case study collaborative supply chains

Collaboration Within the Supply Chain

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• Vivian Osei 2 &
• Disraeli Asante-Darko 2  

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A fundamental challenge for supply chain managers is how to compete effectively by coordinating and integrating business activities in the face of globally dispersed operations. Supply chain collaboration is often deemed as a critical strategy for ensuring that all independent firms work cooperatively to create a cohesive, singularly competitive supply network capable of improving overall performance. This view stems from the fact that it enables two or more independent supply chain partners to develop long-term relationships with the common goal of integrating and coordinating processes in anticipation of sharing success and benefits. A typical supply chain is a complex and multistaged network consisting of several firms and multiple functions. The complexity of these supply chain networks has emphasized the importance of supply chain collaboration more than ever in this century, particularly in the advent of the COVID-19 pandemic. The purpose of this chapter is to discuss supply chain collaboration and its role in enhancing business performance. It begins by defining supply chain collaboration; it then proceeds to discuss the various types of collaborations, their benefits, and their importance, before delving into the various levels of collaboration and emerging issues. The chapter concludes with a discussion of the implications of collaborations for business management.

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Osei, V., Asante-Darko, D. (2023). Collaboration Within the Supply Chain. In: Sarkis, J. (eds) The Palgrave Handbook of Supply Chain Management. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-89822-9_56-1

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Supply Chain Management Design & Simulation Online

Collaborative Supply Chains

December 28, 2014 By mhugos

CASE STUDY CONCEPT: Collaborative Supply Chains and Shared Services help companies grow while controlling costs.

This case is based on a real candy company called Just Born Candy that has it’s main factory in Bethlehem, Pennsylvania, and a competitor candy company that we’ll call Crunch Candy Company with its factory in a nearby town. Even though both of these companies compete with each other, their main competitors are big candy companies such as M&M Mars and Hershey’s. By combining their individual supply chains both companies can benefit by becoming more competitive against their larger competitors.

Collaborative supply chains generate value

Value in the form of increased customer service levels and lower operating costs can be had when two different companies in the same industry combine their supply chain operations. If these companies are selling to many of the same customers, and if both of them compete against much larger companies then they can mutually benefit from creating a single supply chain to support both of their businesses – even if they still compete against each other to some degree.

[ For instructors there is a study guide for this case study . It is structured as a 12 week course and explores different aspects of this case study in detail. The structure can be modified as needed. It is illustrated with screenshots and commentary. Instructors using this case study can contact [email protected] to request a study guide. ]

When you load this case study you will see the supply chains of Just Born Candy and Crunchy Candy Company. You will see the location of their factories and their distribution centers. Also shown are customers’ stores where they make deliveries. Each company does not sell to all of the same customers as the other, but there is a significant amount of overlap in the customers of the two companies. You can see the overlap in the supply chains of these two companies when you map them out as shown in the screenshot above.

Customers would like to see fewer deliveries of candies in larger quantities , like what they get from the bigger candy companies (M&M Mars and Hershey’s). They are also asking for lower prices. Both of these customer requests point toward the need for combining supply chains. That way both smaller candy companies could make fewer and larger deliveries of their combined products. And if they can reduce their supply chain costs, they can also lower prices to customers.

You are a highly regarded supply chain consultant

The CEOs of the two companies have appointed you to lead a project team composed of people from both companies. Your mission is to design a new common supply chain for both companies that will reduce costs and still meet customer demands. How will you combine the supply chains of Just Born Candy and Crunchy Candy to create a single more cost effective supply chain for both companies?

Each company makes and delivers two kinds of candy to their customers. These products are shown as JBCandy1, JBCandy2, Crunchy1, and Crunchy2. Look at the production rates for these candies, and check the daily demand for these candies at the customer stores.

At the start of the case study both companies operate their own supply chains. You can simulate the operations of these two company supply chains and see their combined costs and the amounts of inventory they need to keep on-hand in order to meet customer demands over a 30 day period.

The two company CEOs asked you to first make recommendations for improving operations of their two existing supply chains. Then they want you to recommend how to combine the two separate supply chains into one common supply chain that meets the needs of both companies, and is less expensive to operate. Those requests are reflected in your two challenges shown below.

NOTE: This is an advanced case . Work through the three challenges of the beginning case, “ Cincinnati Seasonings ” before taking on the challenges in this case.

FIRST CHALLENGE

Get the supply chains for both companies to run for 30 days without problems

Do whatever you feel is necessary to make this happen. In the process you will come to learn a lot about how these two company supply chains work. You will get an insight into how the two company supply chains work, and you will see some of the strengths and weaknesses of each company’s supply chain. The screenshot below shows the result of one simulation; the red circle with the line through it shows where a distribution center has run out of one of the candy products.

REPORTING TEMPLATE for use with this case study: Import your simulation data into the template and create monthly profit & loss reports as well as generate key performance indicators. The reporting template to use is set up for the S&J Trading Company . Look at how the report on the first tab read the simulation data on the second tab. You need to add another row for a fourth product, and add more columns for the additional facilities in this case study. See the short tutorial on modifying P&L reporting templates to accommodate extra facilities at the bottom of the Analyzing Simulation Data page. Then go ahead and d ownload copy of Multi-Product P&L Reporting Template here .

[ If you are using SCM Globe Professional version, these reports can be generated automatically by clicking on the “ Generate P&L Report ” button on the Simulate Screen ]

SAVE BACKUP COPIES  of your supply chain model from time to time as you make changes. There is no “undo”, but if a change doesn’t work out, you can  restore from a saved copy . And sometimes supply chain model files (json files) become damaged and no longer work, so you want backup copies of your supply chain to restore from when that happens.

SECOND CHALLENGE

Find ways to reduce inventory and operating costs by combining the two company supply chains into one common supply chain 

By combining the supply chains of the two companies you will be able to reduce operating and transportation costs and reduce on-hand inventory across the supply chain. You’ll need to make decisions about whether to create a single distribution center and where to locate that facility. You also need to make decisions about the size of trucks and their delivery routes and schedules.

There are several ways to combine facilities in SCM Globe. Each way has different advantages as far as speed and ease of use.

• For instance, if you want to combine two DCs into a single DC, you can delete one DC and edit the other DC to change its attributes (operating cost, rent cost, storage capacity, and products assigned to it) so as to redesign that DC to become the new combined DC. While editing this DC you can also drag and drop it to a new location or leave it where it is. Remember to click the screen refresh button on your browser after you finish editing this remaining DC.
• Vehicles and routes originating at the DC you deleted will be deleted also, so recreate them at the remaining DC (usually best to delete the DC with the fewest vehicles and routes). At the remaining DC create any new vehicles you need and assign routes and products to those vehicles. You can also edit vehicles and routes that already exist at the remaining DC and update those vehicles and routes to deliver products to the facilities that were earlier covered by vehicles and routes from the deleted DC.
• You can also just delete both the original DCs and create a brand new facility to be the new DC. In that case, recreate vehicles and routes as needed to redirect deliveries to the new DC and create deliveries from the new DC to the facilities that DC serves.

Do what you think is best and get the combined supply chain to run for 30 days. Then go back and get the combined supply chain to run for 30 days at the lowest transport and operating costs and lowest amounts of on-hand product inventory across the supply chain. There are useful ideas to be found in the section “ Reducing Inventory and Operating Costs ”

REPORTING TEMPLATE for use with this case study: Import your simulation data into a spreadsheet template and create monthly profit & loss reports as well as generate key performance indicators.  The reporting template to use is set up for the S&J Trading Company . Look at how the report on the first tab read the simulation data on the second tab. You need to add another row for a fourth product, and add more columns for the additional facilities in this case study. See the short tutorial on modifying P&L reporting templates to accommodate extra facilities at the bottom of the Analyzing Simulation Data page. Then go ahead and d ownload copy of Multi-Product P&L Reporting Template here .

[ If you are using SCM Globe Professional version, reports can be generated automatically by clicking on the “ Generate P&L Report ” button on the Simulate Screen ]

NOTE : An earlier bug that displayed some routes times and distances as ONE-WAY has been fixed. All routes now show  ROUND-TRIP times and distances. Simulations use ROUND-TRIP times and distances.

THIRD CHALLENGE

Expand the common supply chain to support new stores as the companies grow

Your combined supply chain has been quite successful, and both companies have prospered. Now they want you to add new stores in other cities further west such as Chicago, St. Louis, Kansas City, and Omaha.  They want you to add the new vehicles, delivery routes, and warehouse facilities that you feel are necessary to support this business growth. The screenshot below shows one possible supply chain design that you explore as you investigate different design options to see what works best.

There will be a lot going on in this expanded supply chain. Here are some things to think about:

• When you simulate the operations of this supply chain you can look at the data displays for Facilities, Vehicles and Products to see graphs and numeric read outs showing where buildup or depletion of inventory occurs, and where transportation and operating costs are greatest.
• You can continue to use trucks to do all the transportation or you may want to consider a mix of truck and railroad transportation. Where would it make sense to use railroads and why?
• Does the original DC in Pennsylvania still work well enough or do you need a new DC to the west that is closer to the new stores? What is the effect on transportation and operating costs of opening a new DC?
• Summarize your main challenges and how you responded to them in a short paper using screenshots and data from the simulations to illustrate your main points. Use screenshots of onscreen data displays such as those shown below as well as P&L Reports and KPIs generated from downloaded simulation data

Default rent costs at facilities are set higher  than what they would normally be in the real world. If your instructor allows you to change rent costs, use a commercial real-estate website such as CityFeet ( www.cityfeet.com ) to research current rental rates in different cities. 

