Author: Margaret Gilbert. Margaret will be speaking at ProcureTECH in February.
The concept of collaboration is bandied about frequently but without sufficient thought as to the basics of: what, who, how and why – let alone the benefits. There is power in collaboration and the power derives from the reality of two parties working constructively together to achieve for both.
Collaboration can best be described as true partnership of buyer and supplier. Collaboration can occur with trust, relationship and intent to achieve an outcome that assists both.
The power comes from the discussion and agreement as to the extent of the collaboration. Could it be (1) sharing of resources, (2) sharing of space OR (3) cost sharing, (4) rewards and lastly (5) consultation.
Working together effectively is in itself powerful. Both sides can benefit for existing and ongoing requirements. Collaboration can provide for not just short term but also for long term goals.
Collaboration is essential so that buyers and suppliers work together rather than in a ‘them’ and ‘us’ situation. Collaboration leads to positive interactions. In the next decade the focus should clearly be on how both parties can work together so that both benefit. This relates to sustainability and building relationships for working together. This requires true collaboration in operating rather than as a ‘wish’ without putting it into practice. This links to introduction of innovation and innovative ideas.
Procurement need to get away from the traditional buyer/supplier relationship, which can be a confrontational one, and look ahead as to how both sides can work together. We need to recognise that buyers need suppliers and it is in our best interest to look at how we can improve the relationship and work together more constructively. This applies to operations procurement as well as for next generation procurement.
This is an interesting area, and one in which there can be huge potentially rewarding possibilities. However, this is also an area that can cause confusion and misunderstandings.
A lot of effort and work needs to go into establishing what is meant by the term ‘collaboration’ and to define the boundaries. All too often this concept is bandied about without having regard to the practicalities.
Some benefits of collaboration are:
- Research and Development
- Office space – shared
- Personnel – shared
- Business Processes
- Intellectual Property
- Supply Chain extension
Points 1, 4 and 5 are three areas that need to reflect what is owned by whom and what/how much is shared. These certainly need to be documented, especially in relation to research and development. Intellectual Property (IP) is an area that needs to be protected in normal circumstances – and perhaps there is a case for sharing of joint Intellectual Property. Again, the IP area is really important to document.
The benefit of points 2-4 is that costs can be shared and this can be achieved by having joint office space and utilising staff by sharing their knowledge.
In addition, using shared systems and procedures will reduce back office functions which will be cost effective for both parties – a win-win.
In respect to boundaries – the following are some that need to be considered:
- One off/ongoing – to be effective it would be best for it to be ongoing. This will make it worthwhile for both sides.
- Management – own/linkage?
- Operational – own/linkage?
- Work output – who/what.
- Communication/Reporting/Reporting lines – specific requirements needs to be worked out.
Question: Should we manage without boundaries?
Managing these types of boundaries requires superb operational procurement as well as risk factors and interactions. These are areas that need to be worked through so there are no unnecessary double ups. It certainly needs to be clear in the area of work outputs. When it comes to financial boundaries, it is essential to get this right and to be very well documented.
Question: How do we collaborate in practice?
The power of collaboration shows that the power is shred and for both sides to have a shared vision and direction. It is a case of ‘we’ rather than ‘I’.
Supplier focus – supplier have a responsibility to work with and be a part of resilient procurement. Procurement is key. Buyers have to provide a positive forum to encourage suppliers to enable positive interactions and forward looking procurement. We can learn a lot from suppliers if we only listened. This can form the basis for managing risk.
Supply chain extension
While collaboration between buyer and supplier is key, it needs to be extended to the whole of the supply chain extension. This takes time but is helpful when considering and implementing ‘procurement. To make it work the whole supply chain is required to ensure certainty of supply and also the ability to be innovative.
The idea of collaboration on a wider scale is one which, at first glance, can be thought to be a good idea. It could well be a good idea, however, there are wider issues – one of which is to ensure that all players are ‘on the same page’. It can be messy otherwise. This can be captured in a third party agreement of course.
The supply chain can at times be a long one. Certainty of supply is the goal. Who to include depends on the specific procurement and the complexity. As long as it is possible to reach out for discussions then keeping it simple is the best option.
Too many players can have a negative outcome rather than a positive one. However, sharing of practices can cover the supply chain. Collaboration and the ideals would work better between a smaller number of ‘’players’
A useful checklist could be:
- Do you have a risk management plan for procurement?
- Do you have positive interactions with others?
- Are you open to collaboration?
- How innovative are you?
- How resilient is your procurement process?
- Are you proactive or reactive?
- How often do you go ‘out’ to the organisation?
If you have then you are doing well. If you do not then working to put in place would be useful.
Looking ahead – Collaboration can provide for fresh ideas and an effective mechanism for discussion. So, there is power in ideas and communication. Being on the same page can only be beneficial to both parties.
Achieving the desired outcome is the goal. Working together has to occur. It is a case of how both sides do so.
The power of collaboration is such that the benefits can show up in respect to pricing, relationship, provision of expertise and sharing of reward.
Let us harness the power of collaboration. This can pave the way for working in an innovative way. The first and most important step to achieve is a plan and effective communication. The better the plan, ideas and communicating will lead to positive and forward looking collaboration.
Let us make a start so we ensure that we can get the most out of the procurement process.
Margaret Gilbert will be speaking at ProcureTECH in February in Melbourne.
Margaret’s book ‘Contract Matters: Strategic Contracts/Contract Strategies’ looks at the issues surrounding collaboration, what you need to think about and how to implement. The book also focuses on thinking strategically and awareness of your strategic contracts ($30.00), www.contractmatters.com or email: firstname.lastname@example.org