Reducing Complexity in Logistics: Isolation is a No-Go, Collaboration is Key

In order to maintain efficiency and reduce complexity, companies must adjust to the frequent changes occurring in the business and logistics world. However, adjusting to change requires the partnership of allies, primarily shippers and logistics service providers with broad networks across the world. When these connections are made, companies can replace static, outdated business models with flexible networks.

Industry experts agree: fast-growth in global logistics cannot be addressed without collaboration. Industry collaboration offers multiple benefits, including cost reduction, quicker reaction time to changes, and a more stable supply chain. Without these benefits, companies risk a volatile supply chain and increased chances of logistical failure.

But how can a company achieve successful collaboration? First, an exchange of global data and information must occur. Supply chain executives must recognize the importance of IT in this exchange, and subsequently seek IT partners who can provide the knowledge and capabilities necessary to ensure successful collaboration globally.

Plan Together, Decide Together: Collaboration in Practice

What does collaboration mean in practice? For logistics managers, the term “common” is part of the core component of the term “collaboration”:

  •      Common processes (physical and informational)
  •      Common decisions
  •      Common time horizon

One essential aspect of collaboration is the time horizon. If you want to cooperate successfully you have to think in the long term. This is also true for projects. When it comes to strategic partnerships, “quick wins” are much less important than creating long-term alignment, which opens new and profitable opportunities for everyone involved. Collaboration, therefore, is an investment in the future.

In preparation, it is important for all involved parties to formulate and compare their expectations for the future. 

Collaboration replaces bilateral business relations with common decisions. Isolating your company processes and goals from your trading partners has no place in collaboration; it is about creating a common, cross-company approach that integrates all involved parties across supply chain and logistics processes. Shippers, logistics service providers, suppliers, consignees – collaboration involves all participants, processes, and information in the end-to-end process.

A similar perception by participants facilitates collaboration

Establishing common goals and attitudes are important prerequisites for successful collaboration. Sharing similar views simplifies communication between parties, which in turn facilitates the successful implementation of collaborative processes.

There are many factors involved in developing a unified approach to sustainable collaboration, which we discuss in more detail in a recently-published paper, but it’s sufficient to say that everyone agrees on one thing: companies will no longer be able to manage the growing requirements placed on their logistics operations without collaboration, especially between shippers, logistics service providers, and IT.

arturzgodaArtur Zgoda joined Siemens in 2015 after the acquisition of AXIT. In 2000 Artur formed the first team developing the product, then successfully built and managed the technology center of AXIT in Wroclaw, Poland. Now in the USA, he is responsible for AX4 business development. Artur believes that Processes, People and IT combined together can generate significant value for business. He is keen on diving into foreign cultures and together with family just settled in Texas.