Supply Chain Collaboration for Resilience | Deloitte US has been saved
Global events continue to challenge supply chains
In the past few years, global supply chains have been disrupted by several “black swan” events such as the COVID-19 pandemic, chip shortages, and even wars. Although companies have long contended with global disruptions, the ever-evolving nature of these disturbances, combined with the expansive reach of the global operational network, magnifies their impact on supply chains. This necessitates a focus on building resilient supply chains.
As per Deloitte’s 2023 Global Chief Procurement Officer (CPO) Survey, 69% of CPOs indicated that enhancing risk management and developing resilient supply chain is a top organizational priority, while 61% believed that increasing supplier collaboration is their top strategy to deliver value.
Supply chain collaboration is key to building an agile and responsive supply chain that can withstand unforeseen challenges. By working together, supply chain partners can gain visibility into each other’s networks, identify, manage, and mitigate risks proactively, develop contingency plans, and innovate to adapt to changing market conditions.
Collaboration is key for end-to-end supply chain resilience
Deloitte has defined a supply chain resilience journey that starts with assessing supply chain priorities, illuminating the supply network, identifying and prioritizing issues, then planning and executing mitigation actions. Organizations can collaborate with suppliers to streamline and enhance every step of this process. For example, network illumination can be very effective if suppliers collaborate and share information about their networks, capabilities, and capacities. Collaboration enables building trusted networks—which promotes early detection of risks and a faster response to such risks, enabling reconfiguration of supply chains for resilience.
Reimagining supply chain collaboration
“Collaboration” has always existed within supply chains of an organization through communication and information exchange with suppliers, 3PL (third-party logistics) partners, distributors, etc. Traditionally, interactions between manufacturers and their suppliers would involve transactions such as issuing purchase orders or exchanging capacity and demand information. This information exchange was often siloed, not in real time, and sometimes inaccurate. Similar patterns of transactional and disconnected information exchange can happen with logistics partners, contract manufacturers, and other players. This way of working often leads to significant inefficiencies in the system and mistrust on both sides.
However, recent disruption events, regulatory trends, shift in supply dynamics, and changing consumer expectations have compelled organizations to move away from traditional collaboration to a win-win collaboration approach characterized by a trust and commitment to build resilient supply chains. The current complexity of supply networks also necessitates pushing the frontiers of collaboration beyond tier 1 suppliers to include other supply chain partners such as sub-tier suppliers, contract manufacturers, and logistics service providers.
End-to-end supply chain collaboration in action
True collaboration involves orchestration of the value chain partners and getting everyone to operate on a common drumbeat. High-impact use cases for end-to-end, advanced supply chain collaboration are summarized below:
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Manufacturers often collaborate with strategic sub-suppliers by openly sharing bill of material/component/raw material information for joint innovation and co-creation. Collaboration across supply chain planning provides visibility of a sub-supplier’s “true” inventory and capacity—enabling optimization of supply and material plans to minimize production disruptions. Proactive adjustment of category and commodity sourcing plans to mitigate supply risks is made possible by sourcing and procurement collaboration. Collaborative manufacturing through visibility of a contract manufacturer’s capacity results in effective resource utilization, reducing cost and improving throughput. Track and trace systems have been the earliest use cases implemented for collaboration with logistics partners—providing more visibility and trust to customers and supply chain partners.
Choosing which use cases to prioritize and implement depends on current maturity in these areas and business priorities. Most organizations start with sourcing and planning functions to enhance supplier collaboration to a multitier level and then expand across. We have seen many examples of how successful supply chain collaboration leads to cost savings and other positive business outcomes.
A European automotive manufacturer established full supply chain transparency across all involved partners and drove sustainable improvement in the supply chain for plants, suppliers, and transportation service providers by implementing a connected supply chain platform to enable supply chain collaboration. It resulted in an approximate 7% of stock savings through roughly 10% stock reduction, about 13% improvement in delivery performance, and about 10% reduction in transportation cost while reducing customer lead time by nearly six weeks.
The mosaic for successful supply chain collaboration
Several platform solutions exist in the market today to enable effective supply chain collaboration for supply chain resilience. While such platforms are critical enablers, true collaboration must go beyond technology to include other organizational and process factors.
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Start with a well-thought-out supply chain collaboration strategy, grounded in business goals, with a well-defined process and governance framework covering technology and data governance policies. Leverage organizational change management to create trust-based partnerships and facilitate rapid and seamless supplier onboarding. This can streamline common challenges since each supplier comes with its own set of systems and technical and functional procedures. Establish effective communication channels, demonstrate value, address concerns or resistance, and actively involve supply partners in the design and implementation of the chosen collaboration platform. All of these elements are instrumental for success.
Avoiding common pitfalls when executing supply chain collaboration
Effective supply chain collaboration is a transformative journey with multiple agile steps, constantly delivering value at each stage with many possibilities to improve. Some key considerations are listed below:
1. The journey should be initiated with a clearly defined strategy. This includes identifying gaps in current processes followed by a comprehensive assessment of the technology landscape.
2. “One” platform for all suppliers is key for successful collaboration. Such a platform should be able to:
- Collect data from multiple siloed systems; and
- Join, transform, curate, and create a contextualized data set for effective collaboration.
3. Start with developing foundational capabilities to enhance operational visibility with critical suppliers (start small). Once foundational capabilities are established, they can be extended to other suppliers (scale rapidly).
4. Onboarding of other supply chain partners, namely sub-tier suppliers, logistics service providers, etc., needs to be well-thought-out, as it can be challenging but rewarding.
5. True collaboration requires stakeholder buy-in, which can be achieved through effective communication, change management, and the demonstration of value. The realization of value and the understanding of value are pivotal factors that drive adoption.
6. Having a well-defined “playbook” can accelerate development and reduce overall implementation time. This comprehensive playbook should include functional and technical requirements, a robust governance framework that defines roles, responsibilities, decision-making processes, and a strategy for partner onboarding and organization change management, including “Why buy?” frameworks that help ease the process of internal and external stakeholder alignment.
Deloitte can help define and orchestrate supply chain collaboration capabilities
With its ability to improve multiple important key performance indicators, such as on-time, in-full (OTIF) delivery; forecast accuracy; build-to-plan; and downtime, successful supply chain collaboration is necessary for setting up resilient operations to win in today’s complex, challenging, and highly competitive environment. Through a team of subject-matter, technology, and industry specialists, Deloitte has been helping organizations across sectors establish robust collaborative ecosystems for supply chain resilience by harnessing technology and adopting industry-leading practices.
Authors:
 | Lisa Walker | ||||
| Vijay Natarajan | ||||
 | Simpson Selwyn |
Thank you to our contributors: Kreeti Mahajan and Ankit Aggarwal.
