Introduction

Companies have always been striving to develop effective business models. The objective is
to meet the customer demands better than the competitors. A Successful business depends on
the processes that can create and deliver the innovative, high quality, low cost products and
services that customers demand. To accomplish this task companies often find that they lack
needed resources and skills. Therefore the companies begin to look beyond their boundaries
to contemplate how the resources of suppliers and customers can be used to create value.
These efforts to align goals, share resources and collaborate across companies boundaries are
the essence of Supply Chain Management.
Supply chain management is interesting to study because it is an area of management that is
there and supply chains do exist whether they are managed or not, if supply chain is managed
properly it can result into a very successful competitive advantage that cannot be imitated
easily.
To have a better understanding of what Supply Chain Management is we have to understand
and define Supply Chain. The definition of supply chain appears to be almost same among
authors (cooper & Ellram, 1993; La Londe & Masters, 1994; Lambert, Stock, & Ellram,
1998). La Londe and Masters (1994) proposed that supply chain is a set of firms that pass
materials forward. Normally, several independent firms are involved in manufacturing a
product and placing it in the hands of the end user in a supply chainraw material and
component producers, product assemblers, wholesalers, and retail merchant are all members
of supply chain (La Londe & Masters, 1994). Lambert, Stock, and Ellram (1998) define
supply chain as the alignment of firms that brings products or services to the market.
According to Mentzer(2001) A supply Chain is defined as a set of three or more companies
directly linked by one or more of the upstream and downstream flow of products, services,
finances, and information from a source to a customer.
If we dig deep to understand supply chain we will have to distinguish between various types
of supply chain. A Basic Supply Chain consists of a company, an immediate supplier, and an
immediate customer directly linked by one or more of the upstream and downstream flows of
products, services, finances and information. An Extended supply chain include suppliers of
immediate supplier and customer of immediate customer, all linked by one or more of
upstream and downstream flows of products, services, finances and information. An Ultimate
supply chain includes all the companies involved in all the upstream and downstream flows
of products, services, finances and information from the initial supplier to the ultimate
customer. Although the idea of supply chain takes into account the manifold links that guide
the flow of conversion of raw materials to the final product and ultimate consumer (Cooper
and Ellram, 1993; Houlihan, 1988; Stevens, 1989). It must be noted that collaborative
liaisons between organisations are distinct from supply chains, because this type of
relationship does not involve any organisation in coetaneous upstream and downstream
activities. Such dyadic relationships could be defined as partnerships or alliances. It is also
essential to realise that implied within these descriptions is the fact that supply chains exist
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whether they are managed or not. All these types of supply chains are represented graphically
in the given figure though it very briefly explains some of the many complex functions that
complex supply chain can do and perform.

Source: Houlihan, 1988

The two-way arrows show more than just products flow through supply chains and i.e.
products, services, information, and finances at a minimum flow through such connections.
There are countless alternative supply chain configurations and any one organisation could be
part of several supply chains.
Now that the concept of supply chain has been established we have to define and understand
Supply Chain Management. The definition of Supply Chain Management (SCM) differs
among different authors.
Monczka, Trent, and Handfield (1998) explain that SCM is a concept whose primary
objective is to integrate and manage the sourcing, flow, and control of materials using a total
systems perspective across multiple functions and multiple tiers of suppliers.
La Londe and Masters (1994) that SCM involves elements including two or more firms in a
supply chain entering into a long-term agreement; ... the development of trust and
commitment to the relationship; ... the integration of logistics activities involving the sharing
of demand and sales data; ... the potential for a shift in the locus of control of the logistics
process.

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Jones and Riley (1985) stated that Supply chain management deals with the total flow of
materials from suppliers through end users.
Stevens (1989) argues that The objective of managing the supply chain is to
synchronize the requirements of the customer with the flow of materials
from suppliers in order to effect a balance between what are often seen as
conflicting goals of high customer service, low inventory management,
and low unit cost.
Houlihan (1988) defined four differences between the supply chain
management and classical materials and manufacturing control,
including;

The supply chain is viewed as a single process. Responsibility for

the various segments in the chain is not fragmented and relegated
to functional areas such as, purchasing, manufacturing, distribution
& sales.

Supply chain management is all about strategic decision making.

Supply is a shared objective of every function in the chain and is
of prime strategic significance due to its impact on market share &
overall costs.

Supply chain management calls for a different perspective on

inventories which are used as a balancing mechanism of last, not
first, resort.

A new approach to systems is required that is integration rather

than interfacing.

Referring to Stevens (1989), Houlihan (1985, 1989), and Jones and Riley (1985), Ellram and
Cooper (1990) define Supply Chain Management broadly as an integrative philosophy to
manage the total flow of a distribution channel from supplier to the ultimate user.
Supply Chain Management is principally the economic theory of comparative advantage
applied at the company level. Adam smith argued that
(1) The wealth of nation is the product of its labour and
(2) The greatest improvement in the product of labour result from the division of labour.
Through specialization and trade, wealth is increased. The result is consumers worldwide
enjoy higher living standards. Similarly SCM is collaborative specialization.
SCM allows a company to do few things very well for which it has unique skills. Other
activities are outsourced to suppliers or customers that possess the needed skills.
Relationships are established to assure that each member (company) in the chain performs in
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a way that improves the success of entire supply chain. Strategy consultant Kenichi Ohmae
describes SCM, companies are just beginning to learn what nations have always known: In a
complex, uncertain world filled with dangerous opponents, it is best not to go in alone.

Audy et al. (2010) suggest that collaboration occurs when two or more entities form a
coalition and exchange or share resources (including information), with the goal for making
decisions or realizing activities that will generate benefits that they cannot (or only partially)
generate individually. Supply chain collaboration can be viewed from both business process
and close relationship perspectives. The former includes a variety of business processes such
as: planning activities; integrating cross functional processes; setting supply chain goals;
establishing information-sharing; and reviewing sourcing and outsourcing options. The latter
perspective of supply chain collaboration is one of a close, long-term partnership
(Simatupang and Sridharan, 2005; Cao and Zhang, 2011) in which supply chain members
work collectively and share information, resources and risk to reach common objectives.
Supply chain members, namely: supplier, manufacturer and customer, can establish
collaborative relationship in order to save cost, enhance capacities and improve service
performance and gain market share (Audy et al., 2010).
Supply chain collaboration is one of the most important aspects of SCM. In the recent past
companies have been focusing on the achieving the optimum level in supply chain
collaboration because if a supply chain is collaborated and all the members of a supply chain
are aligned; this can result in huge savings of resources. Automotive sector has always been a
leading sector in terms of plasticising and developing new and innovative business
management tools. There are many management tools that were primarily developed by and
for automotive sector and are now used in different other sectors. This is the reason that I
have selected automotive sector for the research on Collaboration between Supply Chains.
There are some are some recent and past examples in automotive sector where two
companies joined their forces to achieve maximum efficiency by collaboration. In spite of the
fact that there have been some efforts to have collaboration between two supply chains it was
never been completely successful or has not delivered the desired results. The most important
factor of failure was lack of trust among the participating companies. Secondly some way
during the process companies lose their boundaries that separate them from each other and
hence these efforts to collaborate results in a disaster or sometime to avoid a disaster a merger
or acquisition was done so that the business could keep running. Moreover even from
academic perspective there is not much literature available that can define and set rules or
present a model for collaboration between two competing supply chains. There are many
areas of supply chain where collaboration can be done and companies could save millions.
For instance, collaborating the logistics can save enormous sums money, fuel, and time and
can also reduce carbon foot print significantly. According to survey conducted by DHL there
are almost 60% of the UK freight vehicles are transporting nothing but fresh air. This
indicates a huge gap in logistics collaboration. Similarly collaboration can be significantly
beneficial in procurement. Research in this project will be focused on automotive sector
finding ways to establish successful collaborative relationship between supply chains.
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All that discussion tells us that in a successful supply chain is the one that can collaborate in
way that not only the operational aspects of the business are aligned but the efforts to achieve
a common object for the mutual benefit are aligned too.

Aim of Dissertation
Collaboration in the context of supply chain is still evolving and new aspects and prospects of
collaboration are becoming more visible. Collaboration between two supply chains is more
challenging than between the members of a supply chain. This highly challenging
collaboration can result in extremely high rewards for the participating companies, as they
can enjoy the most effective and efficient use of resources. There is not much literature
available in for collaboration between two supply chains so by understanding the
collaboration characteristics between the members of a supply chain we may apply findings
to achieve collaboration between two supply chains. The aim of this project is to apply the
knowledge and practical approach of supply chain management to understand the types of
relationships and levels of collaboration between the companies practically working together;
to indicate and analyze the problem and issues those become the barriers to collaboration.

