Published on February 3, 2011 in Articles
The “Peak” season is over, and everyone has survived the mad end of year rush. It is estimated that over 175 million packages were delivered on December 22, 2010 (by UPS, FedEx and USPS)… Santa’s helpers were quite busy. This is a great example of “collaboration” at work. There is a tremendous amount of planning that goes into the execution plan for peak season. This also requires an enormous amount of collaboration between vendors, airlines, business units, employee teams and seasonal help. The definition of collaboration is “the ability to work together in an intellectual and operational manner.”
Let’s take a closer look at how we can use collaboration in 2011 with our small parcel carriers and 3PLs. The goal in exercising collaboration is to develop synergistic value creation. In order to gain the most in a collaborative partnership, this requires senior management support and commitment from all organizations involved. There is an element of shared risk and resources in this process.
Striking Up a Partnership
Here are some steps to get you started in this journey of developing a collaborative partnership:
1. Establish mutual goals by all organizations
2. Obtain senior leadership commitment
3. Set ground rules for “open book” discussions
4. Assign cross functional teams
5. Determine how technology will be integrated
6. Meet regularly
7. Develop communication plan
The small parcel carriers/3PLs are playing a bigger role in the global supply chain arena. Most of them have a full portfolio of services to offer, and this is where collaboration becomes essential in developing the most optimized solution. In a recent supply chain study, it shows that most organizations spend about 72% of their supply chain cost on transportation (50%) and inventory (22%). In the transportation bucket, this can come in many different modes and suppliers. With inventory carrying cost as the second largest one, you can get very creative in this approach to pull out cost and improve operational efficiencies. This is most likely to happen in a partnership that is grounded in a strong collaborative approach.
There are three critical components to collaboration and they are as follows: visibility, integration and synchronization. The process of developing a collaborative approach takes time and is built on trust and commitment. All shippers will be challenged with rising transportation costs in 2011 and the “Best in Class” organizations will embrace the “Collaborative Approach” in achieving their financial goals.
Collaborative partnerships will help you achieve your goals in 2011!!!
— Michael J. Ryan
written for January/February 2011 issue of Parce