23/03/2023 | Last Mile

Benefits of Supply Chain Collaboration

Companies can gain significant benefits from supply chain collaboration. Collaboration is common practice, and a practice that’s growing in popularity. It can take place between internal departments, to stimulate innovation for example, or with external partners, to avoid disruptions and ensure the smooth flow of materials and inventories.

Companies are under more pressure than ever from multiple directions than ever before. Increasing customer expectations for availability and speed of delivery, a business landscape prone to multiple disruptions, complex products and competition for materials and components.

To meet these challenges, it is important to have the best possible demand forecasting, capacity planning, supplier quality management and order fulfilment to ensure a well-functioning supply chain. Supply chain collaboration is one way to ensure this.

What are the main benefits?

The main advantages of supply chain collaboration include:

1. Flexibility and resilience

When a supply chain is able to cope with changes in demand and to anticipate and respond to problems more effectively, it is better able to mitigate the effects of disruptions or avoid them altogether.

2. Sustainable and ethical

Multi-stakeholder collaboration is key to enabling change in supply chains. By working with a trusted supplier, you can achieve greater transparency in the supply chain and therefore promote higher ethical and environmental standards. Working with suppliers allows you to influence the areas of procurement that are most resistant to change.

3. Improved responsiveness to customer needs

By creating efficiencies and optimising and coordinating responses to disruptions, supply chain collaboration increases a company’s ability to meet the needs of its customers.

4. Business growth

Collaboration with internal departments enables supply chain teams to understand requirements and objectives. They can then act as partners to innovate and accelerate new product development or improved supply chain management.

5. Long-term benefits

The benefits of cooperation are practical and long-term. The longer you collaborate with a partner, the better you understand each other’s weaknesses, strengths and ways of working. This means that you increase the possibility of streamlining your communication and collaboration experience with them, avoiding the additional cost and time of having to repeatedly learn a supplier’s habits, rules and operations.

6. Operational efficiency

Collaboration improves operational efficiency and reduces cycle times and costs. Sharing data in real time and improving communication enables organisations to reduce the bullwhip effect across the supply chain when there are changes in demand. When coupled with AI-powered supply chain collaboration systems, information and recommendations can be obtained, as well as automating routine tasks and some basic functions.

7. Improved predictive accuracy

Sharing information and collaborating with suppliers and partners in supply chain planning and forecasting facilitates consensus among partners on forecasts and improves their accuracy.

There are a number of supply chain collaboration software options on the market that can help companies foster meaningful partnerships, improve performance and strengthen productivity throughout the supply chain. This software provides real-time data analysis and sharing and helps companies develop closer relationships with suppliers and vendors.

When establishing supply chain partnerships, it is essential to choose the right supplier or customer, communicate with them regularly, increase the visibility of the supply chain and develop a long-term plan to ensure that the partnership lasts. As the writer Helen Keller famously said:

Alone we can do so little; together we can do so much.” This also applies to the supply chain, and working together will enable us to address the challenges of today, and prepare ourselves for the future.