Objectives

To analyze the level of dependencies between organization of a supply chain.

To understand the meaning of C3 (Cooperation, Coordination and Collaboration)

behavior between organizations.

To understand the current levels of relationships between organizations.

To understand the barriers on each stage of C3 behavior and to identify the ways to
remove these barriers.

To identify the key resources that is required to be shared to achieve C3.

To analyze the effects of C3 behavior on the entire supply chain.

Research Question
Collaboration is important and beneficial for the companies and when two companies in same
industry decide to collaborate they can benefit even more by joining their resources.
How collaboration between two supply chains can be made possible?

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Literature Review
Supply chain Management has become a growing field of study in all sectors of industry. The
Supply Chain Coordination and Collaboration are hot topics today and one of the major areas
of research for the researchers in the field of supply chain. In the following project it is tried
to differentiate between supply chain coordination and collaboration. Factors important for
the coordination and collaboration are analysed and also barriers in the way of collaboration
are assessed.
A supply chain is defined as a set of three or more companies directly linked by one or more
of the upstream and downstream flows of product, services, finances, and information from a
source to a customer (Mentzer, 2001). More precisely supply chain management is
distinguished between a basic supply chain, an extended supply chain, and an ultimate
supply chain. A basic supply chain consists of a company, an immediate supplier, and an
immediate customer directly linked directly linked by one or more of the upstream and
downstream flows of products, services, finances and information. An extended supply chain
includes suppliers of immediate supplier and customers of immediate customer, all linked by
one or more of the upstream and downstream flows of products, services, finances and
information. An ultimate supply chain includes all the companies involved in all the upstream
and downstream flows of products, services, finances, and information from the initial
supplier to the ultimate customer (Mentzer, 2001). Jones and Riley (1985, p. 19) state that
supply chain management deal with the total flow of material from suppliers through end
users. Ellram and Cooper (1990, p. 2) broadly define supply chain management as an
integrative philosophy to manage the total flow of distribution channel from supplier to the
ultimate user. A brief overview of supply chain management is that a supply chain consists of
all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain
includes not only the manufacturers and suppliers, but also transporters, warehouses,
retailers, and even customers themselves. Within each organization, such as manufacturer, the
supply chain includes all functions involved in receiving and fulfilling a customer request.
These functions include, but are not limited to, new product development, marketing,
operations, distribution, finance and customer service (Chopra and Meindl, 2007).

Supply Chain Collaboration

Henry Ford said: Coming together is beginning, keeping together is progress and working
together is success. Two or more chain members working together to create a competitive
advantage through sharing information, making joint decisions, and sharing benefits which
result from greater profitability of satisfying end customer needs than acting alone
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(Simatupang and Sridharan 2002). A supply chain lacks coordination if each stage optimizes
only its local objectives, without considering the impact on the complete chain (Chopra and
Meindl, 2007). The formulation of corporate strategy has evolved from a traditional single
company focus to a much broader and often ill-defined scope that embraces multiple trading
partners in an extended value chain. It is premature to say that no further business
improvement potential left to be delivered through single organization or functional
optimization projects, most companies have already done the easy stuff. Indeed leading
companies increasingly view collaboration as more than just a source of cost reduction;
rather, they it as source of competitive advantage. The successful companies of the future will
be those that can use collaborative opportunities to deliver efficiency and business growth
(Hammant, Logistics and Transport Focus Jul 2011 p 32).

Types of Collaborative Relationships

An empirical research done by Whipple and Russell in 2007 to understand the collaborative
activities taking place, revealing three types of collaborative relationships:
1. Collaborative Transaction Management
2. Collaborative Event Management
3. Collaborative Process Management
All three types have different characteristics on the basis the activities involved in them. Type
I involved collaboration between the people followed by the automated information
exchange. This is the most acceptable form of collaboration for most of the organizations
because of its very basic level. Although there are no more guidelines provided by the
research about how to further develop collaboration but this may a starting point for the
extensive collaborative relationships between organizations.
Type II involves closer person-to-person collaboration and it is more strategic in nature. It
mainly considers the management of specific projects and different organizational events.
There are many crests and troughs observed in this type of collaboration because the same
momentum cannot be maintained during the time of no collaboration as during the
collaborative management of an event or a project. The main barrier involve in this type of
collaboration is the dependency on the people leading the collaboration. Ownership, trust
between the people and organizational departments, limited availability of resources for the
collection and exchange of data are also the factors playing important role in weaken the
relationships.
Type III considers collaboration holistic collaboration from demand to supply and all of the
related operations involved in between. While practicing Type III collaboration both partners
focus on demand planning and forecasting for settled purchasing levels. Trust is the most
important factor involved during the whole process.
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Benefits gained are better stock management and overall performance improvement through
improved and efficient processes. Training involved is mostly focused on the tools used to
manage hard issues for example data exchange and information sharing people related soft
issues like human resources and change management are almost neglected. Soft are also of
the same importance to enhance systems and processes.
The research shows that type I collaboration is mostly in practice in many organization,
which is backing the theory that supply chain is at its early stages in many organizations and
in many areas also. Barratt 2004 supports the point of view that it is not necessary that
organizations develop collaboration from one level to the next and also that organizations
drive all three types of collaboration to different business partners.
Due to the level of commitment necessary, true collaborative relationships are anything but
widespread. Since it is not possible to collaborate with everyone, one of the challenges is
deciding with whim to collaborate. The solution is to look for the key suppliers and
customers and develop collaborative relationship with them alone (Mentzer, 2001).
Whilst reviewing literature on collaboration different aspects of collaboration have been
found in the light of research done by different researchers and academics. One thing that
seems to be common is the focus on the selection of suitable partners on the basis of the
processes and products.
Holweg et al (2005) mainly focused on the benefits provided by the collaboration in the
management of inventory. They also urge the segmentation of the products to develop
collaboration. Although it is argued that businesses dealing in products with shorter shelf life
works closely in collaboration to ensure the quicker distribution and rotation of the products
but the products with longer shelf life provide more suitable basis for collaboration.
Supply chain collaboration has also put pressures on the logistics providers and pushed them
to work in collaboration with their potential partners i.e. manufacturers, retailers etc. In the
drive toward lower inventory carrying costs and better customer service, supply chain
velocity has been the key vehicle of change. The result has been a reduction in working
capital costs, handling costs, shrinkage, and obsolescence (Lynch, 2001). The more focus has
been on the collaboration in the field of logistics because collaborative logistics operations
have uncountable benefits for the organizations. The current highly competitive business
environment encourages organizations to switch to collaborative logistics, which benefits
them by raising collective visibility between the transportation service providers, vendors and
organization for the purpose of realizing the goals of supply chain in an optimal way (online
source).
A theoretical research done by Finley and Srikanth (2005) conclude that aligned strategies of
supply chain partners are important and everyone across the whole supply chain must
collaborate for effective and successful collaboration. They claim that reviewing the whole
supply chain to identify the areas and potential partners for collaboration can be a suitable
point to start the collaboration. In reality it is hard to expect that supply chain partners share
common strategies. Resources needed to make the collaboration are also important thats why
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it is common point of view of many researchers and academics (Sabath and Fontanella 2002,
Barratt 2004) that it is important to be careful while selecting the collaborative partners due
to the demand of the resources for collaboration.
When people think about to collaborate there is also another question arise regarding the
control and management of collaboration across the whole supply chain. Although each
organization in a chain manages and control its own connections and collaborative
relationships in a chain but research is still going on to find out the ways of collective control
and benefits sharing across the whole supply chain. Bowersox et al (2003) presented a point
of view that it is most important for the organizations to identify the benefits of collaboration
and that organizations must try to understand the exact meaning of cross-organizational
collaboration, also before adopting a framework of collaborative relationships in a supply
chain it is important to consider that who will manage and control the collaboration.
In the researches done by many academics at the very early stages of supply chain
collaboration the major focus had been on the hard issues like logistics, lead time issues and
IT infrastructure. But now leading experts and academics has started to think about the soft
human issues, which are very important for the success or failure of any collaboration. Autry
et al. (2011) highlighted that collaborative ventures are primarily dependent on personalities,
knowledge, and skills of the people from the involved companies. Accordingly, the
collaborative venture must involve persons with leadership skills and must be characterized
by trust among the members of the participating companies. After research Bowersox et al
also emphasized on two major areas: look internally first to see if the organization is set up to
work collaboratively and consider the change management strategy of adopting collaboration
across the supply chain. The above two point of views are indicating a shift in managers and
researchers thinking and focus towards the softer issues i.e. human aspects of collaboration
from the harder issues i.e. systems and processes.
While considering soft human issues in depth the first important thing arose is the
management and control of the supply chain collaboration. There two different methods that
are mostly used to manage the relationships in the supply chain are sustainable and dictatorial
are considered by Drake and Schlachter (2008). In their research they conclude that although
sustainable approach is better and important to gain long-term benefits of collaboration by
winning the trust of other partners through frequent communication and information sharing
but they also accept the existence and importance of dictatorial style as it is adopted by the
powerful partners in the supply chain specially in retail sector like Tesco, Sainsbury and WalMart. Across the whole supply chain these big companies are considered as the movers and
shakers and the business of other smaller companies is mostly dependent on these companies.
In comparison with the mega retailers big companies in other sectors especially in automotive
sector adopt sustainable approach. Companies like Honda, BMW, Mercedes Benz and Toyota
are collaborating with their suppliers by adopting a sustainable approach. These companies
are supporting their business partners with provision of required resources and information.
The success gained by these companies clearly shows the worth of sustainable approach. It is
important for the companies using sustainable approach to keep huge resources to support

