COLLABORATION
COLLABORATION
And FMCG giant Procter & Gamble has made it clear collaborative relationships lead to gains on both sides. The company has a supply network of more than 50,000 diverse suppliers from around the world. These providers cover a wide range of industries and services – from creative agencies to technology partners to materials suppliers. In 2019, it recognised 10 ‘Partners of the Year’ for their work in 2018, together with six other companies who made significant contributions to its global supply chain transformation. Speaking at that awards ceremony, P&G’s Chairman of the Board, President and CEO David Taylor, asked the partners to continue to share their best ideas and innovations with them. “We want strong, lasting relationships with our supplier partners,” he said. “The stronger our relationships are, the greater the opportunity we have to serve consumers better than anyone else. It’s clear that winning today, and in the future, requires seamless collaboration and continually raising the bar together.” Innovation is a collaboration opportunity, because good innovation isn’t just having a great idea, it’s about getting the idea into practice, and that requires a collaborative effort. One person may have had the inspiration but without collaboration it would never hit the market. It needs everybody – designers, marketeers, finance, procurement and so on – to pile in and work as a team to make it happen or the idea withers and dies.
The case for supplier collaboration
customer experience. It may even be ways in which suppliers in your network could work together. Supply and value chain mapping is often done to identify ways of cutting costs or inventory but it is also a practical way to identify where your company comes in contact with a whole range of suppliers – at every point you come into contact is an opportunity for collaboration. And sharing also means sharing the negatives, such as risk. Procurement professionals should be wary of pushing risk down the supply chain where it is likely to be less visible and manageable – and therefore actually more of a risk. The output of collaborative conversations should be joint objectives both organisations share and buy into. Clear plans that are signed off, with accountable roles and responsibilities. The impact of Covid-19 has seen suppliers and clients pulling together, and a poll conducted in April by the Chartered Institute of Procurement & Supply and Supply Management magazine found many want it to continue that way. A total of 41% said they intended to maintain collaboration in areas such as buying and logistics long after the pandemic, second only in popularity to retaining new alternative suppliers (45%). Look for opportunities, don’t pontificate, get people in a room (or virtual room), try to overcome any baggage and get positive. To find out how State of Flux can help you facilitate collaboration with your suppliers, as well as the technology, processes and training required, email enquiries@stateofflux.co.uk The optimum level of value from relationships can’t be ‘extracted’, it can only be released through collaboration.
1. The pace of change in business means working with strategic partners can help differentiate your offering and do so quickly. 2. Work with suppliers to realise the full collective power of your relationships. Don’t miss out on opportunities that you cannot realise without external help. 3. Suppliers don’t only provide products and services, they can work with you to ensure the cost of designing, producing and shipping the item is optimised. They can help you expand your reach, build your brand and establish yourselves as a market leader. 4. Improving sustainability for most firms is now a business, as well as an ethical, imperative. Moving at pace to meet increasing demand from the public, governments and companies themselves for sustainable products and supply chains can only be done collaboratively. 5. Smart organisations leverage their supplier’s investment in R&D to achieve their own competitive advantage. Why duplicate effort when you can collaborate? 6. Being a customer of choice matters (see p.44-47). To secure suppliers’ attention in favourable and challenging economic conditions, establish collaborative and mutually productive partnerships with them. 7. Suppliers can help simplify operations. State of Flux research has consistently identified service and quality optimisation as one of the primary business drivers for investment in supplier collaboration. 8. Suppliers are the experts – or should be – so leverage their knowledge and expertise to understand the product, category, capabilities and shifting dynamics in the industry. 9. Ecosystems and supplier networks are the future. Ensure you have the best connections possible to secure what you need to remain resilient and succeed. 10. There’s something in it for you too. By building strategic procurement and supplier collaboration skillsets you will begin to future-proof your career.
Why it matters
Collaboration is important for so many reasons. In the case of the engineers or cleaning company, their teamwork was more likely to get production back up-and-running swiftly; while in the case of the CEOs it could help improve the long-term prosperity of both organisations; and for sports professionals it can lead to wins at international competitions. The approach is the same, but the end goal of each collaboration may be different – such as profits, efficiency, sustainability, savings, health and safety, innovation and so on. More than 60% of companies that responded to this year’s State of Flux SRM research said they were becoming more collaborative with suppliers, with the approach having taken on more urgency and importance as the pace of business has increased. Businesses are seeking ways to respond to new market demands with agility and innovation and are more reliant on their strategic partners to help them create products that are competitive differentiators. In March, frozen food retailer Iceland said collaboration with suppliers had been the main factor behind the company succeeding in improving its environmental credentials, by removing 29% of plastic from its annual packaging usage. In late 2019, engineering business Rolls-Royce scooped a procurement industry award for its approach to supplier collaboration. Then CPO Gordon Tytler described the programme as not only about cost reduction or quality performance, but developing trust to enable both his business and suppliers to invest in new technology and bring it to market. The benefits of these efforts were shared between Rolls- Royce and its suppliers. He told Supply Management the business now encourages suppliers to challenge them in a positive way and work together as equals.
How you do it
Suppliers often suspect buyers of only wishing to work more closely with them when there’s a problem, or wanting to keep any benefit generated from joint working to themselves. True collaboration is about how both parties benefit. State of Flux helps organisations in a relationship to look at their strategic objectives and see where they are complementary. It starts at the highest level, examining the four or five objectives owned by each CEO. It then considers how they are trying to achieve those operationally and identifies ways in which those align or how the businesses can help each other. For example, we all want to help reduce our impact on the environment and everyone wants to improve profitability. This is about finding ways to do those things together, rather than at the expense of each other. State of Flux helps people to work together to realise opportunities proactively, not just reactively when there’s a crisis or problem. And it doesn’t have to mean big bang innovations, it could be incremental changes, or small enhancements to operations or ways to improve
It’s clear that winning today, and in the future,
requires seamless collaboration and continually raising the bar together. P&G CEO David Taylor
82 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
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