Companies continue to invest in core competencies and establish collaborative relationships with supply chain partners to do those things that are not. We’ve worked with organizations that heavily outsource with third-party warehousing and logistics company. Sometimes to great success and sometimes to disappointment. Inevitably when we examine the situations where the partner is underperforming we find lack of clarity on the service level agreement and lack of systems integration with the partner. So from a business criticality, the relationship is strategic but the level of collaboration is immature.
It is helpful to break the spectrum of collaboration up into four levels. Transactional, Cooperative, Coordinated, and Synchronized. Partners with one off or occasional transactions can operate just fine at the transactional level. However, key third-party logistics relationships typically require a coordinated level and ideally should be pushed to synchronized.
Transactional relationships focus on doing a specific job or task for a set price. The transactions are arms-length and require little investment or systems integration.
Cooperative relationships include the sharing of some key information like forecasts, order, and delivery status. The data is typically sent via email or text/IM messages. Generally, information is pushed. Lean principles are not in place.
Coordinated relationships feature two way communication and key information is interfaced between the systems. Information integration can consist of web service calls, EDI, or text file transfers featuring sales orders, purchase orders, available to promise inventory, ship confirmations, etc.
Synchronized relationships move beyond supply chain relationships and effectively the organizations function as one.
Using lean thinking, Adroit can help you consider which Food Supply Chain relationships warrant increases in collaboration. Where there are two many partners for a given function we will help you to rationalize the relationships and facilitate an increase in collaboration. More than ever systems integrations are becoming feasible and worth the investment.
One of the initiatives to foster improved levels of collaboration in the supply chain is the CPFR model or Collaborative Planning, Forecasting and Replenishment. It is an approach that coordinates the requirements planning process between supply chain partners for demand creation and demand fulfillment activities. The CPFR solution shares information involving promotions, forecasts, item data, and orders using EDI or Web Services. The collaboratively developed information is then used jointly by planners to determine demand, replenishment plans, and to set production levels. The information standards are set by GS1.