The COVID-19 pandemic starkly exposed the fragility of global supply chains. Yet even as the dust settles on the pandemic disruptions, supply chain leaders now confront fresh upheavals from events like the war in Ukraine and lockdowns in China.
To ensure resilience moving forward, experts emphasize the urgent need for enhanced collaboration across complex, international supply chains. In its top priorities for supply chain leaders today, McKinsey spotlights stronger collaboration and coordination as a vital area of focus.
This article explores 3 high-impact ways supply chain managers can cultivate deeper collaboration across their ecosystems:
Encourage Data Sharing
In today‘s data-centric economy, information is power. Even a relatively small supplier actively generates and handles massive volumes of data.
Data sharing stands as fundamental to enabling supply chain visibility and collaboration, as it provides true end-to-end transparency. However, despite the tremendous benefits, it remains a complex challenge to implement.
Modern supply chains embody multi-tiered networks. An original equipment manufacturer (OEM) works directly with Tier 1 suppliers, who engage with Tier 2 suppliers, and so on. The OEM‘s visibility rarely penetrates beneath upper tiers, because direct suppliers actively avoid being cut out if OEMs can engage directly with lower tiers.
A multitier supply chain limits visibility and collaboration
To meaningfully expand visibility across the entire supply network, supply chain leaders must look to leverage advanced digital solutions like:
Leverage Integrated Digital Software
A cloud-based supplier network management platform can seamlessly connect OEMs directly with the full supply network for real-time data transparency.
However, supply chain managers should first thoroughly evaluate and actively support the current digital capabilities throughout their supplier base before implementing such systems. Lack of digital readiness could hinder adoption.
A 2022 McKinsey study found that only 55% of suppliers surveyed felt adequately prepared for digitization. Supply chain leaders must assess and boost their partners‘ technology aptitude.
Utilize Blockchain Technology
Blockchain facilitates transparent and tamper-proof data sharing across a decentralized network of participants. It can substantially enhance:
- Granular visibility into all supplier data
- Mutual trust between supply chain partners
- Active collaboration through shared, distributed ledgers
Major global enterprises across industries are already running promising pilots leveraging blockchain to optimize their supply chain processes:
- Walmart uses blockchain to track global food supply sources in seconds rather than days
- Maersk applies blockchain to streamline global shipping workflows and paperwork
"Blockchain has the potential to revolutionize supply chains by enabling a tamper-proof record of transactions and data sharing." – Brian Walker, VP of Supply Chain at Gartner
Strategically Manage your Supplier Network
Moving beyond just encouraging data openness, actively managing the entire supplier network represents a vital driver of collaboration.
Foster Mutual Understanding
The pandemic painfully exposed how previously transactional arm‘s-length relationships with suppliers can dramatically backfire in times of crisis. As demand spiked, many suppliers lacked the flexibility in their operations to rapidly scale up supply.
Supply chain leaders now recognize the immense value of aligning goals with suppliers and cultivating long-term, mutually beneficial strategic partnerships. This is only possible when both parties invest in understanding the other‘s objectives, challenges, and incentives.
A 2022 McKinsey study found 80% of manufacturers rate supplier collaboration as crucial to navigating disruptions. However, only 34% currently partner strategically with suppliers.
Take a Proactive Approach
Suppliers strongly prefer working with businesses that operate resilient, collaborative supply chains prepared for disruptions.
Supply chain managers should drive initiatives to proactively devise contingency plans for crises like COVID-19, tightly integrating suppliers and even competitors into the planning process. Openly sharing demand forecasts, inventory status, logistics schedules, and order details across the ecosystem can enable unified alignment.
"Firms able to plan proactively and collaborate deeply with suppliers will thrive through global disruptions." – Brian Walker, Supply Chain Expert
Diligently Measure and Continuously Improve
To ensure collaboration initiatives remain sharply focused on goals, supply chain managers should diligently measure performance using carefully defined KPIs including:
- Compliance with quality standards
- Overall supply chain costs
- Inventory turnover rates and lead times
- On-time delivery performance
I outline the top supply chain KPIs to track in this comprehensive guide.
Relentlessly monitoring these metrics and rapidly addressing any gaps through corrective actions will systematically improve supply chain collaboration over time.
Given today‘s global interconnectedness, proactive collaboration represents an essential pillar of supply chain resilience. By prioritizing data transparency, strategically managing supplier relationships, and continuously improving, supply chain leaders can cultivate a genuinely collaborative ecosystem capable of surmounting disruptions.
To dive deeper on fortifying your supply chain, explore these additional resources:
- 5 Cutting-Edge Use Cases for AI in Supply Chains
- 7 Tactics to Dramatically Strengthen Supplier Relationships
- 5 Strategies to Radically Optimize Your Supply Chain
- 9 Ways to Supercharge Supply Chain Sustainability
Let me know if you need any help in your supply chain transformation efforts! With over a decade of experience in supply chain data management, I‘m always glad to provide strategic insights.