Logistics collaboration and integration is when two or more autonomous firms working jointly to plan and execute supply chain operationsadmin / March 31, 2019
Logistics collaboration and integration is when two or more autonomous firms working jointly to plan and execute supply chain operations. It can deliver substantial benefits and advantages to its partners. It has been known as a cooperative strategy when one or more companies or business units work together to create mutual benefits. This can be either vertical collaboration and integration or horizontal collaboration and integration (Simatupang and Sridharan, 2002, Mason et al., 2007). Vertical collaboration is the collaboration when two or more organizations 0from different levels or stages in supply chain share their responsibilities, resources, and performance information to serve relatively similar end customers; while horizontal collaboration is an inter-organizational relationship between two or more companies at the same level or stage in the supply chain in order to allow greater ease of work and cooperation towards achieving a common objective.
Through integrating and collaborating with partners and customers downstream as part of a Lean strategy for supply chain strategy, one actually open a window into his or her future and even for the past. It’s like having the ability to time travel.
But before we travel through time, let’s define the subtle differences between integration and collaboration.
Integration of supply chain components started in the 1970s when Electronic Data Interchange created a business-to-business communications standard, followed in the 1990s by Enterprise Resource Planning systems with common databases. Then came the introduction and growth of the Internet.
The physical integration of supply chain processes can be facilitated, to varying degrees, for example, by appropriate contractual arrangements (such as joint ventures, strategic alliances and licensing) that lay out protocols for resources sharing, performance measurement and revenue distribution between the supply chain partners.
But true supply chain collaboration is more than just integrating information among business functions and partners. Yes, it is companies working together to improve data sharing, but it is also an interactive process that results in joint decisions and activities and often in multi-company teams from various disciplines in each organization.
Furthermore, supply chain collaboration is not easy to accomplish for many reasons, including a tendency to rely too much on one technology, failure to understand when and with whom to collaborate, and a propensity for distrust among partners.
Collaborative programs, such as Quick Response, Efficient Consumer Response, Vendor Managed Inventory, and the most recent iterations of Collaborative Planning, Forecasting, and Replenishment, have been around since the late 1980s. They all involve getting a more accurate downstream picture of the supply chain, using information such as point-of-sale data, retail store and distribution centre inventory balances and withdrawals, and current and future events such as promotions, discounts, or advertising.
These types of solutions reduce the bullwhip effect resulting in progressively larger inventory swings in response to changes in customer demand the result of which is supply chain volatility, inefficiency, and waste.
Through a structured integration and collaboration process, it is possible for manufacturers and distributors, in essence, to time travel and see potential causes of future disruptions before they occur. While an initial investment in resources may be required, opportunities for fewer stock outs on store shelves, up-selling, and cross-selling may be worth it.
Collaboration and Integration brings in facilitates benefits such as innovation, resource sharing and access to economies of scale, is a strategy that is increasingly being advocated (Eisenhardt and Martin, 2000, Fawcett et al., 2008). Collaboration is a valuable dynamic capability such that more agile companies can then reap the advantage (Barney, 1991, Helfat and Peteraf, 2003).
However collaboration is often seen as being unsuccessful and costly (Fawcett, Magnan & Fawcett 2010). Additionally working closely with another organisation can require a change in managerial thinking and practices to see the value in working together. Consequently an organisation will also have internal enablers and inhibitors that impact the driving forces to collaborate (Fawcett, Fawcett, Watson, & Magnan, 2012).
Logistics collaboration and integration issues how Information and Communication Technology manages these issues are illustrated below:-