NOTE: Find useful ideas for reducing inventory and for calculating optimum product delivery amounts and schedules by reading “ Cutting Inventory and Operating Costs ” in the online guide. For ideas on how to start expanding this supply chain see “ Tips for Building Supply Chain Models ” for useful techniques.

• This case study uses research done by Professor Joel Sutherland then at Lehigh University in Pennsylvania, now at Supply Chain Management Institute, University of San Diego. The research is published as an executive insight article titled “The Confection Connection” starting on page 106 of Essentials of Supply Chain Management, 4th Edition
• See more about success with collaborative supply chains in an insightful article at CSCMP Supply Chain Quarterly, “ Six Steps to Successful Supply Chain Collaboration “

A FEW THINGS YOU SHOULD NOT DO

SCM Globe is used to model and simulate real supply chains so all numbers in any model can be changed as needed to more accurately describe actual products, facilities, vehicles and routes. However,  when using the simulations as a learning tool in a case study  it does not make sense to change some default values even though the software will let you do so. You should not change certain default values listed below because it either doesn’t make business sense, or it doesn’t make logistics sense (see further explanation in the email a logistics professor sent to his students —  Case Study Caveats and Taboos ):

• Don’t reduce product demand or prices  – that makes no business sense as business is about increasing demand and profits.
• Don’t increase or decrease initial on-hand inventory amounts  at the start of a case study – that makes no logistics sense as inventory doesn’t simply appear or disappear.
• Don’t change default values  for daily rent and operating costs at facilities, or default values for vehicle operating costs. Unless your instructor says otherwise, you can assume they are out of your control in this case study.
• NOTE: Default rent costs at facilities are set higher than current market rates . If your instructor does allow you to change rent costs, use a commercial real-estate website such as CityFeet ( www.cityfeet.com ) to research current rental rates in different cities and type in those rental rates in place of the default rates.

Apart from these few things, you can do anything else to address challenges and solve problems that arise in the simulations. You can:

• add or change types of delivery vehicles and delivery routes
• change delivery frequencies (delay between departures)
• change delivery amounts (drop qty)
• expand or reduce storage capacity at facilities
• change production rates at the factory
• experiment with different locations for new facilities added during the case study
• You can do anything that is not specifically prohibited!

This case study is not a multiple choice test. There is no single “right answer” — only better answers. Running simulations and downloading the results to create Profit & Loss Reports will show you the better answers. They are the ones that keep the supply chain running for 30 days at lower operating costs and lower inventory levels — they make the supply chain as  responsive   and efficient as possible .

To share your changes and improvements to this model (json file) with other SCM Globe users see “ Download and Share Supply Chain Models ”

Register on SCM Globe to gain access to this and all other case studies . Click the blue “ Register ” button on the Log In page ( app.scmglobe.com ) and buy a subscription (if you haven’t already) using a credit card or PayPal account. Then go to the SCM Globe library and click the “Import” button next to this case study. Scan the “ Getting Started ” section (if you haven’t already), and you are ready to go.

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Case Studies: Developing Collaborative Supplier Partnerships

Case studies.

Dell Computers Eric Scott Limited Volkswagen Brazil

h2. Dell Computers ( 27 )

Early on Dell Computers recognized the benefits of collaborative supply chain relationships and adopted the practice while developing its “Dell Direct Model” in 1995. This innovative model of efficiency included something the computer industry had never experienced: a high velocity, low cost distribution system with direct customer relationships and build–to–order manufacturing. By instituting collaborative supplier relationships, Dell Computers was able to achieve significant cost savings and maintain a competitive advantage over competitors for several years.

To accomplish this, Dell first pared down its supplier companies from 204 to 47. Then, in order to operate on a just–in–time ( JIT ) inventory basis, these suppliers warehoused their components only 15 minutes from the Dell factory. This JIT inventory system decreased inventory costs and led to a 6% profit advantage in components which was passed along to consumers, while reducing inventory from 30 to 13 days- well ahead of the industry average at the time of 75 to 100 days. Other advantages of Dell’s JIT system included easier customization of computers to customers’ exact specifications, lessened likelihood of obsolete raw materials, ability to adjust production levels to meet demand, and a finished product ready for shipment just 36 hours after an order was placed.

After a computer was assembled, it was sent to one of Dell’s many contracted shippers. In yet another move to decrease inventory, lower costs, and increase efficiency, Dell had these shippers house the monitors for their computer systems. By email, Dell would notify the appropriate shipper that a system was ready and at the same time the shipper would schedule the monitor for concurrent delivery to the customer. This resulted in a savings of $30 in freight costs per monitor, resulting in another way that Dell could pass on savings to consumers.

Integrated supplier and distributor networks were instrumental in the success of Dell Computers. By using a JIT inventory system, Dell’s inventory turnover time was reduced by 57% and production space expanded due to the decreased storage area needed for inventory. Without these relationships, Dell would not have been able to support a 50+% growth rate for 3 consecutive years that lead to $12 billion in annual sales by 1997.

h2. Eric Scott Limited ( 28 )

As a small leather-goods manufacturer, Eric Scott Limited believes in improving supply chain operations through collaboration with suppliers and customers. By switching from a home-grown IT system to Made2Manage Systems’ VIP enterprise portal solution in 1999, Eric Scott Limited has been able to enhance communications with its partners both up- and down stream. Implementation of the system required overcoming suppliers’ issues before the advantages could be reaped.

One major concern of Eric Scott Limited was the protection of their customers’ data and information. To ensure customer privacy, the two companies worked out a sort of “hybrid hosting” where the collaboration servers are hosted by Made2Manage and the customer data is kept behind Scott’s firewall. This managed gateway approach allows for a relatively high degree of collaboration between the two businesses.

An advantage of the Made2Manage system was the ability it offered Scott to communicate through electric data interchange ( EDI ) with customers and suppliers. Orders come in by EDI where the Made2Manage system schedules them for manufacture and shipment and then sends notification to the customer. Also, this real time data is available on the portal where customers can access the site at any time to check on the status of their orders and pay their invoices on line.

Another benefit of the VIP software is that the system portal provides a collaborative forum for the suppliers. This allows suppliers to check on inventory status with the company and have pre-set reorder points for shipments. The portal also permits customers to exchange virtual design documents and store them, thereby reducing prototypes and the entire timeline from the product’s conception to its delivery.

Collaborative relationships managed through Made2Manage Systems’ software and technology allowed a small company like Eric Scott Limited to add big value in dealings with both suppliers and customers. As Scott expanded into new markets, VIP enterprise portal solutions offered them opportunities to provide additional services around product distribution. From managed gateways and forums for reordering and design development to EDI capabilities that schedule manufacture and shipment of orders, send customer notifications, provide 24 – hour online order checking and invoice payment options, Eric Scott Limited’s adoption of partnership collaboration techniques and use of technology have ensured benefits for all involved.

h2. Volkswagen Brazil ( 29 )

In 1997, Volkswagen (VW) implemented the modular consortium concept of supply chain management at its new assembly complex in their Brazilian plant. In order to for this concept to be successful, VW first had to drastically reduce its number of suppliers from 400 to only 8. Then, these 8 suppliers were invited to locate their bases of operations at the VW Brazil plant where they were provided with their own offices and staffs. In addition, VW asked them to each invest an additional $50 million in their respective modules. For agreeing to this investment and sharing of risk, the partners were guaranteed long-term contracts from 5 to 15 years.

At the facility, seven modules are sequentially integrated with each partner occupying a section of the plant and taking full responsibility for the quality control and mounting of complete assemblies. VW approves the final vehicle and the partners only receive payment on this completely finished product, and not on the individual parts as is the normal industry custom. By basically outsourcing the assembly operation, VW not only reduces its assembly labor costs, but is able to focus on logistics, engineering, quality assurance, and customer service.

This type of partnership has presented unique challenges for VW and the supplier partners to overcome. A plan of daily meetings, constant communication of all the partners, and the integration of 52 information systems providing immediate data access is used to coordinate their many activities. In order to prevent conflicts between the different staffs, wages and benefits are the same and all employees wear identical uniforms featuring a VW logo and their firm’s logo. Finally, a master craftsperson that takes personal responsibility for the vehicles performs final tests and conduct a pre-delivery functional audit to ensure quality standards and maintain conformity within the production process.

Although implementing the modular consortium has produced many challenges, the benefits are noteworthy. By introducing the modular concept, VW’s overall costs are down 15 – 25% and flexibility has increased due to the small number of suppliers. Also, individual customization of orders is made quicker through increased communication and easier decision making. Most importantly, gain sharing rewards of reductions in product defects and order fulfillment times, and improvements in on-time delivery and product performance have been seen throughout the plant. The success of this venture was made possible through planning, communication, and hard work to ensure quality standards – now VW and its supplier partners are reaping rewards through increased revenues.

