The manufacturing supply chain is complex and involves multiple people throughout several locations and teams. Today, disruptions have been common, causing significant impacts, from shipping incidents to weather delays. Collaboration across the supply chain with suppliers is more critical than ever. Manufacturing companies and their suppliers have prioritized supply chain resilience in response to the many disruptions to prevent economic impacts.
Even small setbacks or minor issues can create a hostile working environment between trading partners without collaborative decision-making. Including all stakeholders in the decision-making process ensures real-time updates are made to drive more effective decision-making. It allows companies to develop long-term partnerships that can benefit all parties involved.
Sharing information and collaborating with suppliers and partners on planning and execution decisions reduces cycle times and improves operational efficiencies. Trading partners must understand each other’s strengths, weaknesses, and processes better. By developing long-term partnerships, companies can better fill gaps and streamline production, shipping, and manufacturing, reducing the costs of relearning and understanding a new partner’s operation.
Many companies often underestimate the resources, complexities, and time commitment it takes to collaborate with trading partners. Team members have to be able to understand and communicate effectively and often with different cultures. By consistently changing suppliers, team members are forced to relearn and relocate appropriate contacts and processes for the new organization.
While the most prominent customers and suppliers may seem appealing when trying to maximize efficiency and profit, collaboration can often be challenging. Companies that strive to work with them may face more pushback when trying to deliver their input. Smaller partners are more likely to be open to putting effort into collaboration and understanding to help increase productivity, reduce delays, and improve sales.
Many studies, including one published by the European Journal of Operational Research, have highlighted the influence of collaborative efforts and their impact on reducing the bullwhip effect. The bullwhip effect can be a slight fluctuation or error in assessing demand that causes a gradual increase in variability throughout the supply chain, causing more inefficiencies as the demand ramps.
Thanks to the advancement of technology, communication, and collaboration between suppliers, buyers, and manufacturers are made more accessible by using real-time data to inform decision-making. More companies are turning to cloud-based software to improve collaboration and use a single platform to bring companies together effortlessly. Companies can use IoT sensor integration to review the product through advanced analytics and big data. Trading partners can make decisions faster and more efficiently. The sensors allow companies to track the inventory in real time to receive notice of any delays or disruptions to make better decisions to reduce the impact on the supply chain.
Collaboration decisions throughout the supply chain are essential to increase efficiency while meeting increased customer demands and increasing profitability. Successful collaborations can allow companies to take advantage of each trading partner’s strengths and improve opportunities. By aligning goals, companies can build a successful partnership to deliver enhanced customer service, improve processes, and build a strong foundation. A collaborative supply chain prevents detrimental disruptions and keeps the economy moving no matter the issues.
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