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Benefits of Collaboration for Supply Chain Management

written by: CreativeContents•edited by: Ginny Edwards•updated: 11/10/2010

This article explains in brief the concept of Collaborative Supply Chain and how this concept is beneficial to businesses. The concept when used effectively has helped businesses to improve their productivity significantly.

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    Defining Collaboration in SCM

    Collaboration for Supply Chain Management Supply Chain Management was seen as a process by which suppliers, manufacturers and distributors worked in tandem to optimize resources. A very good example of SCM is Toyota Motors 'Just in Time' practice that has helped the automaker to achieve the No.1 position in the global car market. The new buzz in SCM is collaborative Supply Chain.

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    Supply Chain Challenges Faced by Businesses

    There are several challenges that can hinder the growth of organizations. In today's dynamic business environment a product that is conceptualized by the engineers can become obsolete even before it is launched in the market. In large manufacturing establishments there are numerous partners that supply components for the manufacturing process. If all these suppliers are not aligned, it can result in production delays, loss in productivity and ultimately a loss to the company. Added to these problems are the challenges to launch newer products faster than the competition. There are coordinated steps that should be taken to ensure that a product life-cycle is managed efficiently. The first step is managing the supplier component, followed by a structured product content collaboration and finally managing the launch of the product. Here we will focus on managing the supplier component with collaborative supply chain management and see the benefits that it can bring to the organization.

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    Deriving the Benefits of Collaboration for Supply Chain Management

    A collaborative supply chain mechanism where suppliers are aligned to the business process can result in improved forecasting of manufacturing, improve service levels of delivery and help in the resolution of manufacturing problems quickly. There are numerous IT vendors that offer tools and solutions in this area. They offer business managers dashboards, analytics and portals to access information at their fingertip. At the core of collaborative supply chain are suppliers and businesses that share information, plan their manufacturing activities based upon the information, improve the manufacturing process by accurate forecasting of demand and supply and finally enjoy the results of such success.

    Managers say that collaborative supply chain can add three percentage points to the margins of all the players in the supply chain that include the suppliers and the manufacturers. Collaboration in Supply Chain Management is a buzzword that is catching up with Corporate Managers. If the benefits of collaboration for supply chain management were written in a straight line it would start with improved forecasting, planning and scheduling of the manufacturing process, optimum inventory levels, reduced lead time to manufacturing, reduced logistics cost and better margins. Collaborative Supply Chain also reduces the margin of errors in the manufacturing process thereby increasing the quality of products that come out of the manufacturing line. So if you are a business owner looking at improving margins and reducing your operational expenses, collaborative supply chain can be the answer. Many businesses have derived benefits from it and there is no reason that you should miss out on this new buzz.

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