• Supplier Partnerships

Building Insights Into Supply Chains: A Case Study

For time-sensitive or temperature-controlled cargo, most shippers will agree that high-quality, real-time tracking information is crucial. Though that technology can be expensive, the investment is easy to justify when it could mean the difference between an on-time delivery and spoiled cargo. But for general cargo, which does not have strict timeline requirements, it can be harder for shippers to justify that cost. And if shippers do decide to invest in tracking devices for general cargo, rarely is the technology good enough to make a sizable difference to their bottom line.

This was the challenge faced by Maersk Inc., a provider of transportation and logistics services. They felt that the potential value of tracking insights into general cargo was too important to overlook.

In a collaboration with Tive Inc., a tracking and software provider, Maersk designed a proof of concept for a means of keeping tabs on thousands of shipments without having to view each one individually. The higher-level view yielded surprising insights, and confirmed the value of tracking general cargo, not just time-sensitive, high-value shipments.

What started as a shared frustration at the lack of affordable tracking technology for general cargo shipments resulted in not only a successful collaboration between two companies, but also a much-needed advancement in tracking technology and shipping analytics, which will help companies make smarter and more cost-efficient decisions across the supply chain.

Please CLICK HERE to download the Case Study.

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Exploring barriers to collaborative innovation in supply chains – a study of a supplier and two of its industrial customers

Business Process Management Journal

ISSN : 1463-7154

Article publication date: 19 January 2023

Issue publication date: 18 December 2023

The purpose is to identify and explore barriers to overcome for developing collaborative innovation between a global service supplier and two of its industrial customers in Sweden.

Design/methodology/approach

The research had an action-based research approach in which the researchers were interacting and collaborating with the practitioners in the companies. The empirical part includes primary data from multiple interviews, and two workshops with dialogues with participants from the involved companies. The use of complementary data collection methods gave rich input to understanding the context for collaborative innovation, and to uncovering barriers, to develop solutions for collaborative innovation. The empirical barriers were analysed using theoretically derived barriers from a literature review. The analysis generated four broad themes of barriers which were discussed and led to conclusions and theoretical and practical implications on: the customer's safety culture, the business model, the parties' understanding of innovation and the management of collaborative innovation in supply chains.

The thematic analysis generated four broad themes: the customer's safety culture, the business model, the parties' understanding of innovation and the management of collaborative innovation. These themes where analysed using theoretically derived barriers from a literature review. The industrial context, the understanding of innovation and its management created barriers.

Originality/value

The unique access to the service supplier and its two independent industrial customers adds a rich contextual framing to the process of identifying and exploring the barriers to collaborative innovation. The conclusion emphasizes the importance of an industrial business context, the business logic in terms of business models and for the understanding and management of collaborative innovation.

• Collaboration
• Business model
• Supply chains
• Interaction

Anderson, H. , Müllern, T. and Danilovic, M. (2023), "Exploring barriers to collaborative innovation in supply chains – a study of a supplier and two of its industrial customers", Business Process Management Journal , Vol. 29 No. 8, pp. 25-47. https://doi.org/10.1108/BPMJ-12-2021-0796

Emerald Publishing Limited

Copyright © 2023, Helén Anderson, Tomas Müllern and Mike Danilovic

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

Collaboration between organisations is an area of research that is continuously gaining interest ( Powell et al ., 1996 ; Greer and Lei, 2012 ; Latusek and Vlaar, 2018 ). Numerous aspects of collaborative efforts have been the subject of study (see Majchrzak et al. , 2015 for an overview). The goal for collaboration is often to share cost and resources ( Zhang and Cao, 2018 ) or to share competence and capabilities ( Deken et al ., 2018 ) but can also be to create complementary capabilities and share value and work for common improvement and to create innovation ( Alexiev et al. , 2016 ; Kuhl and da Fonseca Costa, 2019 ).

A particular area of interest for studies on interorganisational collaboration is supply chain management ( Touboulic and Walker, 2015 ). Collaboration between a supplier and a customer may offer potential benefits for both parties, which additionally creates more stable and long-term relations between them ( Duong and Chong, 2020 ). A recent stream of research acknowledges the importance of collaborative innovation between suppliers and customers ( Zimmerman et al. , 2016 ). Depending on whether the focus is up- or downstream in the supply chain, collaborating on innovation can yield different benefits for the participating organizations. For the customer, it can be a way to create and harvest value from the success of its suppliers or by sharing costs and minimizing risk in innovation. For the supplier, it can be a way of moving upstream in the value chain or downstream to its suppliers.

Collaboration between suppliers and customers is not without challenges and problems. In several studies, barriers to collaboration in supply chains have been identified ( Ekanayake et al. , 2017 ; Fawcett et al. , 2015 ; Gruenhagen et al. , 2022 ). Yström and Agogué (2020) describe this type of collaborative effort between suppliers and customers as an “in-between space”, characterized by several difficulties. Collaborative engagement in innovation involving suppliers and customers open important questions on the readiness for collaborative organizations to work jointly on innovation in a trustful manner. A growing body of research also takes a more development-oriented approach by emphasizing the need to not only focus on barriers but also on what facilitates collaboration. Both aspects are important, but we claim that understanding and overcoming barriers is an important prerequisite for successful collaboration in supply chains. We follow the argument from Kazantsev et al . (2022) that horizontal collaboration between independent companies face several challenges and that these challenges are underexplored.

The extant literature typically reconstructs collaborative efforts through interviews and surveys with individuals participating in these efforts. Although this can yield insights on how the collaborative efforts are perceived from the individual's perspective, it fails to capture the collaborative dynamics when supply chain partners engage in collaborative innovation efforts. There is, furthermore, a lack of studies that uncover the context of collaborative innovation. The barriers that are detected are often mentioned without a deeper, holistic understanding for how they emerge and how they operate to hinder collaborative innovation. We agree with Zahorr and Al-Tabbaa (2020) in proposing that the antecedents for successful supply chain collaboration in general are poorly understood and even more so for collaboration with an innovation ambition. Similarly, Zhao et al. (2021) argue for more comprehensive situational awareness in studying business processes.

The methodological approach of action research in this paper was applied to reach beyond reporting only on the individual's views on collaboration. Through the participative aspects of action research that were applied in the workshops conducted for this research project, the sharing of views between client and supplier representatives created an understanding of the dynamics of barriers to collaborative innovation.

The customers operate on a mature and technically advanced market with a standardized and controlled production process, while the service supplier represents a large fast-growing multinational company. The analysis of barriers aims to contribute to an understanding of the perceived and identified barriers in their common context and business, to explore how to overcome barriers to strengthen organizational readiness for collaborative innovation and collaborative value creation.

Barriers to collaborative innovation in supply chains – a literature review

In the literature on innovation, barriers to innovation are a recurring theme, and several barriers that hinder innovation processes in organizations have been suggested. Research has highlighted and categorized different barriers and groups of barriers to innovation. Earlier research has mainly been directed to finding and naming general barriers. Based on a systematic review of studies on radical innovation, Sandberg and Aarikka-Stenroos (2014) , identified 15 barriers to innovation. In a similar vein Gruenhagen et al. (2022) , empirically derived barriers to innovation in five generic areas. Innovation is found to be hindered by both internal and external factors, such as lack of staff and competence ( D'Este et al. , 2012 ; Torres de Oliveira et al ., 2022 ), lack of resources ( Wipulanusat et al ., 2019 ; Madrid-Guijarro et al. , 2009 ) and lack of governmental support and regulation ( Gruenhagen et al ., 2022 ; Hewitt-Dundas, 2006 ).

Earlier research on barriers to innovation typically focused on innovation work within one focal organization ( Freel, 2000 ). Considering the increased importance of collaborative innovation, few studies have focused on the specific barriers in collaborative innovation contexts. Newer studies suggest that external partners and collaboration are important means of innovation ( Bustinza et al. , 2017 ; Feng and Sivakumar, 2016 ) and in a supply chain context. Asree et al. (2019) demonstrate a positive correlation between strategic supply chain collaborations and innovation performance. Increasing innovation work is taking place in supply chain settings, which opens new and challenging questions on the conditions for innovation, for instance, in terms of opportunistic behaviour, lack of trust and issues of control ( Anzola-Román et al ., 2019 ; Cabigiosu and Campagnolo, 2019 ; Skipari et al. , 2017 ).

Moreover, in the collaborative innovation process, there are external and internal dimensions that influence innovation work in supply chain relationships ( Anzola-Román et al. , 2019 ; Roy et al. , 2004 ). The culture in the supplier's organization ( Nguyen et al. , 2020 ), identity ( Öberg, 2016 ) and trust levels play important roles in the success of buyer-supplier relationships ( Kazantsev et al ., 2022 ). There is substantial literature on the joint efforts of suppliers and customers for new product development, early supplier involvement and innovation in general in manufacturing and technologically intensive industries ( Fliess and Becker, 2005 ). Although collaborative innovation has been the focus of a growing stream of research, there is still a need for research that specifically focuses on the barriers to collaborative innovation in supply chains.

The broader field of collaboration in supply chains has identified numerous barriers to collaboration ( Ramesh et al. , 2009 ; Fawcett et al. , 2015 ). Turning to this field of research can provide important insights for the study of barriers to collaborative innovation in supply chains. Although these studies often have a broader scope than just innovation for example, by focusing on change and renewal, they are still highly relevant for the purpose of this article. A literature review was conducted to identify and systematize barriers to collaboration in supply chains. Based on a literature review, Mahmud et al. (2021) , identified four main categories of barriers in supply chain collaboration between SME's: information-related, communication-related, intra-organizational and inter-organizational. Wu and Chiu (2018) identified two major issues for building supply chain collaboration: sharing behaviour and technology use behaviour.