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their partners and unavailability of these resources can provide a justification for the smaller
companies for the rejection of sustainable and adoption of dictatorial style.

Relationships in Supply Chain

Research shows that in current business environment only best business practices and
products are not only enough to succeed but strong relationships with suppliers and
customers are also very important to compete in a marketplace. Scholars of both economics
and management have for a long time largely neglected relationships between industrial
companies, organizations and institutions advocated by Hkansson and Snehota (1995).
When the parties are reciprocally interdependent, the parties need to learn from each other
and hence their capabilities are jointly affected (Borys and Jemison, 1989). They also
described that how suppliers and customers work closely together in an integrated way and
help each other by suggesting the use of new materials and technologies and also about the
improvement in the quality of a product. Trust is the foundation of all the relationships and it
is built over time by working closely. The problem with the trust is that it is an intangible
property and it is very hard to understand it and also it is more time consuming and difficult
to build it.
Lambert et al (1996) in their research stated that there are different types of relationships exist
between the organizations in a supply chain. They start from arm length relationship, which is
the starting point. Arm length relationship is basically based on the drivers compelling both
parties to get closer to each other. With development of further trust organisations start
achieving certain levels of relationships i.e. Type I, Type II and Type III relationships. Finally
there is a stage of vertical integration where the organizations start collaborating with each
other. Lambert et al suggest that there are different levels of relationships required and it is
also important to ask the question that what relationship is appropriate with in certain
circumstances with in a supply chain. They emphasise that a full collaborative relationship is
not all the time appropriate for the organizations. Senge (2008) and Paul (2003) suggest that
it is important to put together the right people at the right time and then take it further from
there. This is a time consuming process and may take months and even years before reaping
the fruits of collaboration as illustrated by Senge.
Claro et al (2006) recognise that longer relationship between the partners lead to a great level
of trust and the more trust between the partners provide them more chance to collaborate in
all the major areas like information sharing, planning and problem solving. Though it is often
seen that there are many long-term transactional relationships as mostly happened in retail
sector and it could be said that in transactional relationships both parties are not bothered
with trust but they are more concerned about the quality and reliability of the exchanged
information. Although trust is insubstantial and is difficult to measure but it is a fundamental

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requirement to build relationship and without trust supply chain collaboration is not likely to
succeed.
Davies (2006) and Hawkins (2007) believe that trust is most important and a key thing in
collaborative business relationships in supply chain and it is a quality that develops over time
and eventually comes with progress. They advocate that greater trust can be generated by
improved performance and acknowledgement of individuals behaviour rather than greatly
focussing on the strategies and policies to build the trust.
In an empirical research by Dyer (2000) with Toyotas suppliers he found that Toyotas
suppliers trust in its fair policies, processes and financial stability is the basis for its suppliers
to bring them in close working relationship rather than only on trust and inter-personal
relationships. Dyer believes that personal trust can better build by process based trust.
Process based trust is referred to the achievement of performance levels. Dyers research
negates some of the previous research that is totally revolving around pure development of
the trust without considering performance levels and circumstances of the partner
organizations.
Wilding and Humphries (2006) indicated that conflicting issues always arise in any
relationship and to move the collaborative relationship forward it is important to have an
ability to manage these conflicts. In their empirical research they found that in long-term
close relationships negative behaviour is often generated and by adopting C3 behaviour (cooperate, co-ordinate, collaborate) mangers would be able to overcome any negativity in
relationships.
In addition to focus on internal issues it is important that organizations must also consider all
external issues that may affect collaborative relationship legislation, taxes, organizations
background and history, technology and overall economy.

Barriers in Collaboration
Research by Ashridge Business School found that only 35% of collaboration initiatives are
even moderately successful. Fawcett et al (2008) believe that identifying barriers will enable
bridges to overcome those barriers. Chopra and Meindl (2007) believe that any factor that
leads to either local optimization by different stages of the supply chain, or an increase in
information delay, distortion and variability with in the supply chain is an obstacle to
coordination or collaboration. Hammant (2011) found that the reasons for collaboration
failures are generally wrongly cited are rational components for example, systems
compatibility, inability to agree on common data standards and benefits sharing. He further
discusses that the reality is different and it is the emotional and people related elements that
are essential to success.

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Mentzer (2001) pointed out few of the factors that can possibly cause supply chain
collaboration to fail: conventional way of doing things, orthodox accounting techniques, tax
laws, narrow vision of supply chain, annual negotiation process, time investment, inadequate
communication, inconsistency and betrayal.

Fawcett and Magnan (2001) identified ten barriers to collaboration:

(1) Inadequate information sharing.
(2) Poor conflict measurement.
(3) Inconsistent operating goals.
(4) Organization culture & structure.
(5) Lack of trust.
(6) Resistance to change.
(7) Poor alliance management practices.
(8) Lack of supply chain vision/understanding.
(9) Lack of management commitment.
(10)

Constrained resources & no employee passion/empowerment.

The identification of barriers to collaboration mainly depends on who is talking about the
collaboration in supply chain and in what perspective. For example a logistic provider
completely consider the alignment of logistic operations with the processes of manufacturer,
a software specialist always consider the lack of technology as major barrier whereas softer
issues like organizational culture and trust are always the focus of academics.
Mentzer et al (2000), Fawcett and Magnan (2001) raised betrayal as the most common barrier
to supply chain collaboration. Although sometime betrayal does not spoil the whole
collaborative relationship but it make very difficult for the organizations to further
collaborate.
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Fawcett et al conducted a mail survey and the results identified inadequate information
sharing as the major barrier to supply chain collaboration. They found that it is very
important that a large amount of data is required to manage complex supply chain networks
but that data can only be valuable information if it is in the hands of right people at the right
time and that can only be possible when all supply chain participants are able to access that
data.
Arabe (2002) identified several barriers and the most important barrier is the costs, which are
required to employ the technologies for a full collaboration. But trust is also an important
barrier because "Majority of companies don't want to share information that creates a
(market) differentiation for them unless it is with a partner that they can truly trust," says
Gerald McNerney, senior analyst of supply chain services, AMR.
The research has done so far mainly identifies human issues as the important barriers to
supply chain. Among these soft issues cultural issues and human resistance to change are
considered hard to tackle. Now there is a need that supply chain managers start learning new
skills in the areas of organizational culture, change management and human behaviour under
the umbrella of organizational behaviour.

Role of IT in Collaboration
A fundamental requirement of a successful collaboration is effective communication. If there
is no gap in communication this can eliminate or at least minimise the surprise
disagreements. If the information is shared or disseminated in time it will help in decision
making and also provide some time to pro-act.
The development of Information Technology in past twenty years has changed most facets of
the approach companies run their businesses. Companies are investing billions of dollars to
acquire state of art technologies and use them to;
(1) Collect, analyse and disseminate information in time and when required.
(2) Redesign processes.
(3) Connect with diverse supply chain members.
Fawcett et al. Hammer (1990; 2004) suggested that information technology can serve as a
very important source that can help the managers to re-engineer the very nature of the work.

