![Collaborative Strategic Planning and Management [CSPM]](http://1.bp.blogspot.com/-dR3H4b3jeMY/Tie8RwkM22I/AAAAAAAAAGs/liaLuH2dqLg/s1600/CSPM%2BPIC4%2BFULL.bmp)
By the end of 20th century, industry analysts made a significant observation in terms of transformation in the global competitive scenario. Their vision is of a competitive arena where cohesive supply chain teams compete against other supply chains. Today, this network-level competition is shifting focus of business strategies towards supply chain-based, driving strategic collaboration with suppliers and partners.
Strategic collaboration among supply chain partners means strategic partnerships that would make the chain behave as a single system, coordinated with each element of the chain and aligned with a jointly established supply chain goal. These supply chain activities include not only logistics, but also product development and strategic planning. Companies not only have to contemplate sharing operational information (e.g., point-of-sale data, production schedules) but should also consider jointly developing strategic plans (e.g., capacity planning, network expansion, long-term supply chain goals, etc. Such intensive collaboration involves member partners to cultivate strategic decision-making and enhance innovation in the chain. Which means shared goals and objectives of the strategic supply chain alliance should be planned by the partners jointly. Joint strategy to accomplish network goals/objectives should be designed by the partners. Relevant policies to govern and steer the strategic partnership should be framed, besides execution & control of joint strategies. This is also often referred to as ‘Joint Decision-Making (JDM),’ defined as "joint authority and structure to carry out a common mission [in which] the parties engage in comprehensive planning and operate well defined communication channels.
Historically, supply chain collaboration has been limited to coordinating operational efforts, but little has been done in the strategic arena, especially joint strategic planning. Thus far, collaborative efforts have focused on integrating operational processes, without integrating the planning and design activities, so, returns have been limited. One of the top-level findings from a supply chain survey is, the supply chain planning process is still not as robust as it should be. In fact, this is one of the areas where the leaders appeared to be just as deficient as the followers and laggards. In strategic context of joint decision-making (JDM), coordination and integration functions (such as establishing shared goals, planning joint strategy, coordinating implementation, controlling collaborative performance, etc.,) some of the major issues confronting strategic collaborations in supply chains are:
What should be the framework for joint planning and decision-making?
How to govern the strategic collaboration towards shared goals?
How should supply chain partners manage the execution/implementation of joint strategy?
What key performance areas (KPAs) should be monitored & controlled to achieve joint goal(s)?
These issues drive the need to determine:
i. Factors to be considered in joint planning
ii. Policy-related areas/concerns to be governed jointly
iii. Joint Mechanism for executing the joint strategy(s)
iv. Key performance areas (KPAs) to be monitored & controlled
iii. Joint Mechanism for executing the joint strategy(s)
iv. Key performance areas (KPAs) to be monitored & controlled
None of the studies have so far, provided a comprehensive collaboration model that offers structured approach to better joint planning/decision-making, coordination and integration in the context of intensive supply chain collaboration. Hence, a comprehensive collaborative strategic management model that guides strategic supply chain partners to plan/govern/coordinate/execute/control together at strategic level collaboration is required which has been proposed in the ensuing discussion. The proposed model referred as ‘Collaborative Strategic Planning and Management (CSPM)' comprises four dimensions:
1. Collaborative Strategic Planning (CSP)
Devising a feasible joint strategy for the supply chain alliance is a complex challenge as each strategic global partner operates in a different economic, political, technical and regulatory climate. to craft an appropriate supply chain strategy it requires analyzing the macro environments of each and every strategic partner. The collaboration leader and strategic partners should together analyze their supply chain environment to develop and agree on the joint goals (see Supply Chain Collaboration: Joint Goal Planning). In the next stage, joint strategy is decomposed into many transformational change objectives or goals with timelines. However, these transformational objectives should be always viewed in relation with the competitors’ supply chains. to set realistic transformational supply chain goals the supply chain members should also assess the level of opportunities and threats/challenges prevailing in their micro environment before they fine-tune the transformational change goals. Next step involve development of the appropriate change strategies based on the transformational objectives by the collaboration leaders and strategic partners. Where to change and ultimately what to change to, for achieving each transformational change objective will be focus of developing change strategies. However, identification of what to change and where to change depends on determination of the strengths and limitations of each partner in the supply chain. As in any system, the supply chain partner is haunted by certain limitations that may be affecting the supply chain performance, which we refer to as supply chain constraints. Supply chain constraints can be broadly classified into internal and external to each partner. Whether internal or external constraint, all should be grouped and each limitation should be mapped to the transformational objectives. Those limitations/constraints if elevated can contribute to the transformational objective(s) should be considered as part of the change strategy of that objective(s). These change strategies should be mapped to the partners and be delegated for implementation to the respective partners in the supply chain.
