“Collaborative networks 'the way forward'”
The content was largely the concept of sharing across an international network.
Developing ideas in the late 1990s at French La Poste
The thoughts that drove the successful built-up of the DPD network between the years 2000 and 2005
Collaborative logistics networks: Some believe that collaborative logistics networks are the way forward for companies looking to broaden and deepen their global reach, but unable to fund a global network of assets.
Some companies can reap benefits from networks built on the sole – or mostly sole – ownership of assets and supply chains, the majority of small to medium service providers can benefit more by joining with suitable partners to expand their mutual footprints.
Difference between Collaborative networks from the traditional sole ownership model:
Sole ownership networks are built around a single asset base.
Collaborative networks are built around a shared vision.
Sole ownership networks predominant through “hardware”, like trucks, planes and buildings.
Collaborative networks predominant through “software”, like processes, information technology systems, relationships etc.
Most transportation networks are indeed a mix, but most do have a tendency to lean towards one particular model. Example: as integrator UPS, Collaborative networks include the franchise network DPD.
Difficulties of traditional strategy (corporation) model:
Setting up owned operations and using own transportation vehicles is a big, and rather expensive, strategy.
Transportation networks are made up of people, policies and processes. The components of the network must work together efficiently and smoothly to ensure that goods are delivered within the promised time. As the world becomes more interconnected & complex, not only is the need for precision in service delivery becoming more critical, it is also clear that only a few players have the reach and network coverage to satisfy these demands using a traditional sole ownership model which is necessarily limited by the assets and structures it's able to fund.
If a company cannot afford to offer what customers need under its own steam, they need to collaborate or at least they would benefit from exploring their partnering options.
Collaborative network function:
Collaborative networks focus primarily on network management, engineering and information technology
Driven and differentiated by efficiency of process rather than the assets that underpin the service
Based on multiple-owner network through – sharing of vision, sharing of risks, sharing of investments, and sharing of profits
Allows companies to offer services and reach beyond their own borders and means
Each partner can focus all efforts on the specifics and dynamics of its market and area of responsibility
The result is a network that responds very well to local requirements and rapidly adapts to changing demand patterns
The way it works in terms of management processes:
Sole ownership models have a general tendency towards top down structuring which can create a “command and control” culture
For collaborative networks, “command and control” approach doesn't work. Only strategic vision and operating frameworks are introduced top down. Beyond this, operational decisions are generally taken bottom up, though this is within the common framework developed by the lead entity and individually agreed by each partner. This ensures coherence of and commitment to the community and network, while enabling effective adaptation to local markets
The success of a collaborative network:
Integration in collaborative networks starts with alignment in spirit and strategy, which in turn comes through complementary and shared ambitions and beliefs of the different partners. Collaborative leadership is crucial for ensuring that the network and the various partner organizations are well integrated and aligned in services customers. This drives the performance of the network and business community as a whole as well as the success of each individual partner.
Fitting franchise network into this set-up:
The franchise concept is an effective tool to integrate collaborative networks and to ensure that seamless processes and common service standards exist. It outlines the rights and obligations of the parties involved, and fosters entrepreneurial drive amongst the largely independent franchisees. This ensures a coherent and consistent customer experience, while the most flexible and commercial approach is offered to markets and customers
The collaborative model enables each partner to focus on its core activities and strengths, while expanding reach through others. The model is new way of balancing the trade-off between agility and ability. As profits, investments and risks are shared across the partnership, collaborative models allow for expansion beyond the financial, customer knowledge and capability barriers of individual companies. While decision making and implementation of new ideas may be slower due to collaborative governance, this is often offset by the natural tendency for collaborative networks to offer greater operational and commercial flexibility to tailor the offer to the needs of local markets and customers. Applying the collaborative partnership concept to a supply chain ecosystem is a very modern and responsible way to run a business – in fact, the collaborative culture promotes the creation of value beyond individual organizations, for partners and customers alike.