Professional differences, attitudes, values . The most frequently mentioned category of barriers was labelled professional differences, attitudes and values, which was mentioned more than twice as often as any of the other categories ( Haas et al. , 2011 ; Carr, 2002 ). Roy et al. (2004) emphasize the need for network partners to create a shared attitudinal commitment to succeed in collaborative endeavours. Greer and Lei (2012) illustrate how different understandings between suppliers and customers rest on cultural patterns in collaborating parties. Öberg (2016) stresses the need to create an identity that goes beyond the single participating organization. Skippari et al. (2017) take a sense-making approach to show how the participants' cognitive basis can possibly inhibit collaborative innovation. In a similar way creating a collaborative culture can also be an important mediator for successful innovation ( Shehzad et al. , 2021 ). Differences in attitudes and values among various professional groups can create lack of trust between the parties ( Chapman and Corso, 2005 ). An important theme in the research on collaboration in supply chains is the trust between the collaborating parties. Lack of trust is indeed an important barrier mentioned by several authors ( Panahifar et al ., 2018 ; Mahmud et al ., 2021 ). The lack of trust is further enforced in situations of high uncertainty ( Latusek and Vlaar, 2018 ). Seeking the roots for a lack of trust indicates that differences in attitudes and values is an important explanation for lack of trust. We therefore view lack of trust as an integrated part of this category of barriers.

Structures . Another group of identified barriers is created by organizational structures in the collaborating supply chain parties. Collaboration often takes place between companies representing different regulatory systems, which creates formal problems for the collaborating parties ( Goldsmith et al ., 2010 ). Differences in organizational and management structures can severely hamper initiatives for innovation between collaborating organizations. Fawcett et al. (2015) show empirically how territorial boundaries and poor system connectivity act as structural resistors to supply chain collaboration.

Lack of resources, staff and skills . The parties in the collaborative effort sometimes work under tight budget restrictions, which makes the lack of resources a problem ( Pratt et al ., 2018 ; McCullough et al ., 2018 ). This can be perceived as lacking both within and between organisations ( Freel, 2000 ; Brown and Eisenhardt, 1995 ; Iachini et al. , 2015 ; Rieley, 2014 ). Participation in joint innovation efforts can be hindered by a lack of necessary skills and shortage of people. Even though skills are available in the participating organisations, collaborative effort might not be prioritized. A further problem that is mentioned is a lack of knowledge about the other parties in the collaboration ( Pratt et al ., 2018 ).

Organizational policies and rules . Internal bureaucracy is often mentioned as a significant barrier, especially in contexts with large organizations collaborating with small firms ( Goduscheit and Knudsen, 2015 ). The existence of internal standard operating procedures in the participating organisations can create barriers to collaboration ( Swink, 2006 ).

Lack of management . Lack of management refers to a broad set of issues that reflects the ways in which managers support, facilitate and organize collaboration efforts. A lack of managerial support and low commitment to collaboration are often mentioned as managerial problems ( Sloper, 2004 ). Davis and Eisenhardt (2011) discuss the role of dynamic organisational processes and the ability to manage across boundaries to achieve re-combinations among the collaborating parties. In a similar way, silo thinking and the inability to make cross-functional and interorganisational collaboration work can seriously hinder collaboration ( Hansen and Schmitt, 2021 ).

Communication . Lack of communication is a broad category that covers numerous aspects of communication. It sometimes refers to a lack of systems for sharing information and data ( Pratt et al ., 2018 ). Zhang and Cao (2018) emphasize both the lack of information sharing as well as collaborative communication as critical variables for supply chain collaboration. Mahmud et al. (2021) describe information-related and communication-related barriers as two broad categories of barriers to supply chain collaboration. Information-related barriers deal with aspects such as reluctance of actors to share information and communication-related ones are lack of communication as well as poor connectivity ( Oyedijo et al. , 2022 ).

Distance . The physical (and mental) distance between the collaborating parties is sometimes referenced up as a barrier to collaboration ( Fickel et al. , 2007 ). Anzola-Román et al . (2018) discuss the strategic fit between collaborating parties, with distant partners posing special challenges for collaboration.

Relations, conflicts . This factor acknowledges the importance of having a shared history between the collaborating parties that forms the basis for current and future relations ( Touboulic and Walker, 2015 ). Fawcett et al . (2015) launch the concept of relational resistors, consisting of sociological and structural factors that, potentially, can undermine collaboration efforts.

The list could have been longer including which have been suggested by some researchers. It can be concluded from the literature review that there is a lack of a clear definition of what constitutes a barrier. Although the list of possible barriers could be extended, incorporating for instance time and technology, which is suggested by some researchers ( Greer and Lei, 2012 ; Goduscheit and Knudsen, 2015 ; Edmunds, 2017 ), there were common denominators and overlap among the different labels that justify the generic list above. It is, however, important to keep the conceptual differences in mind when applying this theoretical framework in the analysis below.

Method: empirical context, studied companies and data collection

This study was based on a close dialogue between the researchers and the practitioners. The researchers took on the role as a catalyst and involved representatives from the companies in different phases of the research effort ( Coghlan and Brannick, 2014 ; McNiff, 2012 ). This process was initiated by the service providing company – the supplier's subsidiary headquarters in Sweden. The company envisioned developing service business through close collaboration with customers focusing on collaborative innovation creation. Thus, the researchers' role was to undertake an action research approach with a clear ambition to develop an understanding of the conditions and requirements for collaborative innovation in services, as well as an intention to design and implement new solutions among involved companies. Through these dual ambitions, knowledge development and intention to redesign existing solutions, the researchers were given access to people and information that otherwise are unavailable to outsiders ( Middel et al ., 2006 ; Gummesson, 2006 ).

Steps were taken to involve the participating companies. The researchers created conditions for a collaborative setting to explore and support change and transformation. The intervention with developing innovative efforts was made through observations at the customers' production sites, interviews with key staff members of all three involved companies at their respective production sites and later workshops with staff from each company (see Table 1 ). Principles of critical self-reflection were applied to understand the ongoing development processes ( McIntyre, 2008 ).

“… win, grow, and retain customers …” , (Wording according to the annual report from 2018).

“Service performance facilitating our customers ' purpose through people empowerment” (Wording according to the annual report from 2018).

“Through satisfied employees, we create added value for the customer.” (Respondent S3: manager at supplier subsidiary headquarters in Sweden)

“ … find models to improve our ability to be innovative and create added value together with our customers …”. (Respondent S3: manager at supplier subsidiary headquarters in Sweden)

“And our strategy is to perform so well so we become the natural partner for these services … with both customers.” (Respondent S3 manager at supplier subsidiary headquarters in Sweden)

The project initiative came from the global supplier's subsidiary in Sweden. Thus, the Swedish context was a natural platform for this research. The customers are two production sites in Sweden, both owned by large international companies within a rigorously controlled industrial production process. One of the customers is international and publicly owned, and the other customer is a large, international, privately held company. The industrial context is characterized as strict with high security operations and producing a homogeneous output. Any extended involvement of external suppliers to provide basic services such as cleaning, maintenance, personnel restaurants and storage has been limited. The supplier provided customers with basic and similar services to their respective production installations in Sweden. Being competitors on the same market, both customers had limited communication with each other and interaction between them had been restricted by their own lack of actions and not by any legal means, albeit they provided similar products and services.

Both customer production sites are in relatively remote and rural geographical places, which is one reason why personnel turnover is very low. The service contracts with the two customers had slightly different conditions, though the supplier was the contractor in both and had been so for some years. The data collection for the project comprised interviews with 25 persons, both managers and workers and two full-day workshops at their respective sites (see Table 1 ).

As action researchers we had free hands to design the process. The two chosen customers are the only business operators in their industry in Sweden. We purposefully selected interviewees at different organizational levels, functions and departments to develop a comprehensive understanding of the context, conditions and expectations from a multitude of perspectives. The intentional approach, to developing and implementing collaborative solutions, was also an argument for the involvement of several groups of people in the process. The choice of interviewees and participants in workshops was conducted on the recommendations from peers and key individuals based on the skills and knowledge of people. We selected interviews and workshops as complementary methods. The purpose of interviews was to create an understanding based on employees' experience and knowledge.

At least two researchers were present in most of the interviews. One researcher conducted three interviews. The interviews lasted between one and two hours and were conducted as open dialogues. They have been recorded and transcribed verbatim. The purpose of the interviews was to obtain a first-hand view of the conditions for innovation at the two sites (customer A and customer B) to prepare for the workshops to follow. The researchers explored how the supplier and buyer representatives perceived innovation and what barriers they saw to engage in innovation together. Some of the interviewees were invited to participate in the workshops.

The researchers applied a workshop approach to create an arena for joint exploration, learning and development of solutions. The combination of interviews and workshops was an intensive and intentional approach. The workshop design was iterative and adjusted to the process. The first interactive workshop was organised after the interviews with ten participants from customer A and the supplier. A second workshop was conducted with eleven participants from customer B and the supplier. Table 1 summarizes the data collection.

