With the shared supply chain, two or more companies with mutual customers form a partnership, using the same distribution facility and transportation services. The manufacturer can lower shipping costs and the retailer can receive more frequent shipments, thereby lowering storage costs. This helps ensure that sufficient supplies are available to the consumer at competitive prices.
While there are several potential advantages, many companies have not realized significant improvements. Changing the culture and structure of each organization is a big challenge. And to be successful, all involved parties must have a high level of commitment and trust, sufficient resources, and compatible goals.
“Although this paradigm is complex, companies are starting to realize measureable results,” states Rich Hite, President of QC Software, a leading provider of warehouse control systems for the material handling industry.
Following are guidelines for a successful collaboration.
Assess the partnership potential. Find out if there is sufficient value and common interests to make the collaboration worth the effort. Make sure your potential partner has sufficient resources and processes in place to effectively manage the arrangement. Each partner should have a robust, compatible IT system that facilitates real-time sharing of data.
Allocate sufficient resources. Don’t underestimate the number of people needed to support this effort, especially in the early stages of the partnership. Make sure senior leaders are on board and ready to lead the collaborative effort. You also need a strong team of support personnel to manage the day-to-day operations.
Establish clearly defined objectives. All companies involved need to create common metrics and targets. Implement a joint monitoring system to keep the project on track and ensure desired results. Regular review meetings are essential to resolve issues.
Develop a long-term perspective. Because this is a complex business model, be prepared to invest a considerable amount of time and effort to resolve major issues. Each company needs to develop long-term objectives that are understood by all parties. Implement a strategic plan for the next five years with your partners to better prepare for the short term and improve your processes over time.
When the shared supply chain is successful, all partners can gain a competitive advantage and improve profitability, while providing better service and value to the consumer.
For over sixteen years, QC Software has delivered the results that help companies succeed. Their leading-edge software solutions provide the flexibility, visibility and control across warehouse operations that customers need to optimize resources and profitability. Through industry collaboration, customized training, and 24/7 support, QC Software ensures that each customer is fully leveraging their technology. In addition, QC Software helps customers develop a strategic focus to better manage new opportunities and future demands.
For more information, contact Jerry List