2. Collaborative Policy-Making (CPM)
Steering the strategic partnerships in the supply chain to successfully implement joint strategy require governance of certain contractual relationships that is part of strategic collaboration. To bind all the partners together and guide them in the strategic process, a set of clear policies should be framed so that desired behaviors are exhibited in strategic collaboration. Incentive alignment, and risk and gain sharing, are argued to be key factors for the successful implementation of Supply Chain Management (SCM).
A firm can design incentive structures (Williamson 1983) that reward the necessary behaviors and/or penalize non-compliance in the ongoing relationship. Which means the dominant partner(s) and strategic partners should together agree on certain policies in areas that will govern their strategic relationships. In strategic alliances, the relationship factors that should be governed effectively are: resources and risks. Resource sharing JDM promotes cooperation over competition among the supply chain trading partners and aims to prepare the network for supply chain vs. supply chain competition. In doing so, the companies within the alliance should consider sharing resources with each other . Partners in the alliance should, therefore determine and agree upon what and how they will pool the resources from each other for executing their strategic plans. Similarly, the collaborative initiatives shall not only derive benefits but may also results in certain financial risks. So, the partners should together determine the type of risks involved, how they will address those risks, and if unavoidable, in what way they will share those risks.
In strategic partnerships, disputes between partners are common and sometimes inevitable too. So, there should be a mechanism that guides the partners to resolve their conflicts. Strategic partners of the supply chain collaboration should priorly determine what disputes are likely and agree on how they would settle those disputes. Similarly for any reason(s) or no reason(s), if any partner(s) wishes to disassociate from the partnership, it affects the strategic collaboration process. The point at which the respective member(s) want to disassociate themselves determines how it will influence the strategic collaboration. It may also influence the leaving partner(s) either positively or negatively. So, a detailed exit policy should be prepared before the strategic collaboration is started in order to avoid any disputes later.
Collaborative performance of the partnership or a team should be governed and controlled from time-to-time, to prevent under performance of the partners or to know whether all partners are performing as per the pre-determined expectations. But the question of how will the collaborative performance measured, how each partners contribution will be known and what guides the partners to control their own performance, what mechanisms should the partners employ to control their performance and how frequently they should meet to review their own performance, etc., should be answered and understood by all the partners prior to the commencement of the strategic collaborative exercise. So, a broad review policy should be developed by all the strategic partners together. Besides, broad guidelines should be stipulated for the strategy execution from instituting the implementation organization to defining the execution authority and mechanism for execution control.
3. Collaborative Strategy Execution (CSE)
Every partner in the collaboration is bound to execute the delegated part of the joint strategy. However, a coordination team drawn from the dominant and strategic partners will develop the implementation plan and coordinate the resources and program. Further, the coordination team will exclusively monitor and control the strategy implementation across the supply chain firms. For executing different parts of the strategy, inter-organizational teams comprising specialists/experts in the respective areas will be drawn from the associated supply chain members or sometimes hire consultants from outside.
Each cross-organizational team will be responsible for transforming a specific area as stipulated in the joint strategy. As per the joint-strategy and transformational objectives, these teams may focus on improving processes, instituting systems for enhancing quality, developing competitive products quickly and cost-effectively, or establishing the technology, logistics and production infrastructure. Usually the combination of any of the following inter-organizational teams is set up aligned with the joint strategy:
a. Process Team
b. Quality Team
c. Product Team
d. Infrastructure Team
e. Coordination Team
Each constituted team is provided with the set of transformational objectives and the appropriate change strategy to pursue. Their performance will be monitored and controlled in the ways as stipulated in the execution policy.