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Supply Chain Collaboration in Automotive Sector

Car manufacturing is an expensive business and it getting even more costly. Industry analyst
claim that UK car manufacturers have increased price up to 234 euros in January 2011, with
majority of the manufacturers passing on more than just the scheduled VAT rise to their
customers. Due to such tough conditions it is obvious that the car manufacturers are focusing
heavily on the cost of developing and building vehicles. They might like to portray as fierce
rivals, many of the big names from automotive industry are becoming firm frenenimies as
they are discovering the benefits of working together, specifically across supply chains,
procurement and development. The savings are certainly significant, according to the US
centre for Automotive Research says collaboration can help car-manufacturers can save 40%
by sharing vehicle tooling platform.
Pressure to relocate the car manufacturing operations to Eastern Europe or Asia is increasing
so collaboration has become increasingly important to domestic industry. While companies
will continue to gain pursue competitive advantage by having complete control on costs in
the entire supply chain. Automotive companies are increasingly sharing
one vehicle
platform and therefore reducing cost base, and sharing best practices.
Collaboration in the British automotive sector can be dated back to 1980s when HONDA and
ROVER decided to collaborate. This was the time when car manufacturer began to realise
that highly complex supply chain that are customised to fulfil the needs of one particular
company had become too expensive and they could save huge sums of resources if they
collaborate with each other; of course without scarifying the product integrity. Rover and
Honda began to collaborate with each other to develop new technology, with Rover
incorporating Honda engines in its cars. This collaborative partnership lasted 15 years.
There are some other historical examples of collaboration between supply chains in
automotive sector but they always ended up or did not delivered the desired results. If
investigate the failure of the problems thoroughly we will find out that during the process of
collaboration companies start to eliminate the boundaries that separates them from each other
and gives them a unique identity. The most important factor of failure was lack of trust
among the participating companies. Secondly some way during the process companies lose
their boundaries that separate them from each other and hence these efforts to collaborate
results in a disaster or sometime to avoid a disaster a merger or acquisition was done so that
the business could keep running. According to survey conducted by DHL there are almost
60% of the UK freight vehicles are transporting nothing but fresh air. This indicates a huge
gap in logistics collaboration. Similarly collaboration can be significantly beneficial in
procurement.
There are some recent examples of collaboration in automotive sector. BMW and Daimler
AG has decided to collaborate in the procurement of parts such as headlamps, batteries and
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speedometers, they signed the agreement in 2010. The two companies joint purchasing
power of more than 50bn allows huge scope for cost optimization. Daimler has taken the
principle even further, announcing an alliance with Renault-Nissan in 2010 to develop small
cars together. Both parties believe they can save 2bn a year by sharing production costs as
well as procurement. The important thing to note here is that in all these examples of
collaboration the competitive edge is intact these companies have identified the areas where
they can collaborate without compromising the competitive edge. These examples of
collaboration are very important to the automotive sector because if these collaborations
deliver the desired results then it will be a model for automotive sector to work on its future.

Characteristics of successful Collaboration

There is very limited literature available for collaboration between supply chains and the
available literature is not sufficient enough to provide base for research. Therefore the
characteristics of successful collaboration with in the supply chain are identified during the
literature review. These characteristics are listed below:

Trust
It is the most important characteristic in any collaboration. The members must share
information of course without compromising the competitive advantage.

Equality
The participating companies must be enjoying almost the same status co, otherwise
the dominant company will dictate the rules of collaboration and hence it will end in
disaster.

Skills
The members of the supply chain must identify their own unique set of skills and
offer those skills for collaboration that they master.

Commitment
All the members of a supply chain must be committed to achieve a set goal. They
must also follow the guide lines predetermined by consensus to reach that goal.

There are many other characteristics of successful supply chain collaboration but these are common
characteristics find amongst the authors. Every business has its own needs and demands and therefore
each collaborative relation will have its set of unique characteristics, but these characteristics
identified here are common and they provide the base for successful collaboration irrespective of the
nature of the business.

41

Research Methodology
One of important part of any dissertation is Research methodology. It is all about selection
among the options of particular tools and strategies for data gathering and analysis (Chandler,
1998). Hair et al. (2003) reported methodology as a way of doing research that presents all
the parts of research. There are different ways to conduct a research & researcher has to select
research mythology by which researcher can easily present solution to existing dilemma.
Methods of conducting research are described by a lot many researchers .Following are the
methodologies explained by different authors:
Hair et al (2003) talk about three steps of business research;
(1) Research formulation.
(2) Execution.
(3) Analysis.

(Hair et al. (2003: pp. 50-51))

Kervin (1992) identified twelve stages of methodology to conduct any business research and
summarized these into four different sets as follows;
(1) Research problem.
(2)Research design.
(3) Data Gathering and Data Analysis.
(4) Results interpretation.

(Kervin 1992: pp21-23).

Saunders et al. (2000) found six stages including formulation and clarification of a topic,
literature review, choosing the strategy, data collection, data analysis and write up (Saunders
et al., 2000: p.4).
Researcher in the case of this research has adopted a method explained by Hair et al. (2003:
p.50) in figure 1, as researcher found that model easy and less overwhelming, appropriate for
41

this research rather than adopting Saunders et al.s onion model that most of the researcher
follow. All three phases of this method have been employed in this project.

Figure 1: Basic Research Method

Source: Hair et al. (2003: p50)

The structural organization of the methodology is explained as follow:
The first segment of the research method includes the definition and design of the research
philosophy and then explanation of different approaches to research, description and
justifications of employed data collection methods by using these approaches.
The second segment of the methodology describes the data collection method and techniques
used to collect the data (Questionnaire and Interviews); questionnaire design and layout,
format and types of questions, population sampling and pilot work-study.
In the last segment of the research data obtained is interpreted by following the research
ethics and suggestions and limitations are made.
These steps generally signify the whole procedure of carrying out research; however these
steps should be regarded as an ever-changing phenomenon rather than a fixed set of steps.
Most people begin to research with a wide-ranging statement of the problem, or rather, the
reason for getting involved in the research. The literature review identifies faults or errors in
prior research which offers rationalization for the study. Often, a literature review is carried
out in a specific subject area before a research question is formulated. A gap in the existing
literature, is identified by a researcher, and then produces a research question. The research
41

question could be comparable to the hypothesis. The hypothesis is the idea to be verified. The
researcher(s) gathers data to test the hypothesis. The researcher(s) then analyzes and
interprets the data via a variety of methods, engrossing in what is known as Empirical
research. The results of the data analysis in approving or dwindling to reject the Null
hypothesis are then testified and assessed. At the end the researcher may discuss opportunities
for auxiliary research.

Phase 1: Research Formulation

Philosophy and Design of Research
In every research, it is very useful to understand the research philosophy, Hair et al. (2003:
p51) state significance of the research philosophy in a research process by defining it as fuel
for research.
Churchill (2001) stated research design as an action plan that provide researcher a simple
illustration of research design, and explains it as the plan or framework for a research study
that provides the guidance to collect and analyse the data.
Saunders et al. (2000: p.85) advocated that, there are two philosophical research approaches
to design and conduct a research and both of them play an important part in any management
or business research. They named these two approaches as phenomenological approach
and positivism approach (see fig: 2).

Source: Saunders et al. (2002: pp8486)

Saunders et al. (2000) stated that, positivism should be used during the design of research
for hypothesis testing as the approach has scientifically based principles and quantitative data
collection.
Phenomenological research comes back to proficiency in order to acquire thorough
explanations. These descriptions then offer the basis for a philosophical organizational
exploration to depict the cruxes of the knowledge. First the new data is encompassed of
nave explanations acquired through open-ended questions and dialogue. Then the
41

researcher defines the formation of the knowledge based on evidence and understanding of
the research participants account. The aim is to establish what the experience intends for the
people who have had the experience. From there general meanings are originated.

Phenomenology is an approach that is also called ethnographic and interpretative approach

(Blackmon and Maylor, 2005).It involves in qualitative data collection.
Table 1: Comparison between Positivistic and Phenomenological Approaches
Characteristics
Answerable Questions
Associated Method

Type of Data
Findings

Positivistic Approach
How much, What
Survey

Phenomenological Approach
How, Why
Direct Observations

Databases

Interviews

Experiments
Predominantly Numbers
Measure

Participant Observation
Predominantly Words
Meaning

Source: Adopted by Blackmon and Maylor (2005: p.140)

Researcher in this research has adopted Phenomenological approach.

