Unleashing The Power Of Collaboration: A New Paradigm For Supply Chains

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Imagine you're building a new house: you need water lines in several rooms. Would it make sense to hire one plumber to put a line to the kitchen, another one to plumb the restroom, another the master bath and another to pipe in the laundry room? No, of course it wouldn't. It would be terribly inefficient, inexpensive and inconvenient. The plumbers are all using similar resources and equipment and they have the same objectives. Wouldn't it make much more sense for them to pool resources and work together?

Supply chain companies compete for the same resources, whether it's labor, warehouse space or trucks on the road. As the packaging market for ecommerce continues to skyrocket, doesn't it make more sense to embrace cross-industry collaboration over competition?

What often happens when business leaders employ tactics to streamline and digitize supply chains is that they focus on specific links in the chain instead of the big picture. They default to linear thinking and, as a result, the solutions are often at odds with reality. Supply chains are sophisticated networks of interactions that more closely resemble complex physics than simple linear paths. Despite good intentions, many initiatives fall short by neglecting this complexity.

The pandemic laid bare these vulnerabilities. With container backlogs and crew shortages, we saw firsthand how traditional supply chains falter under pressure. Large shippers exacerbated problems by monopolizing resources and squeezing out smaller shipments. This chaotic period underscored the need for networks that prioritize shared information and resources, optimizing volume and density for everyone involved.

A shift towards collaborative networks, where companies share resources and information, could redefine resource optimization, moving away from closed systems to open networks where supply and demand are met more effectively. The telecom and energy industries are already doing this. By pooling resources and leveraging interoperability, these industries operate efficiently without sacrificing control of their businesses.