[MeRC Home]

[Supply Chain FAQ] [About Tim McLaren] [Supply Chain References] [Top IS Journals] [eBiz Journals] [eBiz Links]

What is Supply Chain Collaboration?
Why should I be interested?
What can I learn from this website?
Why aren't you looking at instant messaging, groupware, or video conferencing?
Is this just a rehashing of the concept of horizontal integration?

Q: So what is Supply Chain Collaboration all about?

A: For starters, it can mean different things to different people. Let's get some definitions out of the way...

Supply Chain: I use the definition of a supply chain as a partnership of organizations sharing a common goal of delivering a set of goods or services to an end-customer. Thus, the supply chain includes not only the upstream suppliers of an item and the organizations that make the components used to create that item, but also the downstream retailers or distributors for the item. Other authors have called these value chains or webs, in an attempt to highlight the fact that supply chains don't just include suppliers but also their customers and that the relationships aren't always linear but more commonly look like a network or web.

Supply Chain Collaboration: any kind of joint, coordinated effort between two parties in a supply chain to achieve a common goal. Note that these words on their own give no indication of whether the effort I am talking about is at a strategic, tactical, or operational level, what kind of business process is involved, or the degree of collaboration. These things aren't often stated explicitly enough when we talk about collaboration or the tools used to support it.

Since there are numerous processes that partners can collaborate on, it is critical that we are clear about which processes are involved in the collaboration. On this site, we focus primarily on Collaborative Planning, Forecasting, and Replenishment (CPFR) activities when talking about supply chain collaboration, rather than other activities such as collaborative design or marketing. However, once organizations begin the strategic shift towards more collaborative relationships, it is much easier to experience process gains in many other areas.

Q: Why should I be interested in supply chain collaboration?

A: There are several current issues in supply chain management which are behind the trend towards more collaboration:

• Orders to suppliers progressively upstream from the end-customer are inflated to buffer uncertainty and prevent stockouts. This amplification of demand uncertainty up the supply chain, known as the "bullwhip effect", results in excess inventory and inefficiencies in the supply chain.
• In the absence of reliable demand information, vendors must second guess customer needs and 'push' product which creates much more waste then if product was 'pulled' or demand-driven.
• Even when partners agree to share information, demand forecasts and orders are often distorted unless developed jointly by the partners.
• Collaboration can reduce waste in the supply chain, but can also increase market responsiveness, customer satisfaction, and competitiveness among all members of the partnership.

Q: What can I learn from this website?

A: Check out my Understanding Supply Chain Collaboration Alternatives online presentation or see my collection of References for Supply Chain Collaboration related to my research.

In addition, I have compiled some links to leading Information Systems journals and other peer-reviewed and non-academic research materials, which are particularly useful for research into eBusiness, Information Systems, and Supply Chain Collaboration.

Also, just for fun, if you need help coming up with a brilliant eBusiness research paper, the topic generator tool can help. You can also try my simple online game that illustrates basic concepts in project prioritization for a project management presentation I gave.

Q: Why aren't you looking at instant messaging, groupware, or video conferencing for collaboration?

A: While networked communication tools and video conferencing do facilitate collaboration and sharing unstructured information, the type of Supply Chain Collaboration we are talking about is focused on information sharing and process coordination to support joint planning, ordering, and distribution among partners in a value chain. This usually requires coordinating vast amounts of structured data using enterprise systems such as ERP, APS, SCM, EDI, and other fancy acronymns. These systems, along with the emerging technologies and processes used to share information amongst them, are the focal point of this research. See the links above for more details.

Q: Is this just a rehashing of the concept of horizontal integration?

A: Again, no! A lot of the concepts underlying my work are the same things people have been thinking about for ages, but the information technologies have changed things.

Horizontal integration means bringing other entities under one organization's legal or at least managerial control. This was usually the case because the cost of performing and controlling transactions was high, so an organization brought it all in house under their control. A classic example was Ford Motor Co. buying up steel and rubber suppliers to achieve in-house efficiencies.

However, with the current information systems and networks, the ease of information sharing brings down the costs of the transactions (including control and information sharing) so that it is relatively cheap and easy to have the most capable organizations perform the different functions (e.g. outsourcing non-core functions, having independent partners supply the materials, etc.). The supply chain integration or collaboration trend is thus about sharing information, plans, and transactions between the partners to achieve a "virtual" horizontal integration, without all the capital costs of buying up partners and thus having legal and managerial control over the entities. Virtual or inter-enterprise integration increases efficiencies while avoiding the bureaucracies that can decrease the agility of an organization (the ability to respond to changing markets). So it is more about using information sharing and strategic partnerships to allow value chains to be dis-integrated and have each of the value-added steps performed by the most capable partner.