4. Collaborative Strategic Performance Control (CSPC)
Majority of supply chain metrics are in fact measures of internal logistics performance (Lambert and Pohlen, 2001), and can be considered inappropriate for the supply chain as a whole (Simatupang and Sridharan, 2002). Until holistic “supply chain” metrics are developed, the constituents of supply chain will not pursue common goal(s). A common review policy should guide how the members will measure their own performance and the collaborative performance.
Strategic performance of the alliance should be reviewed by dominant and strategic partners of the supply chain. The pre-determined review policy will guide how the members will measure their own performance and the collaborative performance. Performance of the supply chain alliance in various areas as focused by their joint strategy should be the guiding principle. The most important of supply chain performance drivers are cost focus, customer lead-time and customer quality, but these vary by sector. Financial perspective of the balanced scorecard views organizations as creating long-term shareholder value, and therefore builds from a productivity strategy of cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Therefore, focused areas such as cost, asset efficiency, service quality and revenue aligned with their shared vision should be assessed and compared against shared goals and industry performance standards.
Devising a feasible joint strategy for the supply chain alliance is a complex challenge as each strategic global partner operates in a different economic, political, technical and regulatory climate. to craft an appropriate supply chain strategy it requires analyzing the macro environments of each and every strategic partner. The collaboration leader and strategic partners should together analyze their supply chain environment to develop and agree on the joint goals (see Supply Chain Collaboration: Joint Goal Planning). In the next stage, joint strategy is decomposed into many transformational change objectives or goals with timelines. However, these transformational objectives should be always viewed in relation with the competitors’ supply chains. to set realistic transformational supply chain goals the supply chain members should also assess the level of opportunities and threats/challenges prevailing in their micro environment before they fine-tune the transformational change goals. Next step involve development of the appropriate change strategies based on the transformational objectives by the collaboration leaders and strategic partners. Where to change and ultimately what to change to, for achieving each transformational change objective will be focus of developing change strategies. However, identification of what to change and where to change depends on determination of the strengths and limitations of each partner in the supply chain. As in any system, the supply chain partner is haunted by certain limitations that may be affecting the supply chain performance, which we refer to as supply chain constraints. Supply chain constraints can be broadly classified into internal and external to each partner. Whether internal or external constraint, all should be grouped and each limitation should be mapped to the transformational objectives. Those limitations/constraints if elevated can contribute to the transformational objective(s) should be considered as part of the change strategy of that objective(s). These change strategies should be mapped to the partners and be delegated for implementation to the respective partners in the supply chain.
2. Collaborative Policy-Making (CPM)
Steering the strategic partnerships in the supply chain to successfully implement joint strategy require governance of certain contractual relationships that is part of strategic collaboration. To bind all the partners together and guide them in the strategic process, a set of clear policies should be framed so that desired behaviors are exhibited in strategic collaboration. Incentive alignment, and risk and gain sharing, are argued to be key factors for the successful implementation of Supply Chain Management (SCM).
A firm can design incentive structures (Williamson 1983) that reward the necessary behaviors and/or penalize non-compliance in the ongoing relationship. Which means the dominant partner(s) and strategic partners should together agree on certain policies in areas that will govern their strategic relationships. In strategic alliances, the relationship factors that should be governed effectively are: resources and risks. Resource sharing JDM promotes cooperation over competition among the supply chain trading partners and aims to prepare the network for supply chain vs. supply chain competition. In doing so, the companies within the alliance should consider sharing resources with each other . Partners in the alliance should, therefore determine and agree upon what and how they will pool the resources from each other for executing their strategic plans. Similarly, the collaborative initiatives shall not only derive benefits but may also results in certain financial risks. So, the partners should together determine the type of risks involved, how they will address those risks, and if unavoidable, in what way they will share those risks.
