Insights

Supply chain collaboration is more vital than ever - here’s how to do it

Jun 07, 2022

In a disrupted freight market, supply chain collaboration is more important than ever. However, the majority of businesses lack the tools, visibility and organisational structures to enable effective collaboration in supply chain management.

In our recent research report ‘The Supply Chain Data Crisis’ we found that 100% of supply chain leaders encounter problems with collaborating effectively with internal stakeholders and 95% struggle with external collaboration. This leaves leaders unable to effectively respond to changes in the market, whether it’s mitigating disruptions, taking advantage of commercial opportunities or improving processes.

In the long term, these issues seriously limit the performance of the entire business, driving up costs and reducing agility. Meanwhile, companies that can collaborate effectively across the supply chain can reduce inventories and overheads while enjoying improvements in speed, service levels, and customer satisfaction.

Let’s explore the key collaboration challenges facing supply chain leaders and how to build value-driving systems that deliver tangible results.

Why is collaboration important in supply chain management?

Supply chain collaboration entails coordinating internal and external stakeholders to manage and adapt the flow of goods to efficiently meet demand and ensure on-time, in-full delivery. However, maintaining collaborative relationships in supply chain has become increasingly difficult due to supply and demand risks for businesses and their networks.

Demand for goods has proved especially volatile and shows no signs of calming, with potential recession risks and attendant economic uncertainty putting downward pressure on prices. On the supply side, businesses and their manufacturers have faced additional costs from gas prices, raw material fluctuation and rising transport rates.

Managing these pressures is made more complicated by the changing supply chain context for businesses, including:

  • Enhanced regulatory processes, including more stringent declarations for the new CDS customs programme
  • A renewed focus on the environmental and ethical impact of logistics and supply chain from regulators and consumers
  • The increased importance of ecommerce and distributed logistics models increasing complexity and nodes in the supply chain

Without effective supply chain collaboration systems, businesses risk soaring supply chain costs and lead times which can eat into product margins, damage customer relationships and leave companies exposed to losing market share to more agile competitors.

What are the key challenges to supply chain collaboration?

Supply chains are complex structures, with thousands of SKUs moving through multiple stakeholders from ordering, to manufacturing, to logistics, carriers and warehouses. However, the collaboration procedure that underpins these networks are often not fit for purpose.

Competing organisational incentives

Misaligned incentives can be found across supply chains, both within organisations and with their external partners.

Within a business, stakeholders include supply chain teams, logistics, buyers and commercial teams, as well as various levels of management. Commercial teams are incentivised on revenue and sales, prioritising stock levels and availability. Meanwhile, logistics teams are pushed to reduce the cost of moving goods and maintain good supplier relationships.

Externally, manufacturers serve a variety of customers, creating competition for resources and priority, while they seek to maintain a steady flow of output without changes to production schedules to accommodate clients.

This leaves many stakeholders talking at cross purposes, exacerbated by a lack of shared visibility to guide collaboration.

Lack of investment in systems

In our research we found that while 99% of respondents have received additional budget or resources for the supply chain function since March 2020, the most common reason is to offset the rise of freight rates (50%).

Of those surveyed, only 35% are investing in technology, despite the fact that 98% encounter obstacles with visibility in their supply chain. The end result is that many teams lack the supply chain platforms and shared visibility to collaborate effectively due to a lack of targeted systems.

98% encounter obstacle with visibility

How can businesses improve supply chain collaboration?

Enabling collaboration in supply chain requires systems that can connect stakeholders with reliable information to enable proactive and reactive decision making with confidence.

In an increasingly digital world, this has to start with data. Our research found that only 4% of supply chain professionals trust their data. Without reliable insights, teams are left in the dark, leading to poor business decisions.

Fix the data

In our survey, we found that almost half (49%) of respondents said they do not trust their supply chain data because it’s inaccurate, while 44% consider it incomplete.

Supply chain management platforms, such as Zencargo, are built on a data-first approach to supply chain management to create a sustainable foundation for planning, execution and optimisation.

This includes:

  • Digitising the SKU-catalogue to set standards for product information
  • Connecting directly to manufacturers and carriers to source real-time information on production and transport
  • Direct integration with WMS, ERP and front-end sales systems to source complete, accurate data
  • Automated flagging of at-risk SKUs or shipments
  • By connecting directly to reliable data sources, businesses can bring their supply chain visibility into real time to deal with events as they are.

    Centralising communication and collaboration

    With shared visibility established, teams can move from inefficient, multi-channel communications to a single-source model, reducing scope for crossed-wires, missed messages and incomplete documentation.

    Zencargo’s cloud logistics platform connects all the relevant stakeholders and systems, enabling not just communication, but faster decision making when it matters most via:

    • Communication tied to individual shipments to minimise lost correspondence
    • Enabling suppliers to update key milestones and reasons for delays to analyse root causes
    • ‘Approval to ship’ action on the platform allows you to approve shipments as soon as cargo is ready
    • Digital documentation to streamline customs processes and origin/destination compliance

    Targeting progressive improvements

    With visibility and collaboration linked, teams can move beyond execution and target strategic improvements based on historic visibility and reliable benchmarks. These can reveal systematic issues such as process bottlenecks, poor supplier performance or unnecessary costs.

    Zencargo’s platform includes:

    • Analytics on landed freight costs per SKU to track margins and overheads
    • Benchmarks for supplier performance and container utilisation
    • Tracking OTIF by supplier and carrier
    • Lead time optimisation for more effective SOP
    • Tailoring modes according to SKU, trade lane and demand

    Supply cahin data

    The power of supply chain collaboration

    Supply chain collaboration is no longer a ‘nice to have’ for businesses. Organisations that are unable to effectively coordinate their networks to keep up with the demands of the current market will be at a distinct disadvantage as supply chains continue to evolve.

    Achieving true collaboration requires changes in culture, technology and organisational structure, however many businesses are unable to even quantify the scope of the challenge. Without reliable data and insights, any supply chain collaboration plan is operating in the dark. Businesses need to prioritise true supply chain visibility in order to achieve results.

    Zencargo’s supply chain platform is designed to integrate with a range of systems, from warehouse management to manufacturers, bringing data, insights and collaboration to enable informed, transparent decision-making.

    To find out more about how Zencargo can enhance your supply chain collaboration, book a call with one of our supply chain experts or take our supply chain diagnostic to benchmark your own performance.