIVE RELATIONSHIPS CompanyT1 Supplier T1 supplierT2 SupplierCompany T1 SupplierCustomer Multi -party Company T1 Supplier JV Company Company B Two- party Competitor A Competitor B Company Industry group CustomerCompany Company B Customer Industry group University T1 Supplier T2 Supplier Design house Other external party Company © CAPS Research 2012

THE FOUR C’S OF SUPPLY RELATIONSHIPS Counter Productive CompetitiveCooperativeCollaborative  Also called antagonistic relationships  Parties work actively against the needs of each other  Neither party takes responsibility for what happens in the relationship  Destructive conflict occurs  Also called adversarial relationships  Parties engage in competitive struggle over fixed value  Parties attempt to maximize value for their side  Minimal sharing of information  Parties work together and share information  Closer relationships are a result of mutual goals  Supplier and customer involvement increases  Congruence of goals exists  Parties work together to create new business opportunities  Parties work jointly to identify creative solutions to problems Lose/LoseWin/LoseWin/Win

SEGMENTING SUPPLY RELATIONSHIPS AND APPROACHES Critical Items Collaborative relationships Cost focus Win/win approaches Transaction Items Transactional relationships Transaction cost focus Win/lose approaches Leverage Items Cooperative relationships Cost focus Usually win/win approaches Market Items Competitive relationships Price focus Win/lose approaches Qualified Suppliers Value FewMany Low High Items = purchased goods and services

COLLABORATION SUCCESS FACTORS Research and experience reveal a set of factors that are critical to the success of collaborative relationships Executive commitment (often at the highest organizational levels) Rigorous collaboration selection process in terms of opportunities and parties Joint strategy development, problem solving, and continuous improvement efforts Goal congruency between parties Support mechanisms and documents (beyond a contract) that define the strategic aims of the collaboration Continuous focus on win-win business opportunities

COLLABORATION SUCCESS FACTORS Research and experience reveal a set of factors that are critical to the success of collaborative relationships: Extensive communication and open information sharing between parties High levels of trust Resource commitments specific to the relationship Clear indicators or measures of success (rather than simply activity-based measures) Internal education regarding the goals and expected benefits from the collaboration Ability to maintain the collaborative relationship when personnel change

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