One of the challenges in any supply chain is the issue of having all links in the chain working together rather than working autonomously in the chain. In a traditional type of supply chain Company A works with several different vendors, suppliers, and carriers to move raw material to their location and then also move final product to their customers.
A Simple Example
Each of those individual vendors, suppliers, and carriers is trying to make the best deal for his or her respective company, plus they are also trying to lower their costs of doing business. At the same time, they may also see others in the supply chain as potential competitors.
In the same sort of concept, Company A and Company B may both be ordering part loads or LTL freight from the same supplier, and both pay premium LTL freight rates. If they would just combine or collaborate on orders, both companies could reap the benefits of lower freight costs plus the carrier would also benefit with easier loads.
This is the heart of collaborative supply chain management. It involves creating mutually beneficial working relationships between the links in the chain as well as between local businesses that can benefit from the supply chain.
Moving from competitive to collaborative supply chain management is a shift for management. It creates an atmosphere of working together to find mutually beneficial options, diverse suppliers and to find the lowest cost options without sacrificing quality or options.
Often by working across units, departments, locations or even with other collaborative minded businesses in the area it is possible to create a more effective supply chain. Collaborative supply chain management will also allow the supply chain to grow, which uses the forward thinking and advanced planning that will keep any business growing and thriving.