Why Do Collaborations Fizzle?

A manufacturer can only deliver the goods if the supply chain comes through first. That's why collaborative relationships among suppliers, manufacturers and logistics companies are vital to the economic engine of the global economy. When these relationships break down, it's usually due to three main reasons.

1. Not Closing the Deal

Collaborative relationships rely on details to get the job done. If raw materials or parts arrive at the plant in the wrong sizes, numbers or configurations, production lines face delays while suppliers try to get it right the second time. Because details are so important to manufacturing, suppliers and plants need to know what they get out of the partnership in plain terms before the deal is signed. Unfortunately, manufacturers drop the ball and only explain what goes in general terms.

Incentives go a long way to sweeten a deal from the beginning of a partnership. Suppliers can offer discounts for volume purchases, and manufacturers can offer extra bonuses for deliveries made on time or before deadlines. Once both sides get to know what is expected of them, collaborative relationships improve.

2. Too Picky on the Hunt

Companies usually have a list of partners they want before searching for a business alliance. Manufacturers can be too narrow-minded when it comes to searching for like-minded companies that could increase revenue. Collaborative relationships don't necessarily have to come from companies that have the same product line.

If a manufacturer wants to break into a new market but lacks warehouse space, the manufacturer might consider teaming up with a company also looking to gain a foothold in that market. Unless both companies may ruin each other's finished product by storing items together, two manufacturers could use the same logistics company to ship items to the new warehouse as sales territories expand.

3. Lack of Nurturing

Trust between manufacturers and suppliers takes time to develop. In the long run, these trusted partners might do more for a manufacturer's business than an extra 20 suppliers trying to compete for more business. Collaborative relationships are built on sharing details among several companies, but that takes a lot of trust for one business to divulge proprietary secrets and data to another.

Manufacturers can build bridges by signing legally binding nondisclosure statements among partners. Legal experts can review contractual language to ensure both sides benefit and know what to expect along every step of the collaboration. There should be no surprises from anyone in this type of arrangement, and that fosters trust over time when all companies involved get into regular patterns that lead to repeated successes. Firms should bet on long-term profits, rather than assessing failures at the beginning, as new partners get to know each other when the contract starts.

Collaborative relationships are only as strong as the companies involved. Manufacturers, logistics companies and businesses within the supply chain should all play to each other's strengths during every phase of a strategic partnership.

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