The working model for the workshops was based on active interaction by a mix of representatives for both suppliers and customers. The goal for the research approach was to identify and articulate the barriers for innovation in an interactive process between supplier and customer. Each workshop was video recorded, and photos were shot of the categories that were written on post-its and presented on a whiteboard. The workshops were held with the question: What prevents us from being innovative together with our supplier/customer? Gradually we realised that both customers were facing similar barriers to collaborative innovation.

In the workshops with supplier and customer A respective to customer B, the individual participants were first asked to list all barriers they perceived to engage in innovation work together with the customer/supplier based on the findings from the interviews. Every individual described and presented barriers on a whiteboard. The workshops then moved into an interactive phase. The barriers were grouped into broader categories where care was undertaken to work close to the industrial setting and not to have the researchers impose categories on the participants in the workshop. At the end of each workshop, the participants had developed an articulated shared view of their perceived most significant barriers in the interaction between supplier and customer. The two independent workshops resulted in similarities and overlapping findings.

The analytical processes followed the principles of thematic analysis described by Braun and Clarke (2012) . The analysis included a combination of the data from both interviews and workshops. The goal was to uncover meaningful themes based on the contents derived from the participants in their common context rather than from the literature. In the qualitative analysis performed interactively by the three researchers, four themes appeared to be quite consistent between the two customers. The researchers' interpretation of data was made through repeated readings of the transcripts of the interviews and listening and watching the videorecorded workshops. All three researchers participated in both workshops. The barriers in the literature served as a theoretical construct for our analysis. The understanding of the business context and the interaction between supplier and customers were interpreted by the researchers into four major themes presented below. The themes aim to serve as a bridge from identifying barriers to constructing steps to overcome barriers.

Was there a strong researcher effect that provoked a certain type of result? First, although the analysis arrived at four broad themes, the two customers contained much variation in detail on how the experience worked in collaboration. Second, measures were taken to ensure that the participants in the workshop were passing through the stages of the workshop with as little input from the researchers' team as possible. In a similar way, the interviews were conducted to give the participants an open space to reflect upon the conditions for collaborative innovation. No suggestions were made in workshops or interviews by the researchers regarding specific barriers or guide them in the process of merging categories.

In this section, the result from the content analysis of the data is presented in four themes which serves as areas to address to overcome barriers.

Theme 1: The customers' safety culture created special conditions

“It is not so easy to make changes. You must consider a lot of instructions, rules and routines that are out here.” (Respondent C2)

“… that is the disadvantage in our industry, just look, we have fences, there are guards everywhere for getting in and out …” (Respondent C12)

“… then we will investigate it further later if we can do it in any other way …” The supplier continues: “… the management at the customer thought it was good that we test different variants … they do not dare to test themselves … the first times we tested there was worry on the customer staff but now it's more of a normal thing … and by now most people actually think it's really good.” (Respondent S2: middle manager at supplier subsidiary headquarters in Sweden)

“The customers are very controlled in the process … so this is very regulated …” . (Respondent S2: manager at supplier subsidiary headquarters in Sweden)

Slow processes for giving supplier personnel access to the facilities.

The overarching focus on daily operations in the industry hinders future development.

The expression mirrors the importance that the regulations of production are known by everyone and always followed. This theme, which is related to the customers' production processes, was acknowledged as one group of barriers in the workshops following the interviews.

Theme 2: The current business model was a barrier to collaborative innovation

“… if we reach a certain number of quality levels, we can get kickbacks … if we can keep the budget, even go further, then we can share the cost reduction.” (Respondent S3: manager at supplier subsidiary headquarters in Sweden),

“You do a lot of extra work that is not charged, so that will go under goodwill …” (Respondent S12: supplier blue-collar worker at customer B).

“It is a driving force, an incentive. If they improve something, to do it in a better way or more cost-effectively, they get to take part of that profit.” (Respondent C2: white-collar worker at Customer A)

“But the customer has to let us in a little more and they have said that now they should really do it, now we are interested in because we need to earn, we need to save money.” (Respondent S13)

“… if the customer is doing well, they can reduce their customer organization if they trust us and then transfer the responsibility to us and in a way that they get reduced costs as well.”, (Respondent S3)

“… We play with open cards against them now … we have said that winnings should be shared … honesty lasts the longest in this case. They also say that we know that you do not operate here without making any profit from it.” (Respondent S11)

There is a lack of understanding of the contract within both organizations

Mutual knowledge about the core business between customer and supplier is lacking

Unclear interfaces for buyer and supplier interaction

No mutual responsibility for the shared interaction process

“… with satisfied employees satisfied are also the customer benefits.” (Respondent C6: operations manager at customer A, former manager at supplier).

To perform well the service provider needs to have knowledge about the customer needs. Some of the knowledge the supplier had gained was through recruitment of new employees who previously were employed with the customers.

For the customers, on the other hand, there had not been any real prior incentive to learn more about the supplier. It should be noted, however, that supplier knowledge of the customer's core business was scarce. Therefore, there was a need for the participants from both parties to become motivated by the bigger picture (the business model) to create mutual development. In the interviews with the customers, it was mentioned several times that there were no incentives for the individual to be innovative. We conclude that a focus on the business model has not previously been recognized in the literature as a barrier. Before turning to the third observed theme, we want to emphasize that common value creation between collaborative partners needs to take off not only in a mutual understanding of each other's ways of working but also in what could be an innovative path forward.

Theme 3: Innovation had different meanings for supplier and customers

The interviews revealed that the supplier and customers had different understandings of the meaning of innovation and how it can be developed. While the supplier had learned much about the customers' operations, the customers were less knowledgeable about the supplier's competencies. From the situation of contract renewal, it was also obvious that the supplier's strategic ambition to be innovative was relatively unknown and thereby new among the customers' representatives.

“The supplier is quite good at coming up with ideas and suggestions for areas for improvement.” (Respondent C2)

“… all suppliers have been required tough savings … so it was a big step for us being classified as the cleaning company to be allowed to perform a final inspection …” (Respondent S3)

“… there are only incentives for cost savings and improved … and for such suggestions we compensate generously …” (Respondent C7: operations manager at customer A).

At the same time, there were expectations from the customers that the supplier should be able to innovate on a larger scale drawing from experiences in its global business. It was expressed in the interviews that the technology, safety and security regulations gave little or no room for radical innovation. The results show that the industry culture was conservative, and that safety and security aspects were often used to explain why more comprehensive innovation was not desirable and too complicated to carry through in practice. The context was of key importance. During the interviews, the customers' personnel turnover was described as low. A few employees had moved from being employed by the customer to being employed by the supplier. From the interviews, we gained an understanding of the character of barriers that had the character of being perceived, believed and experienced.

The interviews revealed that the customers and the supplier had similar and complementary motives to develop their respective business models to achieve innovation. For both customers, the service supplier had an ongoing discussion on how to interpret the business model inherent in the contract directed to the importance of innovation in the scope of the contracts. Therefore, the situation of renewing the contract with the supplier acted as a revelation for renewing its content for both.

Customer A white-collar worker: “It is perhaps more about streamlining, doing the job better and faster … business development and innovations, new models, we do not really expect that from the supplier. However, we expect them to behave in accordance with the way we have agreed, but that they should do it a little better, a little cheaper, year after year. That's basically it.” (Respondent C2)

The arguments during the workshops were imprinted by a lack of common motive for interacting in a creative and innovative way. They reflect the traditions in the industry and habits of how to collaborate with suppliers, keeping the supplier on an arm length distance, while expecting them to decrease cost every year. The dialogues provided as part of the contract often had the character of reporting and informing. Communication regarding the business model among employees on both sides was not encouraged or legitimized.

Theme 4: Managerial and organizational prerequisites for collaboration

In the workshops, the participants spent much time discussing questions on how the collaboration between the customer and supplier was to be managed and the different barriers they were facing in this. Accordingly, we treat this fourth theme as a prerequisite for collaboration between supplier and customers.

The organization, control and economic prerequisites for the delivery is based on operations (…) and not on ambitions and expectations in the contract.

This signals a gap between the overall ambition to foster more collaborative innovation and the realities within the specific industry context. There were clearly several prerequisites in the production processes that were prioritized at the expense of the innovation work.

The execution of mutual responsibility for the common business is hindered by insufficient communication and information.

This formulation suggests that the problem rests in how the collaboration is managed, with poorly developed processes for communicating between supplier and customer and a lack of sharing information.

For the customer A, the discussion on what hindered innovation work had been expressed as more formal, for instance, with barriers that were classified as structural barriers and with barriers classified as lack of management. The expressed lack of a clear process for communication and information and the slow processes for the supplier to gain access and to get into the premises of customer A were described in formal terms. Customer A emphasizes existing operations and their control, organisation and economic conditions. In terms of actual barriers, there is a similarity between both customers, while the specific articulation signals differ.

“… customer A is more isolated than customer B … customer A is ahead in its thinking about the procurement of services than customer B who is more satisfied with us than customer A, but we are not doing a better job at customer B, it is just that customer A is more into assessment …” (Respondent S2: manager at supplier subsidiary headquarters in Sweden). The supplier continues: “…the relationship between our service personnel and the customer B is closer than at customer A”.

… a key to success is definitively to make the employees understand that my suggestions and ideas are good.

