Monday, 24 January 2011

Horizontal collaboration in the supply chain – can IT providers keep up with this green opportunity?

Back in December eyefortransport published its European Supply Chain Horizontal Collaboration Report 2010, which makes quite interesting reading.

Clearly collaboration within the supply chain is a greener approach, as well as more cost effective for all parties, and seems to be spreading rapidly. It generally involves a pooling of resources between manufacturers or retailers, including consolidation of goods flows, sharing of transport vehicles and network capacity, sharing warehouses, etc. as well as back office processes such as finance, administration and customer service.

The report is a survey-based analysis looking at the extent of acceptance and adoption of collaboration and the issues involved. It was addressed at companies of all sizes and included manufacturers/retailers, third party logistics suppliers (3PL), carriers, and solutions/technology providers.

Lowering carbon emissions was only assessed as 9th of the 14 drivers for horizontal collaboration among manufacturers and retailers. The ranking was based on those who thought it a very important driver (c10%), but a much larger number, around 70%, thought lowering carbon emissions is either important, quite important or very important as a driver for horizontal supply chain collaboration.

The solutions providers had the lowest expectations for the implementation of horizontal collaboration, although they did report a much higher level of acceptance than a year ago and significantly higher implementation is expected within the next three years.



When it comes to implementing horizontal collaboration, lack of IT infrastructure and/or support was seen as a barrier for 20% of the manufacturers/retailers. Significantly, though, the figure was much higher for the carriers, as the chart shows. Whilst the carriers, understandably, have more concerns generally, the lack of IT infrastructure and/or support is second only to the difficulty in establishing a relationship of trust.




The report’s general conclusion is that horizontal collaboration in the supply chain is spreading in both acceptance and practice. With the benefits in terms of cost reduction and service levels, horizontal collaboration is seen as the next step in supply chain development.

It’s clearly also going to be a significant factor in reducing greenhouse gas emissions and it seems to me that it could easily become a much higher priority if broader carbon-reduction legislation is introduced, or even if carbon reporting becomes more widespread.

As yet, though, it seems that the IT aspect remains an issue. Solutions providers have the lowest expectations for its adoption and a significant number of carriers (40% plus) feel that IT is holding things back.

It looks like supply chain solutions providers are behind the market on this one, or if they have solutions that can handle horizontal collaboration they’re not making it clear to the market. With such a significant green IT potential it does seem that the supply chain solutions providers are doing themselves, the market and the environment no favours.

© The Green IT Review

1 comment:

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