Turning the Australian supply chain symphony into a masterpiece: Institutionalised collaboration

6 September 2021
From our ‘Thinking outside the box’ series
Professor Ben Fahimnia calls for a more collaborative supply chain management culture to optimise business processes in this increasingly globalised age.

The pandemic has exposed many weaknesses in our supply chains, the biggest being the lack of collaboration between different supply chain stakeholders.

At the height of lockdown, interest in videos of individual musicians cut together to form orchestral pieces soared. Whilst these efforts are admirable given physical distance requirements, the final products are admittedly not as good as a live performance – they were missing a conductor. Supply chains in Australia work in much the same way. The world-class supply chains know that it takes a great conductor to turn the supply chain symphony into a masterpiece.

Supply chain management is often referred to as a branch of operations management. Prior to supply chain management being introduced as a concept almost half a century ago, organisations bought their materials locally (or made them internally), processed them, and sold their final products to local markets. It was easy for managers to have everything under their own control using standard operations management tools and techniques.

Things started to change dramatically with globalisation because organisations are now required to deal with several stakeholders, both internally and externally. I refer to these stakeholders as the orchestral sections that work together to create the supply chain symphony. The management is the conductor who runs the show and is held responsible for synchronisation of all activities.

The only form of collaboration prior to supply chain management was “internal” collaboration between individuals within the organisation. However, with the involvement of external stakeholders in multi-layer operations (or supply chains), collaboration can be either internal (e.g., collaboration between different functions or departments) or external (e.g., collaboration with external stakeholders and third parties).

The different functions of an organisation such as marketing, sales, production, procurement, and logistics are the primary orchestral sections (internal stakeholders) that play the symphony, of course under the leadership of the conductor. The leadership comes with certain challenges. Tensions between different functions are inevitable given that individuals and departments are performance measured against different criteria. Externally, collaboration with customers, suppliers, and third parties are even more challenging than ever before given that entities in a supply chain (producer, supplier, distributer, etc.) have different goals and thrive to maximise their own utilities.

It all comes down to the management. Senior managers have realised the essence of all types of collaborations – as often and unsurprisingly addressed in the strategic intent documents. We have seen statements such as “we are going to be a truly collaborative organisation that...”, but the IT infrastructure, education/training, and organisational culture are often the bottlenecks to achieve the desired outcomes. We must remind ourselves that a conductor can only run the show if all the required instruments (infrastructure and technologies in a supply chain) are available and each section of the orchestra works in tandem with the others.

Most organisations have a big pool of data from their operations, but the data is usually a complete mess because it is collected, stored, and used differently, inconsistently, and unsystematically by different individuals and functions/departments. This is where digital transformation and organisation-wide platforms/guidelines for data collection and processing will help.  

The drum beat needs to be set by the chief executives, but conducting the show is in the hands of operations and supply chain managers. There are various approaches to help supply chain managers to ensure that the organisation is internally aligned, and the employee is adequately instructed and incentivised to take collaboration seriously. We can only expect our employees and managers to take collaboration seriously and be comfortable collecting and sharing information/data if they understand the rationale and are held accountable. This is to say that we need specific guidelines and approaches to take the collaboration concept from the chief executive to the frontline.

Establishing a collaborative culture is obviously not an overnight exercise, but rather a long process. What is important to understand is that a supply chain can only be optimised if collaboration is institutionalised. It comes with some costs in the short-term but has an attractive end product: “a cohesively assembled orchestra to play a unique supply chain symphony”.