The fourth theme is directly related to the management of the commonly agreed ambition to develop the business within the relationship between the supplier and the customers. The interactive discussion between customers and seller does not come about spontaneously and demands managerial legitimacy and active involvement. A discussion of creating and introducing a new business model is a strategic item that needs support from top management, which means that in addition and parallel to what goes on interactively between customers and seller, an interaction between the managerial levels within each organization needs to be addressed.

The need to take a managerial approach for overcoming barriers in collaboration has become visible for both customers. The empirical descriptions reveal a lack of trust and resources within the respective organizations having made up the business contract.

Integration in management and control on a strategic level is lacking

Lack of long-term financial planning

Mutual knowledge of the respective organizations and their decision-making processes is lacking

There is a lack of shared view of economic resources

Interaction between the supplier and the customer is largely formalized in meetings between managers and does not involve employees. Therefore, when the study identified a need for both formal and informal arenas for interaction at different organizational levels among clients and supplier, this became an issue for managers to handle. There is a need to address the respective internal organizational levels within both supplier and customer organizations. Management attention needs be directed to the work floor personnel who perform the maintenance.

“… it is up to the customer to inform in its organisation while we must inform our personnel …”, and the manager continues “… in this industry we have need to develop middle management … they could be an enormous driving force” and concludes “… it takes a strong leadership to challenge your own group”. (Respondent S3)

The supplier had a strategy to develop innovation through collaborative services with customers and become more engaged in customers' operations. The customers expressed an interest and were positive, albeit careful and cautious. The customers gradually developed expectations and trust for the supplier to provide innovative service solutions. However, at the same time, the customers identified and articulated barriers to collaborating on innovation. This indicates that to develop collaborative innovation we need to explore and understand the barriers perceived from both suppliers and buyer's side. Those barriers must be addressed, removed and transformed into opportunities to enable development to take place.

The literature review revealed several generic barriers to collaboration between organisations. The themes being the result of our analysis of content in the data collection are described in comparison to the generic barriers from the literature in Table 2 below to check for similarities with previous research but also to show that the themes comprise several barriers from the list. Our thematic analysis is suggested as an alternative to the many listings of barriers, an alternative which also opens for how to overcome barriers. As we did not find any indications of barriers related to time or technology, they were excluded from Table 2 .

Three of the literature-based barriers stand out as more visible, essentially cutting through three themes, and in two cases all four, of the themes. We start with discussing these three barriers and their significance for understanding the conditions for collaborative innovation.

The literature on barriers to collaboration highlights professional differences, attitudes and values as a common barrier to collaboration ( Haas et al. , 2011 ). We identified several examples of this in our data, with the supplier representatives coming from a service sector and with strong commercial motives for acting, whereas the customer representatives had a strong focus on their core business. The professional differences constituted theme one – the strong safety culture at the customers. The supplier representatives viewed this as a constant area for discussion and frustration and it was sometimes difficult for them to understand why safety was so highly valued except for in the core business. For the customer representatives, the safety culture was part of their identity; safety was a top priority, regardless of whether the situation called for it or not. This made it more difficult to create the shared identity that Öberg (2016) proposed as critical for successful collaboration. The different cultures in the supplier and customer organizations created a cultural fragmentation that upheld a certain distance between the parties. The customer representatives were fully aware of this and even brought it up as a barrier in the workshops. This contextual based perception of security was one basic barrier that was identified between supplier and both customers and was reflected in the contemporary business logic and business model being used.

The second generic barrier from the literature that was clearly visible in interviews and workshops was organizational policies and rules. We found numerous examples of organizational policies and rules hindering collaborative efforts. The safety culture, as discussed in theme one, was manifested in a multitude of rules and regulations that made collaboration more difficult on a day-to-day basis. Safety culture is a manifestation of customers operating in an industry where there are several technological and regulative conditions they must comply with. This was also visible in what was identified as theme three and the way in which the safety regulations hindered ambitions for more radical innovation. The participants also connected this with the current business logic and existing contracts that specified several formal aspects that effectively hindered more radical innovations, especially when introduced by the supplier.

The third literature-based barrier that surfaced frequently in the themes was relationships and conflicts. The participants frequently mentioned the (lacking) relationships between the supplier and the customers as a source of problem in the collaboration. Under theme one, the participants brought up the reluctance of the client to interact with external parties but at the same time acknowledging that this basic attitude was in a process of change. This was visible when the participants discussed the shortcomings of the contract, with a business model that hindered more ambitious attempts from the supplier to initiate innovation efforts. In the current business model, relations were marked by formal renegotiations of the contract every 3–5 years, which introduced much uncertainty for the supplier and effectively hampered more long-term innovation work. It can also be argued that the lack of processes for sharing experiences also marks the relations between the supplier and the customers, therefore also appearing as an example of this generic barrier.

The three literature-based barriers discussed above highlight an interesting pattern in our data with a combined effect of formal decision-making and cultural aspects. There are formal rules, regulations and technical requirements that govern and restrict the operations of the two customers, and these are important for the understanding of collaborative innovation. The other two barriers in the literature, professional differences, attitudes, values and relations and conflicts, seem to go beyond the formal requirements and form a cultural pattern. This cultural pattern does not formally stop the parties from collaborating but functions as an established way of thinking hindering collaboration. Taken together, the formal and cultural aspects make collaboration difficult between the supplier and the customer. They form a mental model and cognitive framework, hindering close and intensive collaboration for innovation.

The remaining literature-based barriers surfaced in one or two of the themes. Another generic barrier to collaboration found in the literature review was organisational structures. This barrier was visible in the fourth identified theme – managing collaborative innovation work. For both customers, the participants in interviews and workshops discussed structural barriers. One aspect that was brought up was the lack of involvement of lower-level managers and employees, and interviewees called for both more formal and informal arenas for interaction between supplier and customer. They saw it as problematic that innovation between supplier and customer was primarily discussed among senior managers from both parties, which made it more difficult for operative personnel and middle managers to catch opportunities for innovation in the daily work – the authority to do so was not there ( Sloper, 2004 ; Widmark et al ., 2011 ).

The generic barriers in the literature: lack of resources, staff and skills, were considered less problematic in our study involving a supplier and two customers. The literature highlights this as one of the most important barriers ( Crotty et al. , 2012 ; Fickel et al. , 2007 ; Haas et al. , 2011 ). This barrier surfaced when discussing the understanding each party had of the others business, indicating a lack of knowledge of the commercial aspects of the collaboration. Apart from this, resources were not a barrier in the efforts to collaborate between the parties. Resources were rather complementary and needed to create collaborative innovation. The supplier had extensive experiences from other industries that would be beneficial for collaborative innovation in our study if the settings were favourable.

The identified theme four illustrated other generic barriers from the literature review. A common issue that surfaced for both customers, in interviews and workshops, was the lack of communication. This was partly related to the structural issues above, with a lack of established processes for sharing experiences. Several of the participants also mentioned that there was a lack of information that made it difficult to work together on innovation.

The four themes can be further analysed to find the inherent patterns of collaborative efforts between the supplier and the two customers. The safety culture in the two customer organizations contributed to the lack of progress in collaborative innovation. There was a generally positive attitude towards collaboration, but many minor aspects of the safety culture made further progress more difficult. The safety culture was also in a dynamic relationship with the current business model that in different ways emphasized the distance and formal relations between the customer and the supplier. Furthermore, the current business model gave few incentives to the supplier to engage in collaborations with the customer to innovate. The combined effect of both formal aspects and culturally ingrained values and experiences created this special context for collaborative innovation. These two contextual themes: safety culture and the current business model, affected both the interpretation of innovation (giving it different meanings) and how innovation was managed. Figure 1 below describes the relation between the safety culture/current business model (themes one and two) and the meaning and management of innovation (themes three and four).

There are arguably links between the theme of the strong safety culture and the fourth theme that brought up managerial and organisational issues in the collaboration between customers and supplier. It seems that the safety culture created a distance between the customers and supplier, a sense of formal relations where both parties were careful in giving more authority to lower hierarchical levels. This can also account for the lack of communication and information that the participants saw as problematic.

The second and third themes can be framed as a broader discussion on how the meaning of innovation was clearly influenced by the deeply held values in the current business model. This is a question both in the content of the business model(s) guiding the innovation efforts of the supplier and its customers and in how the representatives interpret (and act upon) the business model.

Our analysis into themes where content and context are integrated had the ambition to recognize barriers embedded in the context and in the situation where the interaction between supplier and customer takes place to facilitate common innovation work.

Conclusions and implications

Our study of barriers to collaboration between supplier and customer leads to our first conclusion which claims that to overcome barriers, it is not enough to make a list of barriers. The study illustrates a need to acknowledge both the specific industrial context and the business logic for collaborative. This first conclusion was illustrated as the context of innovation in Figure 1 .

Secondly, the possibility to overcome barriers demands mutual knowledge of both industrial context and business situation. In our study embeddedness in the context was influential. The variety of rules, regulations and requirements that form the backbone of the industrial context and safety culture in the customers' processes is a fundamental part of the current business model. The study also shows that although the rigorous system of rules and regulations were deeply held values, experience and knowledge, the participants articulated an awareness and acknowledged the role they played (along with the formal aspects) in constituting the setting for the business. The role of the context and the business model between the supplier and the customers requires attention and need to be acknowledged by both parties.

