Supply Chain Collaboration: Joint Goal Planning

One of the top-level reasons for poor strategic supply chain collaborations is --  joint strategic planning process is still not as robust as it should be.  Without appropriate planning and analysis from the outset there is a potential for failure. The 
supply
 chain
 strategy 
process 
in many
 businesses 
is
 still
 immature
 and
 fragmented. In fact, this is one of the areas where the leaders appeared to be just as deficient as followers and laggards. Partners pay limited attention in evolving true  collaboration goals in the strategic planning and hence supply chain collaborations often fail. The study by Cranfield University in 2010 states that “the most important of supply chain performance drivers are cost focus, customer lead-time and customer quality but these vary by sector.” Customer behaviours also differ from segment to segment. Hence the shared goals (whether cost-focused and/or lead-time focused and/or quality-focused) chosen for the supply chain collaboration should be relevant to the business/industry/market in which the firm operates.  It  involves  deciding right supply chain for the product. The study also found that Customer Service and Corporate Strategy are key functional drivers of supply chain strategy. Therefore, short- and long-term business strategies should also be incorporated  in  the supply chain goals to align with corporate objectives. Care should be taken so that rebuilding or reinvention of supply chain capabilities is prevented. The state of supply chain capabilities should be assessed for future performance to know the capability gap.

Researchers often claim that “collaboration ends up in failure when the start is all wrong and when compromises cover irreconcilable differences.” Because collaboration requires objective sharing between partners and lack of agreed objectives will lead the alliance to fail. So, adequate care should be taken to ensure that mutually agreed objectives are set for collaboration while addressing all possible differences among partners. Therefore, the joint strategic planning process should evolve mutually agreed objectives contemplating the strategic objectives and expectations of all partners with an outlook for inclusive growth and supply chain performance.  Shared objectives should comprise only those which are aligned with every partner’s business strategy.  This involves verifying and  ensuring strategic alignment with partners. If common agreed objectives cover existing supply chain capabilities, then shared goals of supply chain collaboration should be restricted to build required competencies from there. 

Collaboration efforts often do not succeed because vital long-term details are ignored. Besides, failure to identify and mitigate key risks (internal or external) proactively has been found to be one of the major reasons for supply chain collaboration failures. One of the findings of ‘Supply Chain Strategy in the Boardroom 2010” of Cranfield University is the supply chain strategy development process is generally undertaken internally, with little visibility outside the company. But, if external risks are not factored in, then collaboration may not be able to pursue the stated shared goals. For instance, if partner(s) are operating in an unstable economic conditions the high cost of credit and currency fluctuations limits the ability to improve cost structures. Similarly, if stringent labor laws prevail in their countries then partner(s) cannot contribute to efficient HR assets utilization. ‘Innovation’ cannot be the objective if partners have limited access to skilled labor and/or technology resources. ‘Delivery’ cannot be the game plan if logistics infrastructure is poor.  To preempt such external risks, it requires analyzing how friendly and/or hostile is the partners'  business environment. Hence, both micro and macro business environments of all the partners should be contemplated to evolve feasible supply chain collaboration goals.

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