Sharing Knowledge Across Borders
Several important lessons emerge from this. First, while suppliers may benefit the most from knowledge sharing, buyers also come out ahead. Frequently, supply chain partners focus too much on their own share of the benefits pie, forgetting that unless knowledge resources are shared, no one benefits. A company may not benefit as much from knowledge-sharing activities as its partners. But in absolute terms, its performance will be enhanced significantly. Without participation, knowledge sharing doesn’t occur, and no one wins.
Second, dividing the benefits equally between suppliers and buyers may sound appealing, but in reality it may not be possible: One partner will always have more to learn than the other and thereby have a bigger upside. In most industries, suppliers have the advantage as global supply chains move toward more demand-driven models, giving buyers the upper hand. However, buyers have already seized many efficiencies. Suppliers, who are furthest removed from the point of final sale (and thus have the most room for improvement), have the next opportunity.
Suppliers need to realize that any real or perceived disproportional benefits on their part may cause tension in the relationship, and they need to be willing to address this problem. Among other things, they can show good will in the form of more generous division of profits, support for customers’ R&D programs, discounts or preferred customer status. This would go a long way toward ensuring future knowledge-sharing benefits.
Third, in order to benefit from their partners’ knowledge, companies need to participate in the sharing process. Even if a company feels that sharing certain information or knowledge resources is more of a potential liability than a benefit, it must recognize that there is a quid pro quo: A partner’s participation in the sharing process will likely depend on the original company’s willingness to do its part.
Finally, cross-cultural differences rarely matter, at least in the context of knowledge-sharing value. Managers repeatedly have heard that the greater the cultural distances between buyers and their suppliers, the less effective knowledge sharing can be. Our research found the opposite.
IN THE COMPETITIVE LANDSCAPE of global supply chains, knowledge sharing between buyers and suppliers has never been more critical. Although there is still a significant amount of hesitancy on the part of supply chain managers to share critical knowledge resources, experience shows that knowledge sharing can benefit both buyers and suppliers. If managers can come to terms with the often-disproportionate gains for suppliers and understand that some gain is better than no gain at all, both parties will benefit. Simultaneously, there may be room for suppliers to address the benefit disparities in order to reduce tensions among supply chain partners. If companies approach global knowledge sharing constructively, supply chains will become more competitive — and everyone can win.
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REFERENCES
1. E. Anderson and S.D. Jap, “The Dark Side of Close Relationships,” MIT Sloan Management Review 46, no. 3 (spring 2005): 75–82.
2. H.L. Lee, “The Triple-A Supply Chain,” Harvard Business Review (October 2004): 102–112.
3. B. Swanton and D. Hofman, “DDSN: Who Says Reducing Forecast Error Requires Predicting Further Into the Future?” (Boston: AMR Research, 2004). An increase in demand visibility was also found to increase on-time delivery performance by 27.5% and yield an average margin improvement of 3.7%, according to AMR; see C. Saran, “Supply Chain Optimisation Can Deliver ROI Within Four Months, Finds AMR Research,” Computer Weekly, April 25, 2006.
4. K. Giriprakash, “Toyota’s Small Car Likely to Be Ready by 2010–11,” Hindu Business Line, Feb. 15, 2007.
5. I. Young, “Industry Eyes Big Savings From Supply Chain Collaboration,” Chemical Week, Nov. 2, 2005; S. Monahan and R. Nardone, “How Unilever Aligned Its Supply Chain and Business Strategies,” Supply Chain Management Review 11, no. 8 (November 2007): 44–50.
6. Many industries besides the chemical industry can benefit from increased supply chain collaboration and knowledge sharing. According to AMR Research, increased knowledge flows and more visible supply chains (meaning more information on customer demand for all supply chain members) lead to a significant reduction in supply chain problems. The combined annual returns for companies in AMR Research’s 2007 top 25 supply chains, an annual ranking that identifies large manufacturers and retailers that display superior supply chain performance, capabilities and leadership, was 17.89%, significantly higher than the Dow Jones or S&P 500 returns for the same period. The top companies include Nokia, Apple, Procter & Gamble and IBM. See K. O’Marah, “The Top 25 Supply Chains 2007,” Supply Chain Management Review 11, no. 6 (September 2007): 16–22.
7. “Best-In-Class Firms 2.7 Times More Likely to Use Global Supply Chain Visibility Platforms to Improve Global Trade Management,” Asia Pulse News, June 15, 2007.
8. Author’s interview with U.S. freight company executive, Aug. 26–27, 2007.
9. F. Selnes and J. Sallis, “Promoting Relationship Learning,” Journal of Marketing 67, no. 3 (July 2003): 80–95.
10. For more detailed descriptions regarding how knowledge sharing works and who benefits, see D. Apostolou, N. Sakkas and G. Mentzas, “Knowledge Networking in Supply Chains: A Case Study in the Wood/Furniture Sector,” Information Knowledge Systems Management 1, no. 3–4 (1999): 267–281; for excellent reviews of the dangerous repercussions, see Anderson and Jap, “The Dark Side.”
11. “Chinese Toys: No Fun and Games,” Economist, Jan. 12, 2008.
12. R. Kisiel, “Automaker, Supplier Win Supply-Chain Honor,” Automotive News, Dec. 12, 2005.
13. J. Ott, “Chain Reaction: The Supplier Excellence Alliance Is Spreading the Gospel of Lean Manufacturing and the Mechanics of Survival,” Aviation Week, Sept. 19, 2005, 51; for more on the Supplier Excellence Alliance, see www.seaonline.org.
14. “Chain Reaction.”