Thirdly, the study sheds light on, a fundamental, need to communicate and manage the acknowledgement of the business model and the industrial context in both the supplier respective the customer organisations. An increased understanding of the respective organisations must be supported by both managerial legitimization and action. Managers in both supplier and customer organization must initiate and manage a communication across organisational borders. This third conclusion is illustrated by the right-hand side in Figure 1 : The understanding and management of innovation in Figure 1 .

Theoretical implication

This paper demonstrates that the development of a joint innovation process involving supplier and customers need to be based on cross-theoretical domain understanding. Theoretically, we need to see the traditional grouping of barriers in the context of business, operations and practices and not as isolated domains. Otherwise, we risk a shallow understanding of the barriers. The literature review shows that many barriers are evident, and they can be listed in many ways. What we demonstrate in this paper is that the supplier and its two customers must have a dialogue to identify and overcome those barriers prevailing in their specific context and companies. For this reason, it was possible to integrate one supplier and two customers, as they operate in the same business context under similar perceptions and business logic. Such collaborative dynamics needs, as claimed in the introduction of this paper, more attention by researchers.

Practical implication

Is it possible to overcome the barriers that have been described in this study? In the discussions at the respective workshops in the study, interest and commitment to addressing the barriers were revealed. Both the supplier's and the customers' representatives showed a willingness to increase the level and intensity of interaction on common improvement. The renewal of the contract gave the supplier an opening opportunity to initiate deeper and more intensive collaboration and to increase the level of intensity. We noticed that the dialogue during the workshops was highly appreciated and inspired continued interaction between supplier and both customers. We observed that this dialogue problematized and created more of a mutual understanding and trust. The values and attitudes, organisational structure and processes and communication were articulated and discussed in a lively but trustful manner. The specific format with researchers facilitating a meeting between supplier and customers facilitated the identification and discussion of the barriers to collaboration. Researchers, as neutral actors, not being any business actor, were the catalyst bridging parties together to achieve joint targets.

Any initial barrier relating to lack of willingness, incentives, or motivation to engage in collaborative innovation work was overcome during the workshops. This meant that both supplier and customers were ready for the next step to explore collaborative innovation. The focus on the business situation and the industrial and organizational context showed that the identified barriers were rooted in the contemporary business model. A change in the content of the business model was crucial for opening a discussion between parties regarding developing collaborative innovation. Moreover, the interaction led to an agreement between supplier and customers, based on a joint understanding of what the barriers were and how the current business model restricted further collaboration. Our intention of action research ended in the design of a collaborative business model for innovation. Without the explicit exploration of barriers and an understanding the logic of industrial and business context, this would be difficult to achieve.

The results of our study cannot be generalized in a traditional manner since the business model constituting the situation we studied, and the specific context of the customer industry are specific. Our analysis focused on a holistic interpretation. We argue however that the insight of the four themes illustrated in Figure 1 can be a good platform for any supplier wanting to initiate interaction on innovation with their customers. We suggest setting focus on business culture, business model, understanding of innovation and the management of innovation to overcome barriers when suppliers and customers want to commonly engage in innovation. The generalization can be done by readers according to their own context and situation.

The context for and the understanding and management of collaborative innovation

Overview of respondents in interviews and participants in workshops

Cross-analysis of the four themes found in the interpretative analysis of data in the study and the generic barriers from the literature review

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Acknowledgements

The authors are grateful for the openness and trust that enabled researchers' access to the Service Supplier, Service Customer A and Service Customer B. The authors are also grateful to two anonymous reviewers that supported the rework of this paper with constructive and helpful comments.

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Future-proofing the supply chain

Supply chains matter. The plumbing of global commerce has rarely been a topic of much discussion in newsrooms or boardrooms, but the past two years have pushed the subject to the top of the agenda. The COVID-19 crisis , postpandemic economic effects , and the ongoing conflict in Ukraine  have exposed the vulnerabilities of today’s global supply chains. They have also made heroes of the teams that keep products flowing in a complex, uncertain, and fast-changing environment . Supply chain leaders now find themselves in an unfamiliar position: they have the attention of top management and a mandate to make real change.

Forward-thinking chief supply chain officers (CSCOs) now have a once-in-a-generation opportunity to future-proof their supply chains. And they can do that by recognizing the three new priorities alongside the function’s traditional objectives of cost/capital, quality, and service 1 Employee safety, food safety, and employee retention are considered operational preconditions, not supply chain objectives. and redesigning their supply chains accordingly.

The first of these new priorities, resilience, addresses the challenges that have made supply chain a widespread topic of conversation. The second, agility, will equip companies with the ability to meet rapidly evolving, and increasingly volatile, customer and consumer needs. The third, sustainability, recognizes the key role that supply chains will play in the transition to a clean and socially just economy (Exhibit 1).

Boosting supply chain resilience

Supply chains have always been vulnerable to disruption . Prepandemic research by the McKinsey Global Institute found that, on average, companies experience a disruption of one to two months in duration every 3.7 years . In the consumer goods sector, for example, the financial fallout of these disruptions over a decade is likely to equal 30 percent of one year’s EBITDA.

Historical data also show that these costs are not inevitable. In 2011, Toyota suffered six months of reduced production following the devastating Tohoku earthquake and tsunami. But the carmaker revamped its production strategy, regionalized supply chains, and addressed supplier vulnerabilities. When another major earthquake hit Japan in April 2016, Toyota was able to resume production after only two weeks.

During the pandemic’s early stages, sportswear maker Nike accelerated a supply chain technology program that used radio frequency identification (RFID) technology to track products flowing through outsourced manufacturing operations. The company also used predictive-demand analytics to minimize the impact of store closures across China. By rerouting inventory from in-store to digital-sales channels and acting early to minimize excess inventory buildup across its network, the company was able to limit sales declines in the region to just 5 percent. Over the same period, major competitors suffered much more significant drops in sales.

Supply chain risk manifests at the intersection of vulnerability and exposure to unforeseen events (Exhibit 2). The first step in mitigating that risk is a clear understanding of the organization’s supply chain vulnerabilities. Which suppliers, processes, or facilities present potential single points of failure in the supply chain? Which critical inputs are at risk from shortages or price volatility?

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In 2021, for example, many companies in North America were affected by labor shortages  across their supply chain operations. Tackling those shortages has forced companies to be creative in their hiring and staffing strategy. One food distributor created regional floating labor pools of drivers, warehouse workers, and supervisors, recruiting staff in areas where they were more available and deploying them wherever they were most needed. Other companies are building their labor pipeline-management capabilities—from recruiting through retention—and sharpening their labor planning as well.

Today, most organizations lack effective systems to measure and monitor those vulnerabilities, and few have such visibility beyond their direct suppliers. In a 2021 McKinsey survey  of senior supply chain executives, just under half said they understood the location of their tier-one suppliers and the key risks those suppliers face. But only 2 percent could make the same claim about suppliers in the third tier and beyond. That matters because most disruptions originate in these deeper supply chain tiers.

Closing the industry’s current knowledge gaps will require it to increase its surveillance of supply chain participants and its understanding of the physical, financial, political, and social risks they may face (Exhibit 3). The complexity and diversity of supply chain risks require smart management tools, and leading companies are applying a range of new techniques, from digital alerting systems to track potential disruptive events to risk “heat maps” that help them focus their attention on high-risk regions and suppliers.

Companies will also need a management infrastructure to steer a proactive response to these risks. Such an infrastructure would include a dedicated team, headed by a senior leader, with the remit to identify, prioritize, and respond to vulnerabilities. Those responses might include structural changes to the supply chain, as well as the development of detailed contingency plans for disruptive events. Introducing resilience metrics into supply chain KPIs helps the whole organization to ensure supply chain design and execution decisions are made in a way that balances efficiency and vulnerability. And because supply chain risk is a continually moving target, the organization should conduct regular stress tests and reviews to ensure its resilience measures remain appropriate.

Increasing supply chain agility

Customer loyalty is no longer a given. During the COVID-19 pandemic, for example, 77 percent of US consumers changed stores, brands, or the way they shop . Much of that change was driven by necessity. People went online when they couldn’t access their regular stores, and two-thirds said that lack of availability was the primary reason for switching brands. The big winners of the crisis were companies, often the largest players, that could keep products flowing to their customers in a difficult operating environment.

In the postpandemic economy, established brands will face new challenges. As consumer-generated content replaces traditional brand marketing campaigns, companies have less control over the peaks or troughs of demand. Where a business might have once spent months preparing its supply chains for a carefully targeted promotional campaign, now a single viral video can bring attention from millions of consumers overnight. One consumer goods manufacturer experienced a surge in demand in 2020 after a video of a customer enjoying its product on a skateboard ride received millions of views and spawned dozens of imitators.

New players are disrupting retail channels too, widening available choices and creating space for smaller, independent manufacturers. While consumers opted for the security of big brands during the COVID-19 pandemic, a preference for smaller producers is rising, especially among younger cohorts. And the growth of comanufacturing businesses and third-party logistics (3PLs) organizations means new entrants can compete in consumer markets with fewer expensive manufacturing and supply chain assets.

For incumbents, the lesson is clear: move at the same speed as consumers. That means creating innovative products and brands that meet the changing needs of different consumer groups as those needs emerge. And it means greater skill in managing complex portfolios of brands with different market characteristics and delivering their products through multiple channels. These same pressures increasingly hold true for B2B businesses as well, as increased consumer product complexity and demand volatility trickle down the supply chain.

