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 IFOLLOWERS OF FASHION Ken Cottrill Collaboration is definitely in vogue but it is coming in a number of guises and companies must choose which one is the best strategic fit. For Forrester Research, "dynamic collaboration" is the new trendsetter. In a report just published, "The Collaboration Imperative," Forrester defines it as "win-win partnerships that share business activities across network allies." Authored by Forrester analyst Steven Kafka, the report says dynamic collaboration is a response to the shift in power toward customers that use the Internet to do business. Unfortunately, companies are trying to meet these demands with outmoded business partnerships that keep partners at arm's length and are based on a what-can-you-do-for-me philosophy that is ill suited to the growing universe of web-based trading. Instead of taking inventory out of the supply chain, today's business partnerships simply pass off inventory to other links in the chain, according to Forrester. An example is efforts by the three big automakers to shove more assembly responsibilities on to suppliers. Information that is hoarded and does not flow freely also clogs the supply chains of today's partnerships, the report said. Dynamic collaboration will enable companies to compete more effectively, providing they follow three operating principles, the report suggested. Partners should seek mutual gain, must break out of the "crippling isolationism" that stymies productive partnerships and should tailor collaborative solutions to different business situations. Technology is the key enabler and the report described some examples. Tyson Foods is using order management tools to shorten payment cycles and make more timely deliveries to customers. MTD Products is speeding up power-equipment development projects by using tools that give suppliers more access to project schedules. GE Plastics has created a Design Solution Center that customers use to save research time and reduce error rates by obtaining the latest product information. The biggest challenges in these three areas are overcoming cultural resistance, reshaping the organization and overcoming the fear of getting started, said Forrester. Start small, the report advised, seek out common goals and "create performance measures that couple partnership metrics like on-time delivery to external measures like end-customer satisfaction." Technology is the glue that binds partners together but "firms shouldn't accept the 'we do it all' promises of vendor charlatans," it warned. Also, dynamic collaboration is not for every organization. It works best in fast-moving industries that have to live with rapid change and in complex industries that face high coordination costs. Companies may opt instead for private exchanges from the collaboration collection. Recent research indicates that this is a popular choice. AMR Research predicted that connecting customers, suppliers and employees to an organization using a private trading exchange would be one of the fastest areas of application growth over the next five years. Specific applications for collaborating between or within organizations that help to lower costs are being widely adopted, according to AMR. A survey released last month by Jupiter Media Matrix concluded that business-to-business collaboration would be the fastest-growing use of private trading networks. The survey is based on responses from 406 executives from U.S.-based companies with revenue greater than $500 million. Twenty-six percent of the respondents said they would add features to their private trading networks within the next 12 months that will allow companies to facilitate collaborative online activities, including inventory level monitoring and product design. The survey revealed that the addition of collaborative applications to these networks would outpace those of transaction-focused enhancements. Sixty-one percent of the executives cited closer supplier relationships as a key function of private networks, and 46 percent indicated that faster times to market and closer links to channel partners were top-value propositions of such networks. For Dr. C. John Langley Jr. of the University of Tennessee, the collaborative logistics network is a great vehicle for collaboration. "As the blending of capabilities increases, the collaborative logistics network satisfies the need for a neutral third party that can be engaged to drive, manage and facilitate the collaborative activities of all participants," he concluded in a white paper published this month, "Internet Logistics Market Analysis." He groups collaboration into three models: vertical, horizontal and full. Of the five categories of vendors in the Internet logistics market charted in the paper, only the collaborative logistics network leverages the full collaboration model, according to Langley. Adding to the confusion is that although vendors may describe their offerings as collaborative, "the truth is that many vendors tend to use the words 'communication' and 'collaboration' interchangeably," Langley said. And while systems vendors and management consultants are profiting from the growing market for collaboration tools, some sectors still are struggling to come to grips with the challenges that closer working relationships bring. The semiconductor industry is one, according to Vinay Asgekar, an analyst at AMR Research. "Supply-chain disconnects in the fourth quarter of 2000 are the latest evidence of the failure of collaborative inventory management," he said. Complex business relationships between OEM, electronic manufacturing service provider and semiconductor manufacturer make collaborative management challenging, Asgekar said. Par- ticipation in collaborative inventory programs is sporadic, and an unwillingness to bear risk is one reason why semiconductor manufacturers are loathe to become involved in such trading communities. "Solving the problem requires a shared-risk framework, a joint risk management process and supply-chain execution systems to provide cross-company inventory visibility," he said. |
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