Logistics and supply chain companies have been told that the biggest challenge the industry faces is their reluctance to collaborate and share data for the benefit of the whole chain.
“We need to change the industry’s mindset about costs,” Hugh Williams, MD of Hughenden Consulting, told a workshop at this week’s 3PL Summit event in Venlo, the Netherlands, on collaboration as the cornerstone of the 21st century supply chain..
“The traditional approach to procurement is that you need to squeeze the supplier to reduce overall cost,” he said, “but along the whole supply chain we need to promote sharing of data about market strategy and costs so that the value created outweighs the cost.”
Workshop participants confirmed that collaboration does not exist at present in the supply chain. “Companies don’t trust each other. We’re afraid someone else will take our value away,” was a typical comment.
Williams also criticised the proliferation of key performance indicators (KPIs), saying they were only useful as behaviour influencers leading to better practice. Too often KPIs lead to inefficiency and little thought is given to their effect of the whole supply chain, he argued.
As an example of this, he cited the widening of the Panama Canal. Larger container ships using the canal reduce unit costs but take longer to load and unload, slowing down the rest of the supply chain.
“A lot more thinking is needed about how to measure supply chains,” he concluded. “Many KPIs are now less relevant than they were. What is holistically best is not necessarily locally best.”