Collaborative work in SCM: advantages, technologies and obstacles

Disruptions in global supply chains affect the world economy. With quite severe consequences, as those disruptions can quickly lead to delays or even failure in the delivery of goods or services. To ensure that the complex logistics processes function as smoothly as possible even in times of crisis, effective collaboration between all supply chain partners and the intensive exchange of all relevant information have become indispensable. In our latest blog post, we explain the key benefits that collaborative work has for companies, the technologies that support them and the obstacles that those involved must face in order to successfully establish and build a transparent, resilient and efficient supply chain.

1. Strengthening collaborative processes and meeting challenges together
2. Transparency, efficiency, sustainability: How companies benefit from collaborative work
3. Technologies that support collaboration along the supply chain
4. Collaborative work – what are the obstacles?
5. Conclusion: Collaborative work along the supply chain is an opportunity

1. Strengthening collaborative processes and meeting challenges together

The COVID-19 pandemic, the energy and climate crisis, geopolitical tensions – the past few years have repeatedly presented the logistics industry with ever new challenges, revealing just how susceptible complex global value chains really are to disruption. To meet these challenges, it has become apparent that it is certainly not just the competitive aspect, but above all efficient collaboration between companies that revives and secures business. Collaboration is key in this context – with the aim of jointly ensuring effective and reliable delivery of products or services.

If the players along a supply chain collaborate, requirements of the procurement and supply structures, the assurance of deliveries or compliance with regulatory criteria such as the German Supply Chain Act can be processed more flexibly. Further, they can be jointly managed and strengthened. The companies involved benefit from greater transparency through appropriate tools and transparent data sharing, which is significantly increased by the shared view on the individual processes. According to the 17th Hermes Barometer, three quarters of the German companies surveyed rate increased transparency as an advantage and a success-critical factor for greater agility and efficiency in the supply chain. In this context, collaboration goes beyond mere cooperation between companies: Rather, it is to be understood as a long-term concept of active and, above all, goal-oriented togetherness that requires intensive communication, integration and interaction between the participants.

2. Transparency, efficiency, sustainability: How companies benefit from collaborative work

Especially in times when markets are changing rapidly and innovations play an important role, quick action and decision-making are very important. Collaborative solutions lay the foundation for this. They give authorized players direct access to the physical and digital supply chain, while at the same time simplifying the access to all relevant data. Companies benefit from this in several ways.

Overview of the benefits of collaborative work:

• More transparency: The use of artificial intelligence and real-time monitoring makes it possible to collect large volumes of data and analyze them at an early stage. This not only allows for a complete monitoring of the individual processes along the supply chain by all partners involved, but the evaluations of the information also provide the opportunity to create forecasts and react to possible risks at an early stage.
• Cost savings for the companies: By making all relevant data available, partners can optimize processes, share resources, and reduce material and/or transport costs. Full transparency over all goods movements can, for example, significantly reduce the costs for waiting times, manual reconciliations or overtime.
• Avoiding supply bottlenecks: If all companies have insight into the complete supply chain, goods management can be designed in a much more agile manner. Product inventories are recorded digitally, repeat orders are requested in good time, and delivery times can also be better coordinated and tracked thanks to coordinated processes.
• Increased flexibility: The collaborating partners have an overview of all information and resources through comprehensive monitoring and can thus adapt their products and processes more quickly to changes in the market.
• Increased efficiency: By automating and streamlining processes, company productivity is increased, administrative overhead is reduced, and companies can focus more on their core competencies and issues.
• More sustainability: Collaborative supply chain processes can lead to an increase in the net savings potential of CO2 emissions through the sharing of resources and the use of digital tools. Also, intensive and transparent collaboration between individual companies can facilitate compliance with ESC criteria.
• Risk reduction: If companies exchange information regularly, they can identify problems at an early stage and, under certain circumstances, take prophylactic action. Delivery bottlenecks, quality problems and miscalculations can thus be reduced.

Studies confirm the benefits of efficient collaboration and prove that collaborating companies are more successful.

