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Co-creation and Collaboration in the Supply Chain. Emeritus Professor Martin Christopher Cranfield School of Management Cranfield University Cranfield Bedford MK43 0AL United Kingdom Tel : 44 (0)1234 751122 Fax : 44 (0)1234 721225 E-mail : m.g.christopher@cranfield.ac.uk

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co creation and collaboration in the supply chain

Co-creation and Collaboration in the Supply Chain

Emeritus Professor Martin Christopher

Cranfield School of Management

Cranfield University

Cranfield

Bedford MK43 0AL

United Kingdom

Tel : 44 (0)1234 751122 Fax : 44 (0)1234 721225

E-mail : m.g.christopher@cranfield.ac.uk

www.martin-christopher.info

agenda
Agenda
  • The new rules of competition
  • Gaining advantage through collaboration
  • The challenge of complexity
  • The case for ‘co-opetition’
  • The Supply Chain of the future
new competitive realities
New competitive realities
  • Input costs are rising but …
  • New sources of low cost competition mean that the pressure on price will continue and …
  • Continued concentration of markets means that bigger, more powerful customers will demand more from their suppliers whilst …
  • Conventional marketing strategies have less effect in a time-sensitive, on-demand world
nothing ever changes
“..... In 50 years between 1870 and 1920 the cost of distributing necessities and luxuries has nearly trebled, while production costs have gone down by one-fifth.... What we are saving in production we are losing in distribution.”

Ralph Borsodi

‘The Distribution Age’ 1929

Nothing ever changes ........
inventory profile of the automotive supply chain

(UK 1999 Figures, Volume Car Stock Levels

First Tier

Supplier

Inbound

Logistics

Vehicle

Manufacturers

OutboundLogistics

Distribution

& Retail

Days of Inventory

Source: Holweg (2002)

Inventory profile of the automotive supply chain
the search for collaborative advantage
The search for collaborative advantage
  • Seek out opportunities for horizontal as well as vertical collaboration
  • Co-operate to grow the cake, compete on how to slice it
  • Leveraging capabilities and knowledge through collaboration
  • Share assets in the supply chain where appropriate
co creation in the supply chain
Co-creation in the supply chain

Extended Enterprise

Focus on expanding the pie

Traditional Relationship

Focus on splitting the pie

Value to Customer

Value to Customer

Value to Supplier

Value to Supplier

Source: J.H. Dyer, Collaborative Advantages

the extended enterprise viewpoint
The extended enterprise viewpoint

Single company thinking

Extended enterprise thinking

Focus on the ultimate consumer

Increase profits for all

Consider total costs

Team with the best

Share ideas, information and resources

Improve joint process efficiency

  • Focus on the customer
  • Increase own profits
  • Consider own costs
  • “Spread the business around”
  • Guard ideas, information and resources
  • Improve internal process efficiency

Source : A T Kearney

the business case for supply chain integration
The business case for supply chain integration
  • Supply chains compete, not companies
  • Most opportunities for cost reduction and/or value enhancement lie at the interface between supply chain partners
  • Supply chain competitiveness is based upon the value-added exchange of information
  • Supply chain integration implies process integration
  • Supply chain competitiveness requires the collective determination of strategy
the role of supplier and customer collaboration

Intermediary

Customer

Supplier

Complementor

The role of supplier and customer collaboration
  • Manufacturing Collaboration
  • Design for localisation
  • Scheduling synchronisation
  • Design anywhere build anywhere
  • Customer Collaboration
  • Joint product definition
  • Rapid proposal response
  • Online custom configuration

Enterprise

SPEED to Margin

  • Product Development Collaboration
  • Global platform design
  • Customisable products
  • Global distributed product development
  • Supplier Collaboration
  • Joint development
  • Outsource design
  • Contract manufacturing

Source : Accenture

co opetition a definition
Co-opetition: a definition

A business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together.

A “non zero sum” scenario, in which the sum of what is gained by all players is greater than the combined sum of what the players entered the scenario with.

Source: D. Meyer, 15th March 2011 and istockphoto

co opetition
Co-opetition
  • Cooperative Competition
  • Co-opetition occurs when companies work together in parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs.
  • Basic premise:
  • Co-opetition strategy and value creation leverage the alliance
  • Partner with other shippers (even competitors) to control logistics and transport costs
  • Load consolidation

Source: D. Meyer, 15th March 2011

co opetition partners
Co-opetition Partners
  • Producers, Customers, Consumers who drive producer demand and determine product eco-footprint
  • Shippers and Terminal Operators who generate the freight flows and provide the critical infrastructure for product flow
  • Logistic Service Partners (3PLs) who can design and implement optimised solutions and move the freight
  • Fourth Party Providers who can facilitate partnerships, referee blockages, find common ground
  • Governments who can assure that legal and regulatory arrangements are in place to support seamless collaboration

Source: D. Meyer, 15th March 2011

co opetition value creation
Co-opetition = Value Creation
  • Co-opetition does not simply emerge from coupling competition and cooperation issues
  • Co-opetition implies that cooperation and competition merge together to form a new kind of strategic interdependence between firms, giving rise to a co-opetitive system of reciprocal value creation.

Source: D. Meyer, 15th March 2011, and reubenmiller.typepad.com

from bow tie to diamond
From “Bow-Tie” to “Diamond”

Building stronger partnerships through multiple linkages

Traditional buyer/supplier interface

Supplier Development

Key-account selling

Buyer

Sales

R & D

Marketing

Marketing

R & D

Operations

Production

Production

Operations

Business Development

Business development

Marketing

Marketing

Supply chain

Supply chain

Supply chain

Supply chain

Customer

Supplier

Customer

Supplier

the supply chain of the future

Tomorrow’s Model

Virtual networks

Information based

Customer value oriented

Yesterday’s Model

Independent entities

Inventory Based

Low cost production

The supply chain of the future

Market Driven

Mass production

Mass customisation

mass marketing

one-to-one marketing

Supplier Driven