In this project the one of the most critical limitation was to have a background research
because there is very limited amount of literature available for the topic therefore the research
was formulated on the literature available for the supply chain collaboration and identifying
the characteristics of collaboration. From the literature available it was also identified that
what are the factors that are responsible for successful collaboration and what are the reasons
that result in failure of the collaboration. There were four basic characteristics were found in
the literature review these factors can make a collaboration a success or a failure, depending
on the fact that if they are taken in to account seriously or not. These four characteristics are
trust, skills, equality and commitment. Trust is the most important characteristic in any
collaboration. The members must share information of course without compromising the
competitive advantage. Collaboration can only proper if the participants specializes a
particular set of skills that can contribute to achieve the ultimate goal. The participating
companies must be enjoying almost the same status co, otherwise the dominant company will
dictate the rules of collaboration and hence it will end in disaster. All the members of a supply
41

chain must be committed to achieve a set goal. They must also follow the guide lines
predetermined by consensus to reach that goal.

Phase II: Research Execution

Due to the nature of the topic of dissertation and short time available to the researcher to
conduct this dissertation, qualitative research method is used rather than quantitative,
because quantitative research takes longer time then qualitative research method.
Table 2: Comparison between Qualitative and Quantitative Approach

Objective

Qualitative

Quantitative

To gain a qualitative understanding of

To quantify the data and generalize the

underlying reasons and motivations.

results from the sample of the

population of interest

Sample

Is based on small number of non-

Is based on a large number of

representative cases

representative cases

Data Collection

Uses unstructured and structured methods

Uses structured surveys

Data Analysis

Non Statistical

Statistical

Outcome

Develop an initial understanding

Recommend a final course of action

Web Source: https://bbv6.hud.ac.uk/webapps/portal/frameset.jsp?tab=courses&url=/bin/common/course.pl?course_id=_21219_1 , 2007

The characteristics of collaboration were identified and then those characteristics were
checked against the practices used historically and currently in the automotive sector. After
studying the literature and carrying out the secondary research related to the practices being
used in automotive sector. It was identified that there have been efforts of collaboration
between supply chains in automotive sector in recent past and even now companies are
making serious efforts to have collaboration with their rivals. The only way to verify the idea
that collaboration between supply chains is feasible and can be fruitful was to interview and
discuss the idea and its pros and cons with the professional dealing with such issues on daily
basis. There are many other methods but they require a lot of time and detailed analysis of all
the factors involved but due time constraint with this particular project, the only feasible way
to verify and authenticate the idea of Collaboration Between Supply Chains in Automotive
Sector was to interview the professionals and analyse the responses they give. Moreover it
was also to discussed and an expert opinion was needed that there have been efforts to
establish collaborative relationships between supply chains in past and recently, some were
failure and some are success so far; so what are the factors that those success models are not
41

yet adopted by the industry, is it require very unique set of skills of establish such relation or
it is too expensive to do so or the recent success examples of collaboration between supply
chains in automotive sector are not mature enough to implement as an authentic model in the
industry? Answers to all these questions could only obtained through the in-depth interviews
considering the time constraint of this project.
Further discussion of research methodology is precisely focused on the illustrations of only
the method employed for the collection of data.

Source: Saunders et al. (2007, p.146)

1. Primary Data Collection

Allen (1999) found that essentially data is initially collected when researcher cannot find the
data through the secondary sources. Primary data collection is termed as a first hand source of
data collection and that data serves as the raw material for any research work. Researcher
collects that data and properly arranges it and that all involves lot of hard work and care
during the collection and handling of data because a small mistake during the collection or
interpretation of data can affect the results badly by giving many errors. On the other hand
high quality and properly managed data in any research work shows the current position of an
organization on the basis of real facts and figures.
Two techniques are used to collect primary data
a) Qualitative
b) Quantitative
a. Qualitative Research
Qualitative research is an approach in which researcher directly interacts with the people
(Saunders et al. 2000). In this approach researcher sets aims and objective on a particular
piece of work to investigate the problem. Bell and Bryman (2003: p.279) define qualitative
41

method, as In qualitative research strategy a researchers emphasis is on the meaning of

words instead of the quantification of data during its collection and analysis. Hawkins and
Tull, (1993) stated that qualitative method is commonly use to obtain information by asking
individuals about their behaviours, attitudes and preferences.
Following are some of the basic reasons justifying the use of qualitative research method,

Formal or fully structured method sometimes makes it hard or impossible to get

information from people.

Usually people are not motivated to give a true response due to the privacy,
embarrassment and ethical issues.

People avoid the questions the questions taping their subconscious (Haigh, 2006).

b. Quantitative Research
Quantitative research is more about the calculation of data mainly collected through survey
questionnaires that mostly give calculated results. This type of research enables a researcher
to gather data in the form of mathematical and statistical figures. By using quantitative
research method a researcher can have a broader view about the utilization of data because
however data collection consumes more time as compared to qualitative approach, further
examination of data is always required. To analyse quantitative data researcher employ
different techniques such as graphs, tables, charts, diagrams etc. Statistical relationships
created amongst the collected data by using these techniques help a researcher to reach on a
final conclusion.
Data Collection through Qualitative Research
Figure 4: Classification of Qualitative Research

41

Source:

Malhotra
and Birks (2006: p158)

In-depth Interviews
Proctors (2003: p.220) defined in-depth interviews as follows, an interview technique that
means relatively one to one interview and it might be unstructured or structured. The most
common and preferred form of interview is Face-to-face interview. Other methods are
telephonic interviews, interviews via video conferencing, interviews via email etc.
(Schindler and Cooper, 2006).
Choice of an interview method is backed by several reasons such as, distance, cost & time.
During this dissertation mostly face-to-face interviews from key people from different
automotive companies were conducted to get the qualitative information on key issues of
supply chain collaboration. Once all the participants agreed to participate, they received an
email of introduction and an overview of the objectives of research with a copy of
questionnaire attached for the perusal of participants and to gather their thoughts about the
subject of the interview. The literature search conducted has also been used for the
development of an interview questionnaire. Interviews were particularly focused on the
basics of supply chain, collaboration in supply chain and barriers to collaboration, soft
human issues in collaboration, information sharing, and trust, benefits of collaboration and
maintenance of collaboration.
Table 3: Characteristics of In-depth Interviews
Purpose

To gain insight why people act and behave in

a particular way by probing motivation etc.
of an individual about issues interest to the

Types of Respondents
Physical Setting
Time Duration
Recording
Interviewer

researcher
Expert in a particular field
Relaxed informal atmosphere
30 minutes 2 hours
Use of recording devices
Require observational, interpersonal and
communication skills
41

Source: Malhotra (1993)

Researcher in this study remained very careful to maximize possible advantages as follows,
Advantages

Direct way of communication.

It is suitable when interviewee lacks reading skills to answer questionnaire.
It is a useful way to untangle the complex topic.
It can deeply investigate response.
It provides higher rates of response.

Possible disadvantages were also associated in this method but carefully minimized.
Disadvantages

It can affect the data if interviewer is not consistent in asking questions.

There are language barriers also in interviewing people.
This method is time consuming.
It is also very hard to get information from a large number of people through
interviews.
The opinion of the interviewer may be biased on the topic.

Secondary Data Collection

Secondary data is another type of data that researcher does not collect by himself but other
people collect it. The important feature of secondary data is that it is easily available,
accessible and interpretable. The downside of secondary data is that there are chances of big
errors if the source is not reliable. Secondary data used in this research is to get helpful and
in-depth research related information.
Emory (1980) stated three reasons for using secondary data in a research work:

To get specific information in reference with a point

Secondary data is considered as an important part of any research study
It is used for research study as an exclusive source

Apart from the formal research methodology some informal sources for secondary data
collection were also been employed to gather extra material helpful for the research. Most
importantly

Linkedin

(www.linkedin.com),
41

face

book

(http://www.facebook.com/pages/Supply-Chain-Management)

and

degrees

network

(www.2degreesnetwork.com) are the some major online forums used to interact with the
people in the field of supply chain. These channels have also been used to ask the questions
about the collaboration in the supply chain and got valuable information. Other resources
used include books, magazines, Google Scholar, Emerald (articles), journals, organizations
reports, newspapers and thesis.

