Rebuilding resilient supply chains through collaboration

The Covid-19 pandemic has caused unprecedented disruption to global supply chains. The crisis has revealed weak links, but has also shown the benefits of good sourcing practice.

Perhaps understandably, the immediate objective of many businesses in the face of the enormous disruption caused by the pandemic was to seek a 'return to normal', quickly restoring existing supply chains. That said, it is also apparent that, for some, this is more of a temporary measure, with the longer term intention of more permanently dealing with identified problems.

The crisis hit some organisations at a time when they were already transforming their supply chains to meet emerging opportunities and challenges – including those of rapid digitalisation and the post-Brexit trading landscape. As such, we can anticipate a significant degree of wider-scale transformation to a 'new' or 'new normal' means of operating supply chains, to create something better, more agile and more resistant to future crises.

Building on our wider work around rebuilding resilient supply chains, this series of articles will focus on the measures being taken by businesses to drive greater collaboration within the supply chain. This includes seeking collaborative improvement in daily operational delivery, as well as wider innovation and risk management.

For some time now, supply chain experts have been actively recommending more collaboration between the main players in a supply chain. Vertical or horizontal collaboration may deliver substantial benefits for participants who leave their respective corporate 'silos' to work together with strategic partners – resulting in greater cost efficiency; service and performance improvements; innovation; and higher levels of customer satisfaction.

Collaboration may also lead to improved sustainability and resilience in crisis situations, especially where the interests of the participants have shifted from purely transactional to more 'enterprise-based', built on aligned interests and outcomes.

There are many current industry examples of collaboration: from less advanced forms like vendor-managed inventories (VMI) and continuous replenishment programmes (CRP); to more sophisticated initiatives such as joint or open innovation-based R&D projects. We have also noticed a shift in mind set in recent years, with larger established multinationals increasingly more attracted to collaboration as a way of meeting changing customer demands and maintaining market share.

However, it is also apparent that greater supply chain collaboration has its challenges. Whether due to a lack of alignment of strategic objectives, technology and governance issues or even cultural differences, there are barriers that will need to be overcome. In addition, the legal challenges of collaboration are often either underestimated or not taken into account suitably early in the process, which can unnecessarily hinder initiatives and increase risk.