Collaboration in Supply Chain Management

Collaboration in supply chain management is a strategy used by firms to work together towards common goals by exchanging ideas, information, knowledge, risks, and rewards. This article explores the types of collaboration, such as transactional, cooperative, coordinated, and synchronized collaboration, and discusses the benefits it brings to different stakeholders in the supply chain. By collaborating effectively, businesses can improve efficiency, reduce costs, access new markets, and achieve strategic and financial gains.

Definition
Collaboration is a strategy used by supply chain firms to collaborate toward common goals by
exchanging ideas, information, knowledge, risks, and rewards.
Strategic and financial gains can be significant when working together effectively. collaboration
can speed up entry into a new market, boost flexibility, and provide you access to knowledge not
offered by your own company. It can generate higher revenues, lower costs, or a mix of the two
(Cohen & Roussel, 2004).
Drivers of collaboration include the desire to access
• Technology that belongs to a different business
• A technology that requires too much capital for one corporation to invest in on its own.
• A skill that is too expensive to develop or sustain
• A new market that is effectively barred from entering due to prohibitive hurdles to entry
(trade barriers, legislation, etc.)
Customers
• Inventory reduction
• Boosted income
• Reduced order management expenses
• Increased gross profit
• Increased prediction accuracy
• More effective use of advertising funds
Material Suppliers
• Inventory reduction
• Lower storage expenses
• Reduced material acquisition expenses
• less stockouts
Service Suppliers
• Reduced freight expenses
• More prompt and dependable delivery
• Reduced capital expenses
• Lessening of depreciation
• Reduced fixed expenses

Types of collaboration
The following are the several types of collaboration, according to Cohen & Roussel (2005):
1. Transactional collaboration
2. Cooperative collaboration
3. Coordinated collaboration
4. Synchronized collaboration
Transactional collaboration
• The goal of transactional collaboration is to execute transactions between
partners as efficiently and effectively as possible.
• The simplicity with which transactions are carried out is typically improved.
For instance, by doing away with the requirement for ongoing negotiations.
• Transactional collaboration typically refers to buyer-seller interactions where
supplies are purchased for common or MRO (maintenance, repair, and
overhaul) items.
• The most fundamental and often utilized type of collaboration is transactional
cooperation.
For instance, if you require your importer (foreign buyer) to pay on 30-day open account terms
but your suppliers provide 60-day open account terms for raw materials, your cash flow will be
in fine shape as long as your importer makes the complete payment on time. However, if your
importer (foreign buyer) requests 60-day open account terms from your company but your
importer (foreign buyer) only offers 30-day open account terms to domestic buyers, you will face
a liquidity crisis that needs to be resolved in order for production to continue while you wait to
be paid as stated by Yao (2015).
Cooperative Collaboration
• Information sharing is more prevalent in relationships that are cooperative.
• In a collaborative effort, the kind and format of the data presented are often
standardized.
• Supply chain partners might automatically commit and confirm, and they
might also offer data on forecasts, inventory availability, purchase orders,
and order and delivery status.
• One characteristic of cooperative relationships is the incentive for one party
to contribute resources or increase the profitability of a different partner in
the supply chain.
• Typically, one party submits information that the other partner reviews, and
data is sent manually or electronically from one partner to the other or made
publicly available so that the receiver can access it.

Coordinated Collaboration
• Supply chain partners cooperate more closely and depend more on one
another's skills in a coordinated connection.
• A two-way information flow between partners and closely synchronized
planning and execution procedures are essential for a coordinated
collaboration.
• Partners in the supply chain work together more closely and rely on one
another's skills in a coordinated cooperation.
• The supply chain partners that are more strategically important typically
engage in coordinated coordination.
• Coordinated collaboration necessitates a high level of negotiation and
compromise in contrast to transactional and cooperative relationships.
• Programs for vendor-managed inventory (VMI) are a popular way to organize
coordinated cooperation.
• In a VMI arrangement, the supplier is in charge of ensuring that the client
never runs out of supplies.
Synchronized Collaboration
The ability to coordinate, arrange, and control product, service, information, and financial flows
from beginning to finish of the supply chain so that it operates as a single entity is known as
supply chain synchronization.
• Synchronous collaboration, which occupies the upper right quadrant of our
structure, is the highest level of cooperation on the spectrum.
• Information is cooperatively generated in a synchronized relationship as
opposed to being only conveyed or traded.
• Partners may make investments in cooperative R&D initiatives, supplier
development, and intellectual property (IP) growth.
• Strategic alliances are frequently used to describe coordinated collaborations.
• Collaborations with Synchronized are characterized by a long-term business
commitment.
• Developing a product plan while taking into account supply chain
requirements is a fantastic example of synchronized collaboration.
• In synchronized connections, a shared product data management system is
typically present.
Conclusion

When the partnership lasts long enough, the businesses involved begin to comprehend and
cooperate with one another more effectively. The partners may coordinate moral business
practices and high-quality goods throughout the supply chain. In order to develop a network of
collaborators that will function as an extension of one's efforts to bring the right product to the
right client in the right market at the precise time they want and need it, a firm must
communicate crucial information in real time with supply chain partners.
References
Cohen, S., & Roussel, J. (2004, August 1). Strategic Supply Chain Management (1st ed.).
McGraw-Hill.
Yao, K. (2015). understanding the supply chain transactional relationship diagram.
Understanding the Supply Chain.