In supply chain management, supply chain collaboration is defined as two or more autonomous firms working jointly to plan and execute supply chain operations. It can deliver substantial benefits and advantages to its partners. It has been known as a cooperative strategy when one or more companies or business units work together to create mutual benefits. There are two main types of supply chain collaboration, vertical collaboration and horizontal collaboration. Vertical collaboration is the collaboration when two or more organizations from different levels or stages in supply chain share their responsibilities, resources, and performance information to serve relatively similar end customers; while horizontal collaboration is an inter-organizational relationship between two or more companies at the same level or stage in the supply chain in order to allow greater ease of work and cooperation towards achieving a common objective.
Different forms and approaches of supply chain collaboration
Collaborative communication
Collaborative communication is the contact and message transmission process among supply chain partners in terms of frequency, direction, mode, and influence strategy. Open, frequent, balanced, two-way, multilevel communications indicate close inter-firm relationships.
Collaborative Execution
Collaborative execution is the process of executing supply chain transactions in a collaborative manner. Suppliers will work with Buyers to ensure the right quantity is delivered in the right time as per the contract. As the purchase ordergoes through a life cycle of order to delivery, at each stage there need to be a tight collaboration between the trading partners for the correct and efficient execution
Coordinating contract
Coordinating contract is defined as a coordination mechanism that provides incentives to all of its members so that the decentralized supply chain behaves nearly or exactly the same as the integrated one, by specifying contract parameters such as quantity, price, quality and deadlines, contracts are designed to improve supplier-buyer relationship.
Information sharing is the extent to which a firm shares a variety of relevant, accurate, complete, and confidential ideas, plans, and procedures with its supply chain partners in a timely manner.
Joint decision making refers to the process where supply chain partners orchestrate decisions in supply chain planning and operations that optimize supply chain benefits.
Joint knowledge creation is the extent to which supply chain partners develop a better understanding of and response to the market and competitive environment by working together.
