In many cases, however, this turns out not to be true.
Collaboration may be of more interest to a smaller
partner, which might invest more time and effort in
the program than a very large one that is already juggling dozens of similar initiatives.
A better approach is one that assesses current customers or suppliers across three key dimensions. First,
is there enough potential value in collaborating with
this partner to merit the effort? Both partners in a
prospective collaboration need to be sure that it will
deliver a sufficient return to justify the upfront investment. Second, do both partners have sufficiently common strategic interests to support the collaboration?
A retailer that has prioritized growth in a particular
region or segment will have more to gain from collaborating with a manufacturer that has a strong offering
in the same area. Third, does the partner have the right
infrastructure and processes in place to provide a basis
for the collaboration? Collaborating to improve forecasting and demand planning is likely to be frustrating
if one partner’s existing planning processes, systems,
or performance are inadequate.
4. Invest in the right infrastructure and people
Both manufacturers and retailers that participated
in our research cited a lack of dedicated resources as
one of the top three reasons for the failure of collaboration efforts. Companies frequently underestimate
the resources required to make collaborations work,
assuming that they can leave it up to staff in various
functions to do what’s required in addition to their
other responsibilities.
In practice, even relatively simple collaborative
tasks will be more difficult than equivalent activities
conducted within the walls of the organization. That’s
because staff must overcome differences in culture,
organization, and terminology, not to mention the
basic challenge of finding the right contact within the
partner organization with whom to liaise.
Disconnects within one organization can create
problems, too. A “grassroots” collaboration started
between two supply chain managers can lead to rapid
performance improvements, only to be snuffed out
when those higher in the organization fail to under-
stand the initiative’s potential. Alternatively, a col-
laboration agreement made between two board-level
executives will fizzle out if the managers responsible
for executing it think it is yet another short-lived
senior management whim; if they can’t see how the
collaboration will help them achieve their own objec-
tives; or if they lack the incentive to put additional
effort into the project on top of their existing day-to-
day roles.
To prevent both of these problems, best-practice
companies devote extra resources to their collabora-
tions, particularly in the early stages of a new relation-
ship. Appropriate infrastructure for a successful col-
laboration begins at the top of the organization, with
a steering committee of senior leaders who can set the
defining vision for the collaborative effort and allocate
resources to support it. The detailed design of the
collaboration program is then completed by a team
comprising members of all relevant functions from
both partners in the collaboration. The team for a
demand-planning effort, for example, should include
members from sales, finance, and supply chain for the
manufacturer, and from purchasing, merchandising,
and store operations for the retailer. This team will
also be responsible for the day-to-day monitoring of
the effort once it is up and running.
Execution of the collaboration should take place
within the line organization and will ultimately form
part of the everyday responsibility of the staff assigned
to it. The best companies avoid forcing their front-
line staff to “reinvent the wheel” by providing strong
support when establishing each new collaboration.
They may, for example, leverage experience gained in
previous collaborations by setting up teams to support
u Collaborate in areas where you
have a solid footing
v Turn win-lose situations into
win-win opportunities with the
right benefit-sharing models
w Select partners based on
capability and strategic
alignment, not just size
x Invest in the right infrastructure
and people
y Jointly manage performance and
measure impact
z Collaborate for the long term
Where to
collaborate
How to
collaborate
SOURCE: MCKINSEY & COMPANY (2012)
[FIGURE 1] SIX KEY STEPS TO
SUCCESSFUL COLLABORATIONS
