Teamwork, partnership, group effort, alliance and cooperation are all synonyms for collaboration, the often-heard buzzword of the commerce world. Collaboration is emerging as the next strategic initiative for improving business performance, but there is a dearth rather than plethora of success stories. That is changing in the retail and consumer packaged goods (CPG) sector as leading companies are now seeking to deploy the next generation of business process improvement solutions by engaging their trading partners with truly collaborative solutions.

Today's collaboration models are predicated on the shared commitment toward common business goals and are empowered by technology applied across the supply chain and all of its participants. Collecting and sharing the data that drives specific business processes reveals the overall performance of the supply chain and that of each of the trading partners. This collection of data provides the foundation for collaborative solutions that are emerging to a mainstream presence for all industry leaders.

Navigating the market
Facing greater consumer expectations and consumer flight risk, plus growing competitive pressure (including the effects from globalization), companies and whole industries are developing collaborative solutions to improve individual and overall performance. To maintain or gain leadership positions, companies must see and understand the impact that one component or function in the supply chain can have on the overall outcome. Much like a relay team, if one player falters the whole team suffers the consequences.

In response to these market dynamics, it's necessary to transition from disjointed processes and often-combative relationships to a holistic approach resulting in a win-win scenario for retail and CPG companies alike. The ultimate representation of success is the high level of customer satisfaction and loyalty, which is achieved through the measurable improvements of "in-stock rates" and product sell-through performance. Retailers and suppliers using collaborative solutions for one year to 18 months have achieved a 20% to 40% reduction of the out-of-stock rate of products, cascading benefits that resonate throughout the supply chain community.

Getting started
All parties need to recognize that the ultimate economic force resides at the shelf—the main interface with the consumer. As such, intertwined companies need to note and appreciate their co-dependencies as necessary for mutual success. For example, metrics such as item availability have different definitions at various points in the supply chain, but the availability that really matters is what is available to the customers. Thus, the entire supply chain is responsible for the performance on the shelf, and that drives the need for a single, common view to enable the collaborative processes. A key initial step in this direction is the practice of data sharing for the common purpose.

Exchanging data is common, such as the sending of advanced shipment notices to inform the receiving company of the inbound product count and content. But that is merely a starting point, as most of the current data exchanges remain point solutions. Due to the lack of complete and integrated data, these systems are commonly described as information silos. The lack of integrated data is accompanied by disparate uses and mismatched data standards and hidden information. The different metrics and key performance indicators (KPIs) generated from these siloed systems by the individual retailers and suppliers are barriers to a successful collaboration; but these can be aligned with a common data platform.

Better data, better decisions
Without a centralized data system, current collaborative practices suffer because they are constrained by the limited scope of the information systems. Because companies evaluate only their data and their own supply chain segment, there is a lack of shared data among the partnering entities. Company-specific data doesn't represent the whole chain and can distort the relative performance, resulting in limited, different and biased views of the same supply chain.

In fact, seeing and addressing only segments of the supply chain often has a negative impact on the overall performance of the entire network. For example, a manufacturer that delivers goods to keep a warehouse's metrics in line may unknowingly overload the store's receiving dock.

Conversely, a single source of shared data collected from inventory, point-of-sale (POS), merchandising and supply chain systems can be made immediately available to sales teams, merchandisers, logistics and distribution teams, among others. This collective data allows these users to work from the same foundation. Effectively, the supply chain is synergized as all participants are reading and working from the same playbook.

Achieving the single view
A single, common view of the collective data is fundamental to establishing collaborative platforms. An enterprise data warehouse (EDW) is a natural solution as it offers users the ability to combine data from many sources, including from trading partners and external supply chain systems.

With robust applications on an EDW-based system, the entire business community of suppliers, distributors and retailers benefits as each partner can view the same supply data at every point along the chain, even beyond their enterprise. The aggregate data correlates the individual components to the overall process enabling users to track inventory and stock level data inside stores, distribution centers, loading docks and all relevant points, and make decisions based on the corresponding performance, outages or exceptions. With this information in hand, the partnering community can then monitor, manage and streamline the ordering, replenishment and flow of sellable goods. The result is the mutual benefit of having the right products at the right place in the right amount at the right time—with no latency.

Collaboration solutions are most effective when generated from a single system and provide a result demonstrating the famous statement that "the value is greater than the sum of the parts." When the co-dependency among partnering companies is understood and data sharing ensues, the win-win statements and benefits take root.

Technically speaking
Deploying a collaborative platform is achievable through the implementation of commonplace technologies and system integration processes. The data already exists, it's just all over the place. The main tasks for a successful system involve collecting, organizing and presenting this data via secure applications and portals. The challenge is turning the data into usable information—this is best achieved from a single platform. For users' ease of mind, technical challenges and security concerns of shared information systems are no longer an issue as new architecture standards, data encryption and synchronization programs ensure layered security.

Additional business benefits
Improved overall performance, a better cost structure and greater customer satisfaction resulting from lower out-of-stock rates is the ultimate benefit of collaborative solutions. The pathway to that achievement includes gaining a better sense of demand to enable efficient replenishment, implementing more effective overall forecasting and adjustments, faster issue identification and resolution, proactive notification and problem avoidance.

With this type of collaborative system and effective processing, optimized inventory levels, improved related holding costs, compressed decision cycle times and reduced physical cycle times are achievable goals.

Benefiting the boss and others
At the end of the supply chain resides the boss—the consumer. Fulfilling the demands and needs of the consumer is best addressed by an aligned set of business processes with a shared responsibility by all trading participants. Understanding the impact of each function and seeing the dependencies across the system is critical for proficient supply chains. Collaborative solutions are best delivered on an EDW, the single information system that has the data available in a timely fashion for all participants in their respective view, with clearly defined dependencies and correlations. T

Teradata SeeChain: Collaborative solution for turning data into actionable information enlarge Maintaining a fully stocked shelf for consumers is what makes companies profitable. To reduce out-of-stocks by improving product availability while cutting costs, retailers and consumer packaged goods (CPG) manufacturers need complete visibility across all functions of the supply chain. Teradata SeeChain is a supply chain performance management application that enables partnering suppliers, distributors and retailers to see the entire chain in their respective views and at their respective levels of detail. The collaborative platform SeeChain builds enables users to monitor, identify, alert and resolve problems quickly and incorporate results for ongoing continuous improvement. Teradata SeeChain brings critical data together from many existing applications into a single data set. Using this supply chain visibility foundation, Teradata SeeChain provides detailed views into the supply chain, generates key performance indicators (KPIs) and delivers actionable alerts enabling collaborative approach and execution. The diagram on the right shows some of the KPIs that relate to improving product availability and sell-through. —R.L.

Richard Lower is solutions manager in Teradata's demand and supply chain marketing department. He has more than a decade of supply chain management and logistics solutions experience specializing in bringing cutting-edge technologies to the supply chain management market.

Teradata Magazine-March 2007