This fast-moving, fragmented, consumer-centric world will require a different sort of supply chain. Traditional supply chains sought to achieve stability and minimize costs. Future supply chains will need to be much more dynamic—and be able to predict, prepare, and respond to rapidly evolving demand and a continually changing product and channel mix. In short, supply chains will need to become agile .

The good news for CSCOs is that agility and resilience are highly complementary: an agile supply chain is inherently more resilient. To be truly effective, however, this agility would need to extend into R&D, procurement, planning, manufacturing, and logistics (Exhibit 4).

At the planning stage, for example, supply chain teams will need to work in a much more proactive way. As potential market opportunities are identified, the supply chain function can begin creating scenarios that are ready for implementation alongside the development of the new product or market offering. After launch, the use of advanced techniques for demand sensing and dynamic forecasting, aided by machine learning technologies, is set to become an essential part of day-to-day supply chain operations.

In supply chain execution, agility requires new capabilities and tools. Agile operations make extensive use of digital technologies in manufacturing, for example, and maximize the use of smart automation in both production and logistics settings. Unlike the rigid supply chain automation systems of the past, technologies such as collaborative robots and smart packaging machines are capable of faster changeovers and can handle a much wider range of products and shipment types.

The drive for agility may require companies to reassess make-versus-buy decisions. In manufacturing, for example, big players typically keep the production of their stable, high-volume products in-house, using comanufacturers for niche and special projects. Leading companies appear likely to invert this trend, investing in flexible core assets and skills that allow their own manufacturing to respond quickly to rapidly changing demands—and, in some cases, outsourcing stable, high-volume products to cost-advantaged external providers. In downstream logistics, meanwhile, greater use of 3PLs may become the most cost-effective way to increase asset flexibility and proximity to customers.

Agile supply chains will also need skilled, flexible people. An agile supply chain workforce is comfortable working with and alongside advanced technologies, and personnel may need a wider range of skills so they can move between tasks as business needs change. Accordingly, agile supply chains make use of agile teams and working methods, borrowing elements of the approach that have transformed flexibility, productivity, and quality in the software industry and beyond. Agile organizational principles are well-described elsewhere , but key elements of the approach include the use of tight-knit, cross-functional teams that work together to implement new concepts and solve difficult problems in short, incremental sprints. These principles are already gaining traction across a range of industries: one major consumer products manufacturer is using “flow to work” pools in its global support functions to dynamically allocate staff to projects, for example.

Digital twins: The art of the possible in product development and beyond

Achieving supply chain sustainability.

Post-COVID-19 consumers have become even more likely to prefer brands that offer robust sustainability credentials and a strong purpose, but industry surveys conducted in mid-2020 suggested that environmental, social, and governance (ESG) topics slipped down companies’ list of priorities during the pandemic. Big players are now making up for lost time. In 2021, 29 percent of companies included ESG metrics in their staff incentive plans, for example, a seven percentage-point uptick over the previous year.

Companies looking to avoid the increasing reputational, regulatory, and financial risks of poor ESG performance are being pressed to act. And as companies such as Henkel have shown, strong environmental actions are also delivering real operational results: a digital twin connects and benchmarks 30 factories and prescribes real-time sustainability actions, which over ten years have reduced energy consumption by almost 40 percent and waste by 20 percent.

The supply chain has a central role to play in the enterprise sustainability transformation. Of nine ESG initiatives highlighted by senior executives in a 2020 industry survey, most either involve the supply chain directly, or have significant implications for supply chain setups (Exhibit 5).

The foundation for an ESG-focused transformation is a clear understanding of the organization’s baseline impact. That would include, for example, quantification of the resources consumed and emissions generated by the company’s direct activities (Scopes 1 and 2) and by participants in its wider supply chain (Scope 3). This baseline allows an organization to identify the largest opportunities for improvement, helping it set challenging but realistic goals and timescales that can be communicated to external stakeholders. Capturing those improvements requires rigorous sustainability KPIs and changes from the shop floor to the boardroom, including optimized operating practices, an ESG focus in procurement decisions , and the adoption of more sustainable technologies in existing and planned manufacturing or logistics projects.

These new priorities of resilience, agility, and sustainability can’t be tacked on to existing supply chain setups. Realistically, they will need to be built in from the foundation and considered in every element of supply chain design, organization, and operation. For many companies, that will likely require a change in mindset from the top, with risk, agility, and sustainability KPIs considered alongside traditional ones focused on cost, capital usage, service, and quality. To excel in these six supply chain dimensions, workforce management and digital capabilities will be essential.

Jan Henrich is a senior partner in McKinsey’s Chicago office; Jason D. Li is an associate partner in the Toronto office; and Carolina Mazuera is an associate partner in the Miami office, where Fernando Perez is a partner.

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McDonald’s and the Challenges of a Modern Supply Chain

Three lessons.

Recently, McDonald’s, the world’s iconic largest food service provider, has been (forgive the cliché) through the grinder. Poor performance has led to the departure of its CEO and plenty of critical attention in the business pages . Part of this story relates to the provenance, or origins, of its products: Chains that provide more upmarket “fast casual” dining such as Panera, Chipotle, and Shake Shack have brands that speak of freshness, health, and trustworthy sourcing.

• Steve New teaches operations and supply-chain management at the University of Oxford’s Saïd Business School and is a fellow of Hertford College.

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'Convergence' Key to Efficient Supply Chain Systems, Gartner Exec Says

"Bob" told his story of working for a fairly well-known retailer but one that was active in only one part of the country. He said his company recently had begun using Manhattan Associates' Point of Sale retail software, a relatively minor part of Manhattan's business compared to its transportation management and warehouse management systems, which are industry juggernauts.

So here he was at Momentum, a new Point of Sale customer for Manhattan Associates, but more importantly, part of the supply chain migration away from spreadsheets and other old applications and on to platforms that provide "convergence" — migrating key applications to a single platform to drive efficiency.

While Bob in his lunchtime chat at the conference here this week didn't use the word "convergence" the need for a system that could work smoothly with processes at his now larger company clearly met the definition of the term as laid out by Brock Johns.

In a presentation at Momentum about the state of transportation management, Johns talked about the levels of convergence.

Level 1 applications are basic solutions, such as key performance indicators (KPIs). But as a company moves up to Level 5 and the applications become more complex, convergence among the company's operations becomes possible through greater adoption of technology that in turn is increasingly complex itself.

The result, Johns said, illustrating the process with an arrow, is that while convergence between warehouse management systems and transportation management systems was possible in the past, it is now spreading to activities such as yard management systems that are converging with TMS and WMS. The last addition to the arrow was supply chain planning.

"Some of these things have come to fruition, and that's where we really start to see a lot of the benefits" Johns said, describing convergence as "bringing all these different parts of functional silos together." And it's happening, Johns said, because "we're seeing the technology architectures change."

The pace of change is "tremendous" he added. As convergence occurs, it raises the prospect of a more integrated planning approach to a company's supply chain.

But not everybody can do that. Companies that can use the convergence of various tools such as WMS and TMS are more "mature" according to Johns.

On a slide Johns presented, the goal of the convergence was spelled out: "Align the function of supply chain planning to supply chain execution." His presentation made it clear that he believes convergence is making that possible.

Getting people and systems to speak to each other

But the solution is not just technology, Johns said. Part of it comes in culture.

"How do we get the folks in other functional areas to come sit at the table?" he said. "How do we talk about shared data, shared information?"

A day earlier at Momentum, Bart De Muynck, a longtime independent supply chain consultant, spoke on a panel about supply chain execution and bringing in the disparate parts of a company's supply chain. One of the clients he described sounded like an example of the need to share data and processes that Johns discussed.

Without identifying the company, De Muynck said he and the company's executives realized that "to get more productivity out of our digital operations, we needed to get more visibility." The lack of visibility was most stark in the fact that orders for particular products, some of them with strong demand, would come down to the sales team with a lead time of "like a few days."

But the company's planners had information about likely demand for the product, and it wasn't shared. "The problem was the supply chain planning systems didn't talk to the TMS system" De Muynck said.

The fix wasn't easy. "We ended up building something, but it took us about two years" he said. "I'm not going to mention how many millions of dollars it cost us to build something in between the company's [enterprise resource planning] that connected the supply chain planning systems to the TMS. We finally got something, but imagine if you have these systems that talk to each other. You wouldn't have to go through all these challenges."

And that was one of the points of Johns' presentation about convergence: It is happening but not everywhere.

How big will AI be?

A day after Warren Barkley of Google spoke about the AI capabilities that can be brought to bear on supply chains, Johns brought AI into his presentation on what's brewing in transportation management.

He spelled out a few specific applications: using generative AI to create written content, such as drafting KPIs; writing standard operating procedure manuals; using chatbots (which Barkley also discussed); and summarizing meetings and communications.

But Johns was notably less boastful than Barkley about the prospects for AI in supply chain management.

He noted that AI is not just generative AI. Examples such as KPIs were "primary use cases." But he added, "You've got people in your organization and on your team that think GenAI is going to solve world hunger, and it will not."

"These are things that can help us do processes better. They can help us have a better user experience" Johns said. "There will be more use cases in logistics." But for now, Johns said, there may be value in "pumping the brakes."

The post ‘Convergence' key to efficient supply chain systems, Gartner exec says appeared first on FreightWaves .

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