Phase III: Data Analysis

Saunders et al. (2000) explained that, almost all pieces of research work contain data in the
form of words or numerical values that helps a researcher to get the answers of questions
asked in the research but, without the interpretation or analysis that data is meaningless and
not useful, interpretation and analysis of data is required by a researcher to make the data
useful and to get significant information. Analysis is vital to the research process; it is the
axis on which significantly everything else turns. Qualitative research can take an array of
configurations, though all exploration must be accustomed to the specific research question
and facts encompassed. There are some principles that must be followed while analyzing the
qualitative data (a) to minimize human error progress methodically and thoroughly. (b)
Emphasize on replying to the research question. (c) Applicable level of explanation. (d) Try
to clarify the idea. Analyzing the qualitative data is in a way a two process that takes you
back and forth while analyzing it, you have to refer back towards the raw data to validate the
descriptive statements and then interpret those statements in accordance with the raw data
obtained to devise the research question.

In this dissertation qualitative interpretation of data, gathered by face-to-face interviews, is

used to get useful and significant information.
In this project professional were interviewed and were asked questioned that were devised
from the literature and other sources to verify and check the applicability of the concept of
Collaboration between supply chains. When all the interview responses were gathered then
those responses were analyzed in context to the available literature and current practices of
the industry. It was critical to analyze the responses in a very rational way because it is a
qualitative method of research and one can get partial to support a particular point of view in
order to validate the basic idea of the research project. To avoid such errors the interviewee
were selected carefully so that can justify what they propose with the work they are doing on
their jobs. And while analyzing the responses it was made sure that all the response are
41

verified against the characteristics of the collaboration picked during the literature review.
During the research process there were some examples of collaboration between supply
chains that came across so those example were also taken into account analyzing the data
from the interviews.
Categorically, data analysis is the most difficult and enigmatic of all of the stages of a
qualitative project, and the one that receives the minimum solicitous discussion in the
literature. Many of the data compilation approaches encompassed in a qualitative project may
seem accustomed and easy to deal with. In order to engender findings that convert raw data
into new knowledge, a qualitative researcher must engross in active and challenging
analytical processes during all the phases of the research. Understanding these processes is
therefore an important aspect not only of doing qualitative research, but also of reading,
understanding, and interpreting it. It is occasionally problematic to comprehend what the
researchers actually did during this phase and to understand how their findings developed out
of the data that were gathered or composed.

Limitations
During the research there were several difficulties that have a direct effect on the research
design and the methodology selected to carry out the research.

Time was the most critical constraint of this project and this has not allowed to have
through investigation into to modern and most recent example of supply chain
collaboration between the key players of the automotive industry i.e. BMW &
Daimler AG. So the research was limited to the available and in reach market players
of the automotive sector.

Privacy and data protection issues also restrained the research to the responses of the
interviewees. In spite of the fact that it was seriously taken in to consideration while
analyzing the responses that no personal view of respondent contaminate the research
but this cannot be guaranteed 100 percent, as analysis is after all based on the
responses provided by the interviewees.

There is very limited literature available for the collaboration competing supply
chains. Therefore the basis of the research was based on the literature for supply chain
collaboration and characteristics of successful collaboration were depicted from that
literature to form the basis for the research. The absence of a model for collaboration
between supply chains has made the research extremely difficult and at times it seems
like this concept of collaboration between supply chains is merely an idea.

As the concept of collaboration is continuously evolving therefore it is a very wide

spread subject and to encompass all its prospects is not possible. Though the research
was focused on one particular sector of industry there are always new dimensions of
the collaboration emerging so it is not possible to comprehend all the dimension and
prospects of collaboration in a research.

41

Interview Results
There were five interviews conducted from key officials and professional supply chain
experts from three different organizations related to automotive sector. The personnel
interviewed are introduced below:

Kevin Will
Material planning and logistics Manager.
Jaguar Land Rover.

Andy Swatman
Project Manager for Jaguar Land Rover (Jaguar Land Rover outsourced storage & supply of parts to DHL)
Jaguar Land Rover.

Mike Jhonson
Frieght Business Manager
DHL.

The other two interviewees were not willing to disclose their names. They were from the and
outsourcing company that DHL hired to manage a recent project involved storage and supply of
Jaguar Land Rover parts from a third party warehouse to the production facility of Jaguar land Rover.
The purpose of these interviews was to understand the principles of collaboration and to verify the
concept of Collaboration Between Competing Supply Chains. Interviews disclosed that different
organizations have different connotations of collaboration and their method to collaboration is
completely subjective on their internal cultures. But one common point has been found out that now
managers are willing to change their inflexible conduct towards their supplier and moving towards
creating a win-win environment for all the parties in a supply chain rather than concentrating only on
their own benefits. Most of the interviewees were of the view that they must develop close

41

relationships and collaborative partnerships with their trusted partners in order to share their risks and
benefits over time.
People working in real environment have clear understand about collaboration consider it as a most
important future requirement for their businesses. Close collaboration is important for the better
understanding of the customers requirements and expectations and also to close the gap of
understandings of requirements and expectations between a company and its suppliers. Companies
want collaboration to make their suppliers better suppliers in order to achieve supply chain excellence.
Supply chain collaboration enable the companies to gain supply chain excellence by working in a
close partnership in order to develop excellent products at the right cost, right quality and be able to
deliver them at right place in the right time in order to meet and exceed customer expectations. One of
the interviewees believe that companies need links with other companies to run their businesses and
the best way that it happens is through a third party logistic (3PL) provider. The interviewee also
insisted that the actual cost savings could be possible through a true collaboration with a 3PL because
logistic providers work with various companies and can offer to share the extra space in their vehicles
if the parts or products are coming from a same location or supplier or going to a same destination.

All the interviewees were certain that the supply chain associations start with cooperation. In
cooperative affiliations companies try to make sure that they can work together by
collaborating with each other on occasional concerns. For example two companies purchase
parts or products from same supplier and they share same vehicle to get their parts in their
warehouses and thats just cooperation. Coordination is where companies go one step further
and may try to combine their plans and goals with the partner organization. In coordination
companies try to follow the correct procedures in order to align their processes with the
partner organizations processes. Coordination is a stage where companies start building their
trust on partner organizations and try to really share the benefits and minimize the costs.
During coordination stage companies select the suppliers for any one of the three further
actions:
1. They take the relationship.
2. Stop the relationship where it is and maintain that relationship as it is
3. Cut the suppliers and start looking for the new partnerships.
Any one of the above three actions that the companies take totally depends upon the level of
trust gained by the organizations. Building of trust is totally dependent upon the efforts from
both sides in order to close the gap between the expectations of both partners towards each
other. When both organizations attain a certain level of trust then they start thinking about
collaboration. In collaboration both organization really start sharing important information,
which normally doesnt happen at coordination stage. The major difference between
cooperation, coordination and collaboration is that cooperation and coordination are at
operational levels but the collaboration is at strategic level. Companies try to align their
strategies and if required both partner organizations try to redesign their processes and
operations to collaborate with each other. When an organizations management decide to
collaborate with its suppliers then it pick up some key suppliers and works closely with them
in order to reduce costs, quality and delivery. Both partners work for the common goals and
that is the satisfaction of the end customer. During the conversation one interviewee claimed
that most the organizations just want the benefits and they may not be agreeing to change
their processes to suit the business of someone else because of the element of control and
thats why most of the companies are still nervous about getting closer with other companies.
Another interviewee believe that to certain extent companies have responsibility to all of the
three aspects i.e. cooperation, coordination and collaboration. The consensus of all the
41

interviewees is that collaboration is not something that starts at once neither it is expected or
reasonable that organizations start extensive information sharing in the earlier stages of
cooperation. It all starts slowly and takes long-time and big efforts to build the relationships
and trust.
Supply chain collaboration has different meanings to different people. All of the interviewees
agreed that ideally collaboration is more likely to create a win-win environment. Despite that
consensus there is a contradiction between the opinions of the interviewees about what is
happening in practical and that contradiction is totally based upon their first-hand experience.
Majority of the interviewees believe that companies would like to transfer the risk and cost
factor to other companies if they can. Usually companies try to transfer the risk factor and
that start from the downstream of a supply chain and thats why they claim that UKs supply
base is not good enough.

