COLLABORATION PRACTICES SUPPLY CHAIN MANAGEMENT 1.

0 INTRODUCTION
Collaboration, in the context of the supply chain (Barratt, 2004), is to share the joint objectives; an intelligence of commitment; trust and respect; skills and knowledge; and intellectual agility. Besides that, it is also known as a process where two or more people or organizations work together to realize shared goals. Structured methods of collaboration encourage introspection of behavior and communication. These methods specifically aim to increase the success of the team as they engage in collaborative problem solving. Forms, rubrics, charts and graphs are useful in these situations to objectively document personal traits with the goal of improving performance in current and future projects.

2.0 ELEMENTS OF COLLABORATION PRACTICES

2.1 COMMUNICATION Communication is critical for effective collaboration. Communication can be defined as the mutual sharing and understanding of ideas and information. Effective communication is the creation of mutual meaning and only happens when understanding is achieved. Most communication problems revolve around perception. Perception is always based on perspective which in turn is shaped by prejudice. Prejudice simply means to pre-judge: we form perceptions based on the perspective of the information, experiences and knowledge in our subconscious minds. We are communicating whenever we are in the presence or proximity of others. Body language is an exact science and subject to cultural and ethnic nuance. Body language should be read as only one source of input. Body language must be managed with the understanding that others will perceive us based on body language alone.

2.2 OPENNESS Being open is also critical to effective collaboration. Those with higher levels of openness will find it, in general, easier to collaborate. The challenge is to be candid and open enough to encourage others to do likewise, while not being so aggressive as to overwhelm, offer too much information, intimidate or make someone feel uncomfortable.

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The degree of openness we exhibit with others communicates the level of trust that we have with individuals, and the willingness to take risks in the relationship. The inherent guardedness of those with low levels of openness can intimidate colleagues from sharing vital information, or asking questions, for fear of embarrassment or other consequences. Openness requires lowering our guard and laying aside personal, private agendas to achieve higher levels of communication.

WHY OPENNESS IS IMPORTANT FOR EFFECTIVE COLLABORATION PRACTICES?

Those with lower openness scores will need to work at overcoming their caution to take early emotional and interpersonal risks with their colleagues. The challenge is to be candid and open enough to encourage the collaboration, while not being so aggressive as to overwhelm or intimidate.

Those with higher levels of openness will find it easy to reveal themselves in collaborative relationships.

DIAGRAM 1: THE CYCLE OF IMPORTANCE OF OPENNES FOR EFFECTICE COLLABORATION PRACTICES

2.3 CLEAR EXPECTATIONS One of the main reasons business relationships end prematurely is because the expectations of one or both sides are not understood and, in turn, not satisfied. Poorly articulated expectations are usually to blame. The challenge when setting expectations in close business relationships is that multiple functional areas and management levels must be involved. Otherwise, the relationship will be managed by a single salesperson from the supplier and a single purchasing agent from the customer. However, in close and complex business relationships, there are no two people that can grasp all aspects of the relationship.

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Clear expectations establish the foundation for high performance relationships, with the product and service agreement (PSA) documenting those expectations. The formation and maintenance of critical business relationships require the involvement of multiple functions on both sides. In the absence of this dialogue, speculation and anxiety, give rise to wastes, reinforced by the frustration that erodes relations over time.

Management many find that the organization is prone to this form of waste both facing customers and suppliers. Unclear expectations likely will result in a few of the supply chain wastes already identified- such as missed opportunities for value creation or disconnects between promise making and promise keeping. It may also result in the waste of late detection of action required.

Clear expectations are required in any lasting relationship. Several of the executives described different situations involving people on the manufacturing floor, or with third-party logistics providers (3PLs), and the need for them to know what they could expect from their partners, and what was expected of them. They described how, for example, standards are made visible, how responsibilities and ownership have been clearly defined, and how processes are clear, visible and rewarded. Expectations are also helped when each party is consistent.

2.4 ASSERTIVENESS Being able to be assertive without being overly aggressive is critical for effective collaboration. The following matrix, comprised of a vertical and horizontal axis where the vertical axis represents expressiveness (high or low), and the horizontal axis represents aggressiveness (high or low) demonstrates the need to find balance between being more expressive or less expressive and more aggressive or less aggressive.

