We are hearing snatches of conversation that sound like the days of peace and love may be with us once again. Be assured that neither of us will be publicly disrobing à la Broadway's 1968 hit musical "Hair" in the interest of making a statement one way or another. And there are signs of something less than the magic of Woodstock in the air, as well.
As for what all this means for buyers of supply chain services and providers of the same, after a few years of beating one another's brains out, two strategic courses have emerged. Perhaps only one is forward looking and strategic, and the other is facing the past and, at best, tactical.
During the recent Great Recession, entirely too many buyers of services (in logistics and in many other areas as well) succumbed to the temptation to squeeze suppliers on price, terms, and anything else that might be squeezed. "Temptation" may be too gentle a term. For some, it was job-saving to satisfy the imperatives issued by senior management. For others, a genuine concern for enterprise survival led to letting suppliers of goods and services bear more than their fair share of the pain.
Whatever the core impetus, the damage wrought on business relationships was significant and had the potential to produce lasting effects. Today, a distressing number of the squeezees are poised to seize the opportunity to become the squeezers.
Even some large and respected service providers are raising rates and prices (and reducing capacity). Reducing supply in the face of rising demand is a classic technique in what we laughingly call "revenue enhancement." Some of the capacity, especially in transportation, is, in fact, gone—sold, junked, placed in faraway markets. Some has been, while not mothballed in a military sense, placed in reserve to be made available at a later date (as demand pressures mount) at a very handsome price.
Others are trying to reinvent how they do business as a competitive differentiator. They tout collaboration as the key to genuine 21st century business relationships, and they are clearly looking at the long view—sustainable practices and processes, and the development of long-term customer relationships in an evolved business model.
ISN'T COLLABORATION BAD?
Not since World War II and Nazi takeovers of nations the Germans were in the process of invading, had occupied, or simply wished to influence from afar. These "collaborators" were called " quislings" after Norway's Vidkun Quisling, who pioneered and perfected the process of decay from within. He had counterparts, perhaps 20 organizations in 10 other countries. But the term of opprobrium was misapplied—"traitor" is more accurate.
Collaboration is actually a set of processes in which two or more entities work together for the benefit of all participants, and perhaps also the benefit of other parties, communities, or societies. The one term includes several facets, including data and information sharing, strategy transparency, high trust, thorough and intimate communications, mutually developed objectives, and integrated planning.
How important is this thing we call "collaboration"? Is it just another buzzword designed to attract the attention of the trade press? DSC's Ann Drake has declared that we have entered the Era of Collaboration. Mark your calendars with the year 2011 as the beginning of this era. We believe that Drake is correct. It is not a fad; it is the new way we do business in the supply chain world.
AND RELATIONSHIPS?
While some talk about collaboration, without necessarily understanding what is really involved, others invoke the wondrous powers of relationships (which are, in fact, terribly important throughout business in this new age and have always been so).
Let's get it straight, though. "Relationships" in general are not nearly the same as business relationships. Collaboration cannot be successfully conducted outside of deep and genuine business relationships. And collaborations and relationships are not different words for the same things.
Good relationships are the lubricant of everyday functioning, in commerce and in society at large. In many, perhaps most, cases, that bears not at all on the issue at hand. We should always say "please" and "thank you" in interactions of all sorts. We remember, and treasure, and return to individuals (and organizations) that create a positive aura and go an extra step for us—in all spheres of contact.
There are all kinds of relationships in business that are both useful and important. Corporate relationships with employees can help bolster those employees in their relationships with customers. A value-adding relationship with customers can foster profitable sales, rather than relying on low-price-driven commoditized transactions (the model that was already fading toward the end of the last century).
These personality-based individually directed efforts, even when an outgrowth of corporate culture, are necessary in the construct of business relationships—a good thing. But business relationships are the foundation for many forms of strategic corporate interactions.
They are important at all levels, whether non-mission-critical commodities are involved or sophisticated strategic competitive differentiators are at stake. All key relationships need to be framed in the context of what form of structured interaction is appropriate under the circumstances. Those that are collaborations are but one form, albeit the most complex and the most strategic, of the spectrum of how enterprises relate with their suppliers, customers, and service providers.
SUMMING UP
So, now we know that things such as limited data sharing, occasional advance warnings of plans, communications of demand levels, getting together to solve a problem when one occurs, or planning for the next quarter, while all good things, are not collaboration.
We've also learned that relationships and collaboration are not synonymous but are vital to each other for achieving the highest level of mutual benefit among supply chain partners.
The course you select depends on many things, including a level of enlightenment, for those with a bias for Zen. The quality of existing supplier partners, and their emotional and intellectual readiness, counts for a lot.
Books have been, and are being, written on relationships, collaboration, and the development of positive environments in business affairs. Taking each as gospel could be confusing. It is not easy to cherry-pick the useful parts of superficially different sets of recommended concepts and processes.
But if you can subscribe to the conclusion that we have entered the Era of Collaboration, the direction—or redirection—seems clear. It will be a bigger leap for some than for others. We suspect that those who don't jump will be pushed, and that's not a good way to get from the cliff's edge to the open water.
Loxo/Planzer