Companies are starting to collaborate with their suppliers

Collaboration key to survival as the economic downturn forces companies to make significant changes to their supply chain...

Research by LCP Consulting, a leading specialist in customer-driven supply chain management has found that the majority of companies (two out of three) are starting to collaborate with their key suppliers as they are being forced to make significant changes to their supply chains as the economic downturn has worsened.

The LCP research, which was conducted across senior decision makers with a responsibility for supply chain management, also found almost half (45 per cent) are focusing on the risks in their supply chain. Furthermore, just over a third of companies (36 per cent) felt that the complex nature of their supply chains had increased these risks. Those surveyed also identified reduced consumer spending, the falling strength of the pound and their boards decision to drive changes to conserve cash as contributing factors to increasing pressure on their supply chains.

Alan Braithwaite, Chairman of LCP Consulting commented:

Our research demonstrates that companies are starting to move towards collaborating with their key suppliers to find common solutions. If carried out effectively, building and nurturing these key relationships along the supply chain will help them get more for less; whereas if companies just negotiated on price they will miss out on the benefits, and their suppliers will leave them high and dry when times get tough.

For many companies this is a new skill and mindset, but the future will be about co-operating and competing through shared supply, manufacturing capacity, and distribution and logistics.

Collaboration in action

LCP highlights that this move towards collaboration is even happening amongst established brands. For instance, when Edscha, a German manufacturer and supplier to BMW filed for insolvency it presented BMW with a huge problem. The luxury car maker was about to introduce its new Z4 convertible and Edscha supplied its roof. It was impossible for BMW to find an alternative supplier in less than six months, so it collaborated with the company to help it become more financially stable.

Move to greening the supply chain continues

The LCP research also found that although almost two out of three companies had seen the economic downturn significantly affect their business in a negative way, the same number are still looking at ways to reduce their carbon footprint. However, over half felt that a strict regulatory environment (with penalties) is still the only way that organisations will start taking its carbon footprint seriously

Alan Braithwaite, concluded:

Whilst companies are citing a strict regulatory environment as the only way organisations will start addressing their carbon footprint seriously, there are changes to the rules which are becoming established in the form of public accountability through CSR standards and government initiatives. These new rules are being set, but it is now time that companies learn how to respond to them.

Supply chain management has a major role to play in both corporate and government adjustments to deliver a sustainable future. Our experience shows that 20-30% gains in efficiency (costs and emissions) can be achieved through the applications of end-to-end supply chain thinking.

As companies put a top priority on cutting their supply chain costs, LCP Consulting says that their actions should focus on five maxims so they ride the downturn and prosper in the recovery. For a copy of LCPs five maxims contact info@lcpconsulting.com or visit the LCP website at (www.lcpconsulting.com)