In strategic partnerships, disputes between partners are common and sometimes inevitable too. So, there should be a mechanism that guides the partners to resolve their conflicts. Strategic partners of the supply chain collaboration should priorly determine what disputes are likely and agree on how they would settle those disputes. Similarly for any reason(s) or no reason(s), if any partner(s) wishes to disassociate from the partnership, it affects the strategic collaboration process. The point at which the respective member(s) want to disassociate themselves determines how it will influence the strategic collaboration. It may also influence the leaving partner(s) either positively or negatively. So, a detailed exit policy should be prepared before the strategic collaboration is started in order to avoid any disputes later.
Collaborative performance of the partnership or a team should be governed and controlled from time-to-time, to prevent under performance of the partners or to know whether all partners are performing as per the pre-determined expectations. But the question of how will the collaborative performance measured, how each partners contribution will be known and what guides the partners to control their own performance, what mechanisms should the partners employ to control their performance and how frequently they should meet to review their own performance, etc., should be answered and understood by all the partners prior to the commencement of the strategic collaborative exercise. So, a broad review policy should be developed by all the strategic partners together. Besides, broad guidelines should be stipulated for the strategy execution from instituting the implementation organization to defining the execution authority and mechanism for execution control.
3. Collaborative Strategy Execution (CSE)
Every partner in the collaboration is bound to execute the delegated part of the joint strategy. However, a coordination team drawn from the dominant and strategic partners will develop the implementation plan and coordinate the resources and program. Further, the coordination team will exclusively monitor and control the strategy implementation across the supply chain firms. For executing different parts of the strategy, inter-organizational teams comprising specialists/experts in the respective areas will be drawn from the associated supply chain members or sometimes hire consultants from outside.
Each cross-organizational team will be responsible for transforming a specific area as stipulated in the joint strategy. As per the joint-strategy and transformational objectives, these teams may focus on improving processes, instituting systems for enhancing quality, developing competitive products quickly and cost-effectively, or establishing the technology, logistics and production infrastructure. Usually the combination of any of the following inter-organizational teams is set up aligned with the joint strategy:
a. Process Team
b. Quality Team
c. Product Team
d. Infrastructure Team
e. Coordination Team
Each constituted team is provided with the set of transformational objectives and the appropriate change strategy to pursue. Their performance will be monitored and controlled in the ways as stipulated in the execution policy.
4. Collaborative Strategic Performance Control (CSPC)
Majority of supply chain metrics are in fact measures of internal logistics performance (Lambert and Pohlen, 2001), and can be considered inappropriate for the supply chain as a whole (Simatupang and Sridharan, 2002). Until holistic “supply chain” metrics are developed, the constituents of supply chain will not pursue common goal(s). A common review policy should guide how the members will measure their own performance and the collaborative performance.
Strategic performance of the alliance should be reviewed by dominant and strategic partners of the supply chain. The pre-determined review policy will guide how the members will measure their own performance and the collaborative performance. Performance of the supply chain alliance in various areas as focused by their joint strategy should be the guiding principle. The most important of supply chain performance drivers are cost focus, customer lead-time and customer quality, but these vary by sector. Financial perspective of the balanced scorecard views organizations as creating long-term shareholder value, and therefore builds from a productivity strategy of cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Therefore, focused areas such as cost, asset efficiency, service quality and revenue aligned with their shared vision should be assessed and compared against shared goals and industry performance standards.
Conclusion
‘Collaborative Strategic Planning and Management (CSPM)' provides a broad conceptual framework for strategic management in collaborative supply chains. It offers a holistic approach to effectively address strategic issues/challenges of the supply chain collaborations. The framework guides strategic alliances (within supply chains) to operate their network as one legal entity and optimizes supply chain integration paving way to collaborative performance. However, it is imperative to design a supply chain environment that facilitates strategic collaboration. Achieving strategic alignment among collaboration partners is crucial (see Supply Chain Collaboration: Achieving Strategic Alignment). Hence a high-level integration (collaborative relationship) among the supply chain partners should be developed. and such environment should be characterized with high-level of trust and relationship commitment between all the supply chain partners (see Supply Chain Collaboration: Evolution Management Framework). Further, the strategic relationship should comprise elements like process-orientation, multiple contact points at all levels of management, regular interaction, focus on end-customer value, flexible interfaces, two-way communication systems, cultural integration, realigned structures, technology exchange and adaptation, etc.
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