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More Aggressive

Less Expressive

More Expressive

Less Aggressive
DIAGRAM 2: TYPE OF ASSERTIVENESS

The fundamentals of assertive behavior: 3 basic behavioral styles

1. Passive or non-assertiveViolates own rights by allowing aggressive to take advantage. 2. AggressiveViolates others rights by taking advantage of other people. 3. AssertiveRespects the rights of others and stands up for own rights.

The passive and the aggressive behaviors both operate from a base of low self-esteem. The passive behavior violates own rights while the aggressive behavior violates the rights of others.

2.5 CO-OPERATION, NOT PUNISHMENT Cooperation among channel members is required for effective SCM. Cooperation refers to similar or complementary coordinated activities performed by firms in a business relationship to produce superior mutual outcomes or singular outcomes that are mutually expected over time. Co-operation, whereby firms exchange bits of essential information and engage some suppliers/customers in longer-term contracts, has become the threshold level of interaction. That is, co-operation is the starting point for supply chain management and has become a necessary but not sufficient condition. The next level of intensity is co-ordination whereby both specified workflow and information are exchanged in a manner that permits JIT systems, EDI, and other mechanisms that attempt to make seamless many of the traditional linkages between and among trading parties. Trading parties can co-operate and co-ordinate certain activities but still not

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behave as true partners. Again, this evolution is a necessary, but not sufficient, condition for total supply chain management

OPEN MARKET NEGOTIATIONS * Price-based discussions * Adversarial relationships

COORDINATION CO-OPERATION * Fewer supplies * Longer-term contracts * Information linkages * WIP linkages * EDI exchange

COLLABORATION * Supply chain integration * Joint planning * Technology sharing

DIAGRAM 3: LEVEL OF INTERACTION

2.6 TRUST Trust is the core of collaboration. In order to successfully optimize the supply chain, you must organize the work of internal and external team to establish trust and confidence. The establishment of collaborative relationships within the organization can begin, first establish some trust, then the basis of the original trust to build more confidence, so that a gradual manner. When the supply of managers within the organization established a cooperative relationship, you can gradually move to constitute the external supply chain team to establish supply chain collaboration between the organizations. Trust is the cornerstone of collaboration. Collaboration happens only when there is trust in a relationship. Trust is the barometer by which the quality of any human relationship can be measured. While trust may take a long time to build, it can be fractured and fragmented in a moment. Trust need not take a long time to buildwe can gain trust by giving trust to others. Trust is a state of readiness for unguarded interaction with someone or thing. We enable trust when the perceived intention of the other is positive and their perceived competence is valued. It

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is impossible to trust without engaging in riskour willingness to trust others will be directly proportional to our tolerance for risk. Trust is conveyed through faith, reliance, belief, or confidence in the supply partner and is viewed as a willingness to forego opportunistic behavior. Trust is simply ones belief that ones supply chain partner will act in a consistent manner and do what he/she says he/she will do.

2.7 TECHNOLOGY Given the role of information systems within the firm and the role of information systems with suppliers, customers and the supply chain, it can be concluded that: ~ As the business environment continues to emphasize more variety and quicker response to a dynamic customer driven marketplace, better and more effective information systems need to be developed. ~ One of the best ways to serve a demanding marketplace is to develop effective intrafirm information systems. ~ Intrafirm information systems such as enterprise resource planning systems are an important precursor to improve the flow of information between firms.

It has been evident for some time that the realization of future logistics and supply chain goals will depend significantly on the further development and utilization of information technologies. Whether they are in the form of hardware, software, or connectivity, these technologies will be the springboard for progress and innovation.

Technology links together a worldwide enterprise and its supply chain. A firm cannot build worldwide collaborative relationships without it. Technology links together the multiple tiers of a supply chain. It allows a firm to communicate with its suppliers at all levels.

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COLLABORATION PRACTICES SUPPLY CHAIN MANAGEMENT 3.0 EXAMPLES OF COLLABORATION PRACTICES

3.1 STRATEGIC ALLIANCES A strategic alliance is essentially a partnership in which you combine efforts in projects ranging from getting a better price for supplies by buying in bulk together to building a product together with each of you providing part of its production. The goal of alliances is to minimize risk while maximizing your leverage and profit. Alliances are often confused with mergers, acquisitions, and outsourcing. While there are similarities in the circumstances in which a business might consider one these solutions, they are far from the same. Mergers and acquisitions are permanent, structural changes in how the company exists. Outsourcing is simply a way of purchasing a functional service for the company. An alliance is simply a business-to-business collaboration. Another term that is frequently used in conjunction with alliances is establishing a business network. Alliances often are established formally in a joint venture or partnership. Businesses use strategic alliances to:
y y y y y y y y y y

achieve advantages of scale, scope and speed increase market penetration enhance competitiveness in domestic and/or global markets enhance product development develop new business opportunities through new products and services expand market development increase exports diversify create new businesses reduce costs.

