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Come Together

Talk of collaboration must be replaced by action.
By Bob Violino
Jul 20, 2004It seems as if companies have been talking about improving collaboration with their supply chain partners since, well, forever. Surveys show that upward of 90 percent of executives—regardless of whether they are in manufacturing, logistics or retail—say better data sharing would increase their sales. And yet true collaboration, where supply chain partners agree on which data to share and change
their business processes to create benefits for both parties, remains more the exception than the rule.

Most retailers would rather sell point-of-sale data to their manufacturing partners than share it in an attempt to boost sales by reducing out-of-stocks. Most manufacturers are happy to fire off advance shipping notices to retail customers, but they aren’t interested in giving the retailers access to information about their warehouse inventory.

That must change. Our cover story, “Collaboration Is Key,” explains why changing the business processes among supply chain partners is critical to achieving the long-promised benefits of RFID technology. In “Models of Teamwork,” we spell out three strategies for collaboration and give examples of forward-thinking companies that are pursuing each (see page 20). The right model for your company will depend on a number of factors, including who the channel masters are, whether distributors play a key role in the industry and what the level of adoption is within your industry.

RFID will force companies to rethink the way they handle common business processes, such as shipping and receiving. But now is the time to work with supply chain partners and industry associations to standardize these processes. Standardization will create efficiencies for all companies within that industry.
Of course, there are plenty of obstacles to collaboration. One of the biggest is trust. Companies often worry that their customers downstream in the supply chain will use data to manipulate prices (that is, squeeze the supplier). The cattle industry in the United States is a good example of how concerns about shared data can inhibit RFID adoption (see “Can RFID Save the Cattle Industry?” page 34). But that industry is far from unique.

Another big obstacle is technology. Some retailers use electronic data interchange to share data with suppliers, while others use Internet portals. But smaller suppliers can’t afford to use different systems to communicate with different retail customers. Even for bigger suppliers, this is highly inefficient.
EPCglobal, the joint venture created by the Uniform Code Council and EAN International to commercialize Electronic Product Code technology, is creating standards for the EPC Network, which will link EPCs with product information stored in electronic catalogs and other online databases. It’s imperative that industry groups work with EPCglobal and with data-synchronization providers within their industry to standardized processes and to create a single platform for sharing data. Because without collaboration and standardization, RFID will be nothing more than a very expensive data-collection tool.
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