Another fact came to the surface that customers often transfer risk to their organizations but
they are not doing the same to their customers. One interviewee revealed that all the
customers dont necessarily transfer their risks but some customers want to share their risks
and if that is the case then they do combine feasibility studies, regular meetings to counter the
risk. That is supposed to be the starting point of collaboration. The other half of the
interviewees believe that nowadays to create a win-win environment is mostly practiced
because in the current business environment companies are following a better-developed and
more matured supply chain approach. Transferring risks and costs is less developed and more
adversarial approach and the companies have moved on form that nowadays. Certainly for
strategic and high cost items companies want to develop a balanced and long-term
collaborative relationship. This group of interviewees believes that if we transfer their risks
and costs then it may only work for one period of contract and people will soon get wise and
they would not be interested in dealing with us anymore and thats not a long term strategy.
Companies want to collaborate specially because of environmental issues where companies
are facing a lot pressure to reduce their carbon footprints. The general point of view that
arises is that companies are taking consideration to make their supply base stable in every
way including financial viability of their suppliers. A competitor cannot be a good provider
for successive opportunities is the opinion of the majority of interviewee but interestingly one
interviewee stated that a company could work with its competitor not for collaborative
purposes but for the sake of economies of scale if both of them require same parts or
materials and companies also compare their performance with their competitors which could
be quite helpful for performance improvements. Although companies outside the industry
work in totally different arena and have their own supply chains but it is still possible to work
with them to learn best practices from them. According to one interviewee the company
outside the industry can be a collaborative because these companies provide equipment and
other supplies that are required to run the businesses but that does work occasionally.
When asked about the possibility of collaboration without having any risk or costs all the
interviewees replied that its impossible to have only benefits by ignoring or declining all the
risks and costs. Another case that appears is that sometimes companies become ready to take
or share the risks but when it comes to nitty-gritty people might say no and then companies
do everything they could get over that risk. Normally the big risk transferred from
downstream to the upstream of the supply chain is warranty risks. One of the interviewees
explained with an example that if a company needs a new computer system and that cost
them ten million pounds and the company predicts savings of 1 million each year and that
41

take 10 years to repay that. But if four companies need the same system and share the costs
then it will cost 2.5 million to each company with the same amount of savings for each year
for each company. In that case all the partners may be ready to take the risk in a hope of
sharing a combine benefit. So its just a cost benefit analysis that companies normally do to
justify a split between more companies. One of the interviewee claimed that companies may
not need a true collaboration in every aspect of their business but a certain level of
partnership and trust is required so that everybody can make money in that relationship. Also
added that true collaboration is very unique situation. Apart from the risk and costs discussion
asset sharing and asset keeping is another issue. Companies want their suppliers to keep their
assets and a big example of that is a vendor-managed inventory. Some companies pay for the
assets used by their suppliers to produce the products and that are mostly in the form of tools.
One of the interviewees first-hand experience is that they pay for their suppliers tools to
produce a specific number of parts and after that the supplier return those tolls back to them
or pay for the present value of those tools. The general consensus was that by ignoring costs
and risks true collaboration is impossible.
The main characteristics of supply chain collaboration were given as the understanding of the
expectations of quality and delivery, transparency with trust between all the parties at the top
of the list. When companies succeeded in finding better and reliable suppliers they normally
trim down their supply base to give much and better portfolio to their existing suppliers. That
shortlisting of suppliers give companies much more control and understanding of
requirements. Before getting bound in a collaborative relationship companies ask their
partners about their expectations from them in terms of quality, cost and delivery.
Relationships are better if there are regular, meetings and feedback. One of the interviewee
advocated that supply chain programs are beneficial but the most important thing to drive the
collaboration forward is both partys interest and participation. The more the collaborative
partners meet and the more the regular they are the better relationship they would gain.
Regularity will help the collaborators to communicate that what is the performance so far.
Another characteristic of collaboration is looking at new initiatives about saving the costs.
Strategic people required looking for the new ways of collaboration in for quality
improvement and cost reductions in addition with on time deliveries and sharing of new
benefits. Upfront or early on involvement of the suppliers or customers in a project to get
their input in terms of expertise and specific knowledge to develop a new product in a cost
effective way is also determined as another characteristic of a collaborative relationship.

Supply chain collaboration is directly linked with the organizational performance as

advocated by all the interviewees. The consensus was that companies are only as good as
their supply chains are good. If supply chain is collaborating effectively by the
communication throughout the chain and everyone knows what is happening and have clear
understanding of the issues then each element of that supply chain would be benefitted. A
general view is that companies want their suppliers and customers successful and give them
more business because if both ends of a supply chain are successful then the companies in the
middle of supply chain will definitely perform well. The major positive effect of a right
collaboration experienced by most the interviewees is the cost reduction in addition with a
guaranteed cost reduction on yearly base. SMEs are more benefitted by the collaboration
because if their performance declines their customers or suppliers who are collaborators help
them to improve their performance by offering them as much technical support as they could
to fix the problems and to improve their performance. Through supply chain collaboration
with customers companies get more business from them that increased their turnover and
41

ultimately increase their performance. On the other hand companies do not have right
collaboration or collaboration is not properly managed the effects can be absolutely drastic
and it could affect the business in general. In that case things can potentially forego and
suppliers will fail to deliver in time and there will be delays in getting the products to the
market. In some cases companies may need to put in some extra resources to fix the issues.
Although companies working in collaborative relationship gain many benefits but it is also
still important to measure them against key performance indicators (KPIs) between the
firms. One of the interviewees advocated that to a certain extent it depends on the types of
products a company buy or supply and nature of relationships between the companies across
the whole supply chain. The policies of company also play an important role in setting up
KPIs. An example was given that in manufacturing companies are more interested in quality,
cost and delivery (QCD). An increase or decrease in the financial performance of the
suppliers and company itself is also another indicator of performance. Nowadays companies
also measure their suppliers against the fulfilment of corporate social responsibility. One of
the interviewee revealed that they have internal scoring system to measure their own
performance and external scoring system to measure their supply base performance.
Concerns and repeat concerns are measured and reviewed and get fixed together in
cooperation and in case of any investment requirements decisions are taken that who will pay
and how much.
It has been found that only a small number of collaborative initiatives are moderately
successful. Interviewees were given with the three important reasons responsible for the
failure of collaboration. A mixed opinion generated about those reasons of failures. Most of
the interviewees believed that companies only get into a collaborative relationship when there
is a big opportunity of benefits and success is there otherwise no one wants to share important
information or resources. Companies are wise enough that they could set up a roadmap for
benefits sharing before entering into collaboration, so benefits sharing is not a big problem.
Only one interviewee contradicts with that by arguing that companies do not like to share
everything fifty-fifty and there must be a visibility of sharing benefits, because if someone
wants to have a significant chunk of benefits then it will lose trust and relationship will be
deteriorated. Systems incompatibility is considered to be a most important reason for the
failure. The reason for that is there is always a need of system to link up in order to transfer
the data and information effectively and efficiently so that everybody could read it throughout
the supply chain but normally companies employ different systems that does not match with
the systems of their partners. A collective opinion in this regard is that all the reasons for
failure are important and depends on the nature of business and relationship.
Thoughts about transparency with in a collaborative relationship were mixed, varying from
total transparency of the information especially costing systems across the whole supply
chain to limited provision of information and not to identify every single penny of the cost to
have a robust collaborative relationship. Some interviewees believed that transparency should
be just as much as it is really needed. Level of transparency also depends upon the trust
between the organizations and also how much the companies want to get out of collaboration.
It is suggested that to get more out of collaboration companies need to share their plans for
near future, their expectations for future and also need to share their strategy. Another point
of view was about not to share all the information and just limit to the information really
needed and try to get most of it. A fair amount of transparency is considered to be most
favourable rather than a complete open book transparency because organizations have
commercial objectives, which they want to meet and people should understand the
breakdown of information. One of the interviewees convinced that in collaborative
41

relationship there should be an opportunity to go and check if there is any doubt in any
information. An example was given that if a products cost does not match with the suppliers
cost estimates then customer must have an opportunity to go and check the suppliers process.
Transparency has been seen as just a matter of transparent costing systems only because
overheads and profits are fixed as they are all done in the long-term agreement.
To derive the initiatives for a collaborative relationship a mixed opinion was generated. Some
interviewees claimed that it does not need to involve the whole organizations in collaboration
whereas others were convinced on the development of collaborative culture throughout the
whole organization. One interviewee was convinced that collaboration should start with two
people but with the time there should be more people involved. The emphasis of another
interviewee was on the establishment of a team representing all the departments of
organization, to look after the collaboration under the supervision of a project leader. In case
of getting just two people together to lead the collaboration the cascading of information in
both organizations is considered important to let everybody know about the proceedings in
the relationship.
Interviewees claimed that collaborative relationships have been broken down because
individuals and in most of the cases one person driving the collaboration left the company or
position changed. One of the interviewees gave an example of Japanese model of developing
the culture of collaboration not just the systems. But for that cultural development it is
important to put the systems in place for the people to follow them and to get all the benefits.
Another interviewee suggested that it is needed to develop a strategy and then to disseminate
that to ensure that people understand the strategy that has been rolled out. It is also important
to identify the skills gaps and any training needed to train the people in the right areas so that
they can work collaboratively with suppliers and customers. It is also important to ensure to
set the objectives to measure the performance of people in that collaborative relationship.
Appropriate IT systems are also important for the efficient and effective sharing of data and
information. Long-term agreements also important to embed the collaboration into
organizational culture and play an important role in the maintenance of relationships even
though people role are changed because agreements are hard to change.
Thoughts about working in collaboration with competitors were mixed. Some interviewees
advocated that it is possible to work with competitor because of peoples right attitude around
collaboration with competitors. Competitors work together very effectively in a supply chain
by developing their relationships in non-competitive areas but it does require the senior
management of the competitor organizations open-minded. Other interviewees claimed that it
is totally impossible to collaborate with a competitor because of the issue of secrecy and
reasons of competitive advantage.
Summary of Interview Results
Understanding of Supply Chain

