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Co-creation and Collaboration in

the Supply ChainEmeritus Professor Martin ChristopherCranfield School of ManagementCranfield UniversityCranfield

Bedford MK4 !"#United Kingdom

$el % 44 &!'()4 *+(()) ,a % 44 &!'()4 *)())+E-mail % m.g.christopher/cranfield.ac.u0111.martin-christopher.info

 

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"genda

• $he ne1 rules of competition

• 2aining advantage through collaboration

• $he challenge of compleity• $he case for 3co-opetition 

• $he Supply Chain of the future

 2

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 3

5e1 competitive realities

• 6nput costs are rising but 7

• 5e1 sources of lo1 cost competition mean thatthe pressure on price 1ill continue and 7

• Continued concentration of mar0ets means thatbigger8 more po1erful customers 1ill demandmore from their suppliers 1hilst 7

• Conventional mar0eting strategies have lesseffect in a time-sensitive8 on-demand 1orld

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 4

9olatility 6nde

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 5

5othing ever changes ........

 :..... 6n +! years bet1een (;*! and (<)! thecost of distributing necessities and luuries has

nearly trebled8 1hile production costs havegone do1n by one-fifth.... =hat 1e aresaving in production 1e are losing indistribution.> 

?alph Borsodi

 3$he @istribution "ge (<)<

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 6

   D  a  y  s  o   f   I  n  v  e  n   t  o  r  y

First Tier 

Supplier 

Inbound

Logistics

Vehicle

Manufacturers

Outbound

Logistics

Distribution

& etail

!"# $%%% Figures Volu'e (ar Stoc) Levels

Source: Holweg (2002)

6nventory profile of the automotivesupply chain

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 7

$he search for collaborative advantage

• See0 out opportunities for horiAontal as 1ell asvertical collaboration

• Co-operate to gro1 the ca0e8 compete on ho1

to slice it

• #everaging capabilities and 0no1ledge throughcollaboration

• Share assets in the supply chain 1hereappropriate

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Compleity in the global supply chain % the Boeing *;* *;*

8

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Co-creation in the supply chain

 9

   9  a

   l  u  e  t  o   C  u  s  t  o  m

  e  r

   9  a

   l  u  e  t  o   C  u  s  t  o  m

  e  r

9alue to Supplier 9alue to Supplier

$raditional ?elationship

,ocus on splitting the pie

Etended Enterprise

,ocus on epanding the pie

rce: J.H. Dyer, Collaborative Advantages

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$he etended enterprise vie1point

 Single company thinking

• ,ocus on the customer

• 6ncrease o1n profits

• Consider o1n costs

•  :Spread the business around> 

• 2uard ideas8 information and

resources

• 6mprove internal processefficiency

Extended enterprise thinking

• ,ocus on the ultimateconsumer

• 6ncrease profits for all

• Consider total costs

• $eam 1ith the best

• Share ideas8 information andresources

• 6mprove oint process efficiency

10

Source : A T Kearney 

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$he business case for supply chainintegration

• Supply chains compete8 not companies

• Most opportunities for cost reduction andor valueenhancement lie at the interface bet1een supply chain

partners

• Supply chain competitiveness is based upon the value-added echange of information

• Supply chain integration implies process integration

• Supply chain competitiveness reDuires the collectivedetermination of strategy

11

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12

$he role of supplier and customercollaboration

ource : Accenture

*nterprise (usto'er Supplier 

(o'ple'entor 

Inter'ediary

S+**D to Margin

Manufacturing (ollaboration• Design for localisation• Scheduling synchronisation• Design any,here build any,here

+roduct Develop'ent (ollaboration• -lobal platfor' design• (usto'isable products• -lobal distributed product

develop'ent

(usto'er (ollaboration• .oint product definition• apid proposal response• Online custo' configuration

Supplier (ollaboration• .oint develop'ent• Outsource design• (ontract 'anufacturing

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Co-opetition% a definition

 13

" business strategy based on acombination of cooperation andcompetition8 derived from anunderstanding that business competitorscan benefit 1hen they 1or0 together.

" :non Aero sum> scenario8 in 1hich thesum of 1hat is gained by all players isgreater than the combined sum of 1hat

the players entered the scenario 1ith.

ce: D. Meyer, 15th March 2011 and !toc"#hoto

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Co-opetition

 14

urce: D. Meyer, 15th March 2011

Cooperative CompetitionCo-opetition occurs 1hen companies 1or0 together inparts of their business 1here they do not believe theyhave competitive advantage and 1here they believethey can share common costs.

Basic premise%

$ Co-opetition strategy and value creation leveragethe alliance

$ Partner 1ith other shippers &even competitors' tocontrol logistics and transport costs

$ #oad consolidation

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Co-opetition Partners

 15

urce: D. Meyer, 15th March 2011

• Producers, Customers, Consumers 1ho drive producer

demand and determine product eco-footprint

• Shippers and Terminal Operators 1ho generate the freight

flo1s and provide the critical infrastructure for product flo1

• Logistic Service Partners (3PLs 1ho can design and

implement optimised solutions and move the freight• !ourth Party Providers 1ho can facilitate partnerships8

referee bloc0ages8 find common ground

• "overnments 1ho can assure that legal and regulatory

arrangements are in place to support seamless collaboration

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Co-opetition 9alue Creation

 16

e: D. Meyer, 15th March 2011, and reu%en&''er.ty#e#ad.co&

• Co-opetition does not simplyemerge from coupling

competition and cooperation

issues

• Co-opetition implies that

cooperation and competitionmerge together to form a ne1

0ind of strategic

interdependence bet1een

firms8 giving rise to a

co-opetitive system of

reciprocal value creation.

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$he Prisoners @ilemma F$he 6mportance of $rust

 17

Source: (((.c)o.co&

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,rom :Bo1-$ie> to :@iamond> 

 18

$raditional buyersupplier interface Building stronger partnerships through

multiple lin0ages

* + D

roducton

Mar"etn-

Su##'ychan

Sa'e!

Mar"etn-

#eraton!

/u!ne!!dee'o#&ent

Su##'ychan

/uyer

Supplier   Customer

* + D

roducton

Mar"etn-

Su##'ychan

ey$account!e''n-

Mar"etn-

#eraton!

/u!ne!!Dee'o#&ent

Su##'ychan

Su##'erDee'o#&ent

Supplier   Customer

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$he supply chain of the future

19

/esterday0s Model

•   Independent entities

•   Inventory 1ased

•   Lo, cost production

Mar)et Driven

Supplier Driven

Mass custo'isation

one2to2one 'ar)eting

Mass production

To'orro,0s Model

•   Virtual net,or)s

•   Infor'ation based

•   (usto'er value oriented

'ass 'ar)eting