Collaboration is key to cutting supply chain costs

The recession has served to emphasise the role and importance of collaboration between suppliers, customers and logistics operators throughout the entire supply chain in order to improve efficiency and to cut costs. 

Collaboration can extend from different companies with similar routing requirements and sympathetic collection and delivery needs sharing vehicles, through to organisations which are actually in competition with each other identifying partnership opportunities for improved efficiency generating mutual benefits.  Pooled logistics operations can maximise vehicle utilisation, reduce empty running, save on expensive fuel costs, reduce labour costs, cut road congestion and decrease carbon emissions.

Professor Alan G Waller OBE, a former President of the Chartered Institute of Logistics and Transport in the UK (CILT) and vice president at consultancy Solving Efeso, is an enthusiastic supporter of using shared logistics facilities and was last week (24th June) featured in a special supply chain management supplement in The Times.  Responding to a suggestion that collaboration means giving up a measure of competitive advantage Waller said: This is old fashioned thinking.  Companies that collaborate to save supply chain costs will have a competitive advantage over those that dont.

The recession has pushed down volumes leaving the fixed costs exposed.companies must either take out fixed costs or increase volumes.  And the best way to do that is to collaborate with other organisations.  There are huge opportunities but you only get those opportunities by focussing externally.

Waller has been instrumental in fostering collaboration through the international organisation the European Logistics Users Providers and Enablers Group (ELUPEG).

In 2007 the CILT itself formed the Value Chain Forum, a group with the objective of improving the overall performance and cost-effectiveness of private and public value chains by redefining the required components of sound management including the exploitation of opportunities to partner or collaborate.  The group recently published Value Chain Development Developing a more valuable and certain future which describes the process of recognising opportunities, structuring integrated and supporting data, and how to collaborate within the law.

The philosophy of industrial and supply chain collaboration is fast gathering momentum.  In May, issues of partnership and collaboration constituted a repeated theme throughout the CILTs 2009 Annual Logistics Conference and a variety of speakers referred to work in hand to establish and develop collaborative opportunities.