A partnership between the companies throughout

the supply chain to make excellent products at

Difference Between Cooperation, Coordination

right QCD
Cooperation is the earliest stage

and Collaboration

Coordination is closer to Cooperation

Win-Win Environment or Transfer of Risks and

Collaboration is very close relationship

Creation of win-win environment is the best

Costs

option but in reality companies do the other way

41

Best Provider of Opportunities

round and transfer risks and costs

Customers and suppliers most important
3PL in some cases, company outside industry

Possibilities of Collaboration Without Risks,

might be but Competitors obviously not

No possibilities of collaboration without sharing

Costs and Assets

the risks, costs and assets

Characteristics of Collaborative Relationships

Trust, Regularity, feedback, forums and meetings,

performance measurement, communication and

Relation of Collaboration with Organizational

information sharing
Very
important

Performance
Benefits of Collaboration

organizational performance and turnover

Reduced costs, inventory, lead-times, and defects.

Barriers to Collaboration

Improved quality, delivery, efficiency etc.

Lack of trust, benefits sharing, systems

relationship.

Improved

incompatibility and disagreement to common data

Importance of IT

standards
Very important

Importance of Logistics

information and data sharing

Most important area to collaborate. Important for

for

communication

and

cost reductions. But collaborative relationship

Role of Organizational Leadership

with 3PL depends on companys processes

Very important. True collaboration is impossible

Transparency and Trust

with the support of top management

Very Important but to certain extent it depends on

Initiatives for Collaboration

trust and level of relationships

Can start with two people interaction but later
involvement of more people and cascading of info

Maintenance of Collaboration

is important. Develop collaborative culture

Formulation of collaborative strategy, Trust
building and long term agreements

41

Conclusion & Recommendations

The research that has been conducted in this dissertation is relative to the organizations that
are already bound in a collaborative relationship or trying to start collaboration with their
trusted partners. Supply chain collaboration is such type of topic that becomes wider and
wider with the new research done into the topic by presenting new challenges and issues
raised during the building of collaborative relationships. Interviews done as a part of this
research revealed that supply chain collaboration is still at its early stages.
This dissertation concludes that it is not only the lack of trust between the parties but rather
the understanding of barriers and lack of required skills that are necessary to develop a close
and collaborative working relationship. There are many other supply chain challenges that
need to be addressed including the search of best partners and best provider of opportunities,
systems incompatibility, in agreement to common data standards and benefits sharing.
There are many factors that are pushing the organizations towards collaboration, nowadays. A
significant number of companies are entering into the collaborative relationships and the
companies having good collaborative strategies are expecting to go beyond to gain maximum
benefits of collaboration. In future business environment collaborative relationships between
the firms will be closer, richer and deeper than past. Companies are now considering
collaboration as a strategic issue and making collaboration a part of their core strategies
rather than just viewing that as temporary and one-time undertaking. Now organization is
trying to make their supply chains successful instead of just thinking about their own
organizational success. Organizations rely on other organizations for many reasons and the
most important reasons are to, get the materials and parts from suppliers and deliver/sell them
to the customers, get supplies and other required machinery to run their businesses, learn and
share best practices and to market their products. The level of dependency is determined by
the core activities of an organization and its requirements. During the research it is found that
the more an organization rely on other organization the more important is the relationship
between them and the more they need to be closer to each other.
The current relationships between most of the organizations, interviewed so far, are of
different types. Organizations deal with their partners in different ways and all that depends
upon that how much an organization is important for other organization. One size fits to all is
not a valid approach for most of organizations. Every single organization has different types
of relationships with other organizations in its own supply chain and outside the chain as
41

well. Some companies have even better relationships outside their supply chains then the
companies inside their supply chain and that enables those companies to develop their
multiple supply chains. It is also commonly seen that a failure of collaboration between the
firms makes todays collaborators tomorrows competitors. It is recommended that to make
the relationships resilient companies should focus on trust and openness.
The outcomes and results of literature review and interviews were used to construct a frame
work that can serve the organizations as a tool to develop a work plan for collaboration.
Frame Work For Collaboration

Int
er
na
l
F
oc
us

Develop strategy for change

management by definig clear vision
Review the internal processes
and find the performance gaps
Initiate Improvements and Focus on
Internal collaboration of organizational
departments
Setup channels for fast internal communication
Test the new system and identify more
option for further improvements

T
R
U
S
T

Try to achieve significant benefits

by collaborating intenally to win the
for exernal collaboration

F
oc
us
on
E
xt
er
na
l
C
oll
ab
or
ati
on

Identify the partners important to the company business

and select best providers of success opertunities
and improve cooperation and coordination with them
Work more closely with them to understand
their culture and structure and formulate
collaborative strategy with clear vision and
measureable objectives
Do requirements planning for systems
allignment for collaboration
and share investments. Establish fast
and efficent communication channels
Do confidentiality agreements and
agreement, for benefits and risks sharing,
that are acceptable for both parties

41

Address the issues promptly and try to resolve them

as soon as possible
Moniter the collaboration and measure the performance
Find new ways of inovation to strengthen
the collaborative relationship

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Appendix
Q.1.

What is your understanding of Supply Chain Collaboration?

Q.2.
How do you differentiate Cooperation, Coordination and Collaboration between the
firms in a chain?
Q.3.

What Supply Chain Collaboration is more likely?

To create a win-win environment for all partners in a supply chain, or

To transfer costs and risks to other parties in supply chain

Q.4.

Which of the following partners can be the best provider of opportunities for success:

A Supplier

A Customer

A 3PL

A Competitor or

A Company outside your industry,

41

Please state why?

Q.5.
In your opinion can the firms really collaborate if everyone wants only the benefits
but without risks, costs and assets?
Q.6.
In your opinion what are the characteristics of Collaborative Relationships between
the organizations?
Q.7.

How do you relate Supply Chain Collaboration with the organizational performance?

Q.8.
What are the potential benefits of collaboration and when you take them into your
account?
Q.9.
What are the most important KPIs in collaborative relationship between the firms
and how do you evaluate them?
Q.10.

How do you rate the following reasons for the collaboration failure and why?

System Incompatibility

Inability to agree common data standards

Benefits sharing

Q.11.
How important are the emotional or people related elements for the success of
collaboration?
Q.12.

What is the importance IT and technology in supply chain collaboration?

Q.13.
Data and information sharing is important for the collaboration. How do you set your
limits of data and information with other organizations and what risks are involved in it?
Q.14.
What types of information system have you employed in your organization to
communicate with other organization and how do you counter the language barriers between
these information systems?
Q.15.
Transparency is important to build the trust with in the collaborative supply chain
relationship. How much transparent should be the information systems?
Q.16.

How much important role does the logistics play in supply chain collaboration?

Q.17.
Is it important to involve whole organization in collaboration or same benefits can be
gained by putting two people together?
Q.18.

What is the importance of organizations leadership in collaboration?

Q.19.
What are the ways you can suggest to embed supply chain collaboration in the
organizations systems rather than depending on people to lead this collaboration?
Q.20.
In your point of view is it possible for the organization working in collaboration in a
supply chain to cooperate and compete at the same time?
41

Q.21.
Finally I would appreciate if you could give me a brief overview of the concept of
when, why, who and how to collaborate in supply chain?

41