3. Technologies that support collaboration along the supply chain

Various factors are decisive for the success of collaborative cooperation along the supply chain. According to the assessment of the companies surveyed for the Hermes Barometer, in addition to personal contact and exchange between the various players, suitable digital platforms have a significant influence on successful collaboration. In this context, efficient control tools such as cloud applications and ERP systems are rated very highly, as they are easy to use for all supply partners thanks to a simple and intuitive handling.

These technologies support collaborative processes:

• Cloud applications: Nothing works in supply chain collaboration without exchanging and sharing data. Cloud applications manage information and data in a central cloud-based environment that can be accessed by all participants in the collaborative supply chain, regardless of location or device.
• ERP systems: They integrate various functions and business processes such as finance, warehouse management, SCM, communication and human resources in one system and thus help companies improve their processes and decision-making.
• Supply Chain Management Systems: As a central platform, SCM systems also enable the management and exchange of information along the entire supply chain – from order to delivery data. Partners can plan their flow of goods more productively and proactively by monitoring inventory data in real time and forecasting demands. SCM also includes raw material procurement, manufacturing, transportation, warehouse management, and materials return and disposal.
• RFID technology: With Radio Frequency Identification, objects and goods are equipped with radio frequencies so that they can be digitally identified and tracked. The system consists of three components: The RFID tags that are attached to the goods and send signals, the RFID readers that receive and process the signals, and software that analyzes the collected data.
• Blockchain technology: The database is distributed on a network of several computers and consists of different blocks. These are linked by cryptographic techniques and contain transactions and information. The data is well protected against forgery and manipulation by encryption.
• Artificial Intelligence and Machine Learning: AI and ML can be used to improve or automate processes, analyze data, and reduce error rates. ML algorithms, for example, recognize patterns in data to make predictions. There are also algorithms that optimize routes and thus reduce transport time.
• Collaborative Planning, Forecasting and Replenishment (CPFR): CPFR uses CPF software and is also based on data sharing. Through joint planning, forecasting, inventory replenishment, and performance evaluation, companies can identify weaknesses and areas for improvement throughout the supply chain and thus jointly increase efficiency.

4. Collaborative work – what are the obstacles?

Despite the many advantages, the logistics industry is still a long way from making supply chains digital across the board. According to the Digitization Index of the German Federal Office for Economic Affairs and Climate Protection it is one of the least digitized industries in Germany. Those responsible particularly often cite the time and expense involved in setting up a common communications infrastructure as an obstacle. Other problems include fragmented IT systems and data formats that are difficult to merge into a uniform information base, as well as inadequate networking between suppliers and trading partners, a lack of personnel for effective communication between stakeholders, and concerns about data protection and security.

To counter these obstacles, many companies seek support from external service providers. Logistics experts like Hermes International therefore help to provide digital offerings and support companies on their way to improved collaboration and more transparency along the supply chain. In a continuous process of further development, Hermes International is also setting up to be even more technologically future-proof in order to raise its supply chain solutions to a new level.

5. Conclusion: Collaborative work along the supply chain is an opportunity

Collaborative work is increasingly becoming a success factor in the supply chain. Effective management tools such as IT platforms are essential for this progress, as they reveal the relationships within the supply chain and help to identify risks at an early stage and minimize them efficiently. Digital channels enable communication in real time, thus creating valuable synergies. Implementing the necessary technologies plays a key role in enabling the various companies involved in a supply chain to share resources, exchange data and make joint decisions based on this information. Accordingly, technologies are developing rapidly: with the help of predictive analytics, simulations and forecasts, problems can be identified at a very early stage and thus solved before they occur. The avoidance of wasted resources is also a decisive factor for collaborative work – in this way, those responsible can sharpen and streamline processes, as well as increase the efficiency of their company in the long term.

Further information and the complete analysis of the survey can be found in our 17th Hermes Barometer “Collaboration in the Supply Chain”, which can be downloaded here free of charge.