Industry Trends: Supply Chain Collaboration

Supply Chain Collaboration is one of the most discussed trends in the industry today. Defined as two or more businesses working together across a broad range of areas to improve the efficiency of their shared supplychain, Supply Chain Collaboration is becoming necessary in a world of increasingly decentralized supply chains that demand greater efficiency. Though Supply Chain Collaboration offers many benefits, it can be a challenge for businesses across different parts of the world: this is why we recommend having a trusted third party to help you build stronger relationships with your suppliers.

The benefits of Supply Chain Integration

Milan Vyas outlines the following benefits of successful Supply Chain Collaboration

  • Lower inventory levels and higher inventory turns
  • Lower transportation and warehousing costs
  • Lower out-of-stock levels
  • Shorter lead times
  • Improved customer service metrics
  • Visibility into customer demand and supplier performance
  • Earlier and quicker decision-making
  • Incremental revenue growth
  • Mitigate potential supply disruptions and the potential risks become opportunities to gain advantage over competitors.
  • A sustainable competitive advantage such as cost, agility, responsiveness and scal­ability

A new model: Playing the long game

With recent events such as the US-China Trade War and the ongoing coronavirus outbreak, businesses are collaborating make their supply chains more efficient, differing from the old way of thought. Writing for the Supply Chain Management Review, Matthew Myers outlines that the old basic premise of short-term supplier-buyer relationships as:

As markets become tighter, energy and raw materials prices increase, and as working capital become harder to procure, supply chain collaboration will suffer in a Darwinian struggle for profitability scraps.”

Myers believes the old tendency toward short-term relationships is being undermined by two important facts. First, is that supply chain relationships tend to have enormous amounts of waste that can only be remedied through long-term collaborative efforts. Second, he notes that new forms of collaboration are allowing businesses to thrive in new ways, noting how each collaborative relationship can allow each party to discover new ways to ways to innovate their processes over time.

Writing for Supply Chain Game Changer, Milan Vyas writes that this can be achieved by businesses engaging with their suppliers directly, creating long-term perspectives while clearly communicating their goals and expectations. He also cautions that while these relationships are based on a shared long-term vision, each party should do everything they can to achieve “quick wins so that the collaboration delivering value as soon as possible”.

Supply Chain Collaboration Software

While data sharing is not the only aspect of supply chain collaboration, it is an essential one. Writing for Select Hub, Kim O’Shaughnessy writes that “with supply chain collaboration software, companies can develop an effective communications process between each other, which leads to numerous benefits such as better inventory planning, reduced costs and overall optimization of SCM processes.” When used correctly by all parties, this software creates more transparent systems that allow businesses to maximize their efficiency while minimizing waste.

Please see O’Shaughnessy’s recommendations for the best Supply Chain Collaboration Software in the link at the bottom of the page.

The Role of Third-Party Inspectors

Creating long-term meaningful relationships with suppliers in other parts of the world can be difficult. Language, culture, and physical distance are barriers that can be overcome with the help of a third-party inspection company. These companies have the ability to serve as your ‘eyes on the ground’, allowing you to qualify potential suppliers through factory audits while gathering information and ensure your quality standards are met through services such as production monitoring. Moreover, a good third-party inspection company will be able to communicate directly with your suppliers in their own language, ensuring your goals and expectations are communicated as you build meaningful collaborative relationships in your supply chain.

About HQTS

With over 25 years of experience in quality assurance, HQTS is ready to help your business build strong, meaningful, and transparent supplier relationships across Asia. Our many service locations are ready to be your one-stop shop for your inspection needs, including  factory audits, translation services, production monitoring, pre-shipment and sorting inspections, and everything in between. Contact us today for more information on how our services can help your business build better relationships with your suppliers.

Further Reading

Kim O’Shaughnessy’s Recommendations for Supply Chain Collaboration Software

Matthew Myers: The Many Benefits of Supply Chain Collaboration

Milan Vyas: Supply Chain Collaboration – The New Way to Drive Value!