Strategic alliances are becoming a more and more common tool for expanding the reach of company without committing to expensive internal expansions beyond our core business.

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3.2 JOINT VENTURE Takes place when two parties come together to take on one project. In a joint venture, both parties are equally invested in the project in terms of money, time, and effort to build on the original concept. While joint ventures are generally small projects, major corporations also use this method in order to diversify. A joint venture can ensure the success of smaller projects for those that are just starting in the business world or for established corporations. Since the cost of starting new projects is generally high, a joint venture allows both parties to share the burden of the project, as well as the resulting profits. A business may also be expanded by developing joint venture relationships. Two types of joint ventures can be used. In one type, the sponsoring company manages each outlet and the joint venture partner is a passive investor that contributes capital. Many such relationships are found in the lodging industry. The hotel management company contributes know-how, development plans, its reservation system, its trademark and management services, and its joint venture partner(s) contributes capital to develop, equip and staff the hotel and operate it until it produces a positive cash flow. The hotel management company will generally receive a base fee and will share profits with the joint venture partner(s). 3.3 FRANCHISING Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-french derivation - from franc- meaning free, and is used both as a noun and as a (transitive) verb. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

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Rapid expansion of distribution system

Fast food franchisees share risk of expansion of the franchisor's network

WHAT WAYS IS FRANCHISING A SUPERIOR EXPANSION METHOD?

A franchising company can realize a higher return on its invested capital

Fast food franchised networks can realize economies achieved by company -owned outlets through joint procurement

DIAGRAM 4: BENEFITS OF A FRANCHISING COMPANY

3.4 INDEPENDENT DEALERSHIPS Some companies can effectively expand their distribution network with non-exclusive, independent dealerships (or distributorships). Such dealerships may carry other, including competitive, products and the network will not have the degree of interdependence found in a fast food franchise network. This type of distribution network is suitable for a manufacturer, particularly a producer of a relatively low cost product with minimum pre-sale and post-sale services, or a product that consumers are used to buying at a retail outlet that carries multiple brands of the same product (e.g., appliances). For such products, a wide range of distribution outlets may be the best marketing strategy. Non-exclusive, independent dealers are rarely utilized for the distribution of a service.

3.5 MEMBER- OWNED COOPERATIVE ASSOCIATIONS Member-owned cooperative associations are found in the grocery and hardware store industry and in bedding products manufacturing. A member-owned cooperative would be an alternative structure to a conversion fast food franchise. Cooperatives are difficult organizations to manage because members of the board of directors have potentially conflicting interests: the interests of

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the cooperative and its members and the interests of their individual businesses. Cooperatives are also subject to more stringent antitrust rules than are fast food franchised networks.

4.0 CONCLUSION
Supply Chain Management (SCM) involves joint collaboration between outsourcing partners, suppliers, and customers. It comprises the transformation of goods from raw materials through to the delivery of the finished product; it also includes the management of key information flows. SCM involves the integration of these activities and aims to improve relationships between the various parties, while achieving a sustainable competitive advantage through high quality and lower cost products. SCM is closely linked with enterprise resource planning (ERP) and electronic commerce systems. Future supply chains are likely to be more dynamic in nature, and consist of collaborative value networks in which productivity and efficiency are constantly maximized. Purchasing firms need to ensure that costs and risks are equitably shared across the supply chain. Risk management has become a strategic imperative particularly for manufacturers operating global supply chains. Risk categories include:
y y y y y

natural disasters terrorism market risks commodity risks, and transportation risks.

Increased security and improved resilience are required to mitigate these risks. Regular testing of infrastructures using simulated disruptions can provide a better understanding of potential issues and possible deficiencies. Organizations that are dependent upon SCM must develop appropriate criteria for the appraisal of supply chain performance, and continuously measure this performance.

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REFERENCES Collaboration Practice Guidelines and Guidebook http://www.cmlto.com/quality_assurance/MLT_practice_guidelines/pdf/collaboration.pdf Creating Collaboration, A PROCESS THAT WORKS, Greg Giesen http://www.improvementandinnovation.com/features/articles/creating-collaboration-processworks
Understanding the meaning of collaboration in the supply chain (Barrat, 2004)

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