Andy Williams, Partner, M33 Integrated Solutions,
contributed the following about blog:
Companies Are Collaborating via Portals to Cut
Costs
The doom and gloom mentality stemming from our country's
financial crisis has set in. By now, you have probably been
presented with countless old and new strategies for weathering the
economic storm. As is usually the case, some of these
strategies work for some of the companies out there, but none of
the strategies work for all of them. Still, that doesn't mean
they're not all worth investigating if it means you might find the
strategy that works for you.
One of the trends that we've seen emerging in this economy is
network collaboration portals. And why not? With the
ubiquity of information management systems and the ability for
multiple parties to communicate in real time, collaboration is an
idea whose time has come. It's not the right fit for every
company, but it's becoming a major driver for cost reductions in
the companies that are making it work.
Logistics veterans might describe collaboration as an over-hyped
solution that rarely gets results in the real world.
Effective collaboration means creating a network of trading
partners that enables shippers to operate more efficiently and at a
lower cost as a group. In the past, collaboration was
prohibitive to business because the labor required in coordinating
activities canceled out the cost savings. But with the
widespread adoption of web-based logistics planning tools, as well
as the growing reliance on Third Party Logistics (3PL)
partnerships, shippers have the capabilities necessary to integrate
distribution channels and transportation providers to minimize
collective distribution costs and execute 'best-practice'
solutions.
Most companies have adopted lean practices over the last decade,
but there's a natural barrier that keeps independent companies from
reaching the next level of savings. Let's put this concept in
more understandable terms: I can negotiate a very low rate
for a cab ride for myself, but it won't be cheaper than splitting
the fare with someone else.
Most companies do not currently have the resources to search and
create these collaborative networks independently. In today's
down economy, options to smart-source this network creation
initiative to a third party partner are increasing. It is
critical to investigate any future partner's ability to create and
host network collaboration communities.
When like companies in like markets collaborate to form a
collective distribution network, either independently or through a
third party, they will inevitably benefit from reduced costs and
faster time-to-value. The companies that comprise such a
network, share in best-practice solutions, while solidifying
reliable relationships with providers that typically wouldn't
present a partnership fit independently. Carriers newly
introduced to these networks find immediate synergies with the
other companies, often increasing their availability in critical
lanes for their original client. Additionally, with over 80%
of the trucks on the road carrying less than full trailer loads,
collaboration allows cost sharing for shippers, increased carrier
revenue, reduced capacity demand in the market, and often faster
transit times.
In this economy, everyone is trying to do more with less.
There's no question that most companies will come out of this
recession leaner than they were when it began, but the competitive
advantage will go to those companies that used this time to
implement new partnerships and processes that will increase
efficiency when the economy turns around. Forward
thinking management at proactive companies will create that
advantage through collaboration.