Collaborative Work in SCM: Advantages, Technologies, and Obstacles

1. Strengthening collaborative processes and facing challenges together
2. Transparency, efficiency, sustainability: How companies benefit from collaborative work
3. These technologies support collaborations in the supply chain
4. Collaborative work – what obstacles exist
5. Conclusion: Collaborative work in the supply chain as an opportunity

The COVID-19 pandemic, energy crisis, climate crisis, geopolitical tensions – the past years have repeatedly posed new challenges for the logistics industry and have revealed how vulnerable complex global value chains can actually be. To meet these challenges, it has been shown that especially efficient collaboration between companies secures business. Collaboration is the keyword here, with the goal of ensuring an effective and reliable delivery of products or services together.

If the actors along a supply chain collaborate, the requirements of procurement and supply structures, the assurance of deliveries, or the compliance with the criteria of the LkSG 2023 can be processed more flexibly and managed and strengthened together. The participating companies benefit from appropriate tools and transparent data sharing, especially from more transparency, which is significantly increased by the shared view of the individual processes. According to the 17. Hermes Barometer, three-quarters of the surveyed German companies rate increased transparency as an advantage and a success-critical factor for more agility and efficiency in the supply chain. Collaboration goes beyond mere cooperation between companies: it is to be understood as a long-term concept of active and, above all, goal-oriented interaction that requires intensive communication, integration, and interaction between the participants.

Especially in times when markets change rapidly and innovations play an important role, quick action and decision-making are of central importance. Collaborative solutions form the basis for this. They provide authorized actors with direct access to the physical and digital supply chain, while also lowering the threshold for access to all relevant data. Companies benefit from this in multiple ways.

• More transparency: The use of artificial intelligence and real-time monitoring makes it possible to collect and analyze large amounts of data early. This not only allows for complete and accessible monitoring of the individual processes along the supply chain for all partners, but the evaluations of the information also provide the opportunity to create forecasts and respond early to potential risks.
• Cost savings for companies: Partners can optimize processes, share resources, and reduce material and/or transport costs by providing all relevant data. Full transparency over all goods movements, for example, reduces costs for waiting times, manual adjustments, or overtime.
• Avoidance of delivery bottlenecks: When all relevant partners have insight into the complete supply chain, goods management can be made significantly more agile. Product stocks are recorded digitally, reorders are requested in a timely manner, and delivery times can also be better coordinated and tracked through aligned processes.
• Increased flexibility: Collaborative partners have all information and resources in view through comprehensive monitoring and can thus adapt their products and processes more quickly to changes in the market.
• Increased efficiency: The automation and streamlining of processes increase the productivity of companies, reduce administrative effort, and allow companies to focus more on their core competencies and topics.
• More sustainability: Collaborative supply chain processes can increase the net savings potential of CO2 emissions through resource sharing and the use of digital tools. Additionally, the intensive and transparent collaboration between individual companies can facilitate compliance with the ESC criteria.
• Risk reduction: When partners are in close information exchange, they can identify problems early and potentially act preventively. Delivery bottlenecks, quality issues, and miscalculations can thus be reduced.

Studies confirm the advantages of efficient collaboration and demonstrate that collaborating companies are more successful.

Various factors are crucial for the success of collaborative work in the supply chain. According to the surveyed companies of the Hermes Barometer, in addition to personal contact and exchange between the various actors, suitable digital platforms have a significant influence on successful collaboration. Efficient control tools such as cloud applications and ERP systems are highly valued, as they are easily applicable for all supply partners due to their simple, intuitive handling.

• Cloud applications: Without the exchange of data and their joint use, nothing works in collaboration in the supply chain. In cloud applications, information and data are managed in a central cloud-based environment, which all participants in the collaborative supply chain can access, regardless of location and device.
• ERP systems: They integrate various functions and business processes such as finance, inventory management, SCM, communication, and human resources into one system and help companies improve processes and make decisions.
• Supply Chain Management systems: SCM systems also enable the management and exchange of information along the entire supply chain as a central platform – from order to delivery data. Partners can plan their flow of goods more productively and proactively through real-time monitoring of inventory data and forecasts of demand. SCM also includes the procurement of raw materials, manufacturing, transportation, inventory management, as well as the return and disposal of materials.
• RFID technology: With Radio Frequency Identification, items and goods are equipped with radio frequencies so that they can be digitally identified and tracked. The system consists of three components: RFID tags that are attached to the goods and send signals, RFID readers that receive and process the signals, and software that analyzes the collected data.
• Blockchain technology: Here, the database is distributed across a network of multiple computers and consists of various blocks. These are connected to each other through cryptographic techniques and contain transactions and information. The data is well protected against forgery and manipulation through encryption.
• Artificial intelligence and machine learning: AI and ML can be used to improve or automate processes, analyze data, and reduce error rates. For example, ML algorithms recognize patterns in data and make predictions. Additionally, there are algorithms that optimize routes and thus shorten transport times.
• Collaborative Planning, Forecasting and Replenishment (CPFR): CPFR uses CPF software and is also based on the exchange of data. Through joint planning, forecasting, inventory replenishment, and performance evaluation, companies can identify weaknesses and improvement potentials in the entire supply chain and thus jointly increase efficiency.

Despite the many advantages, the logistics industry is still far from fully digitizing supply chains and is among the least digitized industries in Germany according to the Digitalization Index of the Federal Ministry for Economic Affairs and Climate Action. As a hindrance, responsible parties often cite the time and cost involved in establishing a common communication infrastructure. Other problems include fragmented IT systems and data formats that are difficult to consolidate into a unified information base, as well as a lack of networking between suppliers and trading partners, insufficient personnel for effective communication between stakeholders, and concerns regarding data protection and security.

To address these obstacles, many companies seek support from external service providers. Logistics experts like Hermes International therefore assist in providing digital offerings and accompany the journey towards improved collaboration and greater transparency along the supply chain. In a continuous process of development, Hermes International is also positioning itself technologically to be more future-proof in order to elevate its supply chain solutions to a new level.

Collaborative cooperation is increasingly becoming a success factor in the supply chain. Effective control tools such as IT platforms are essential for this. They reveal the relationships within the supply chain and help ensure that risks are identified early and efficiently minimized. Digital channels enable real-time communication, creating valuable synergies. The implementation of the necessary technologies is crucial for the various companies involved in a supply chain to share resources, exchange data, and make joint decisions based on that. Today, it is increasingly about looking to the future. Accordingly, technologies are developing rapidly: With the help of predictive analytics, simulations, and forecasts, problems are identified and solved before they occur. Avoiding resource waste is also a crucial factor for collaborative work – responsible parties can streamline and clarify processes in this way and increase the efficiency of their company in the long term.

For more information and the detailed evaluation of the survey, please refer to our 17th Hermes Barometer "Collaboration in the Supply Chain", available for free download.