Interview: Collaborative networks ‚the way forward‘ says industry expert

Some believe that collaborative logistics networks are the way forward for companies looking to broaden and deepen their global reach, but unable to fund a global network of assets. Transport Intelligence caught up with Wolfgang Lehmacher, an expert in the field of network logistics, at his Hong Kong office earlier this month.
 
The author, speaker and consultant told us that while some companies can reap benefits from networks built on the sole – or mostly sole – ownership of assets and supply chains, the majority of small to medium service providers can benefit more by joining with suitable partners to expand their mutual footprints.Ti: How does a collaborative network differ from the traditional sole ownership model?
 
Wolfgang: Sole ownership networks are built around a single asset base while collaborative networks are built around a shared vision. Sole ownership networks seek differentiation predominantly through "hardware", for example trucks, planes and buildings. Collaborative networks do so predominantly through "software", by which I mean processes, IT, relationships etc.
 
Ti: But wouldn’t most companies use a mix of both models?
 
Wolfgang: Most transportation networks are a mixture, yes, but they do have a tendency to lean towards one particular model. There are predominantly sole ownership networks, with most assets on a single balance sheet, and there are predominantly multiple owner networks, with assets spread across several balance sheets with certain jointly owned.
 
Ti: Can you give us examples of both?
 
Wolfgang: Yes, an example of the ownership model would be companies such as integrators UPS and DHL. Collaborative networks include franchise networks such as DPD and System Alliance Europe.
 
Ti: So what exactly is wrong with the traditional strategy of buying assets and expanding networks as demand requires?
 
Wolfgang: Well, for all but the biggest companies, that’s a big, and rather expensive, strategy. Transportation networks at their most fundamental level are made up of people, policies and processes. The components of the network must work together efficiently and smoothly to ensure that goods are delivered within the promised timeframe. As the world becomes more interconnected, volatile and complex, not only is the need for precision in service delivery becoming more critical, it is also clear that only a few players have the reach and network coverage to satisfy these demands using a traditional sole ownership model which is necessarily limited by its assets and structures.
 
Ti: So if a company cannot afford to offer what customers need under its own steam, they need to collaborate?
 
Wolfgang: In short, yes, or at least they perhaps would benefit from exploring their partnering options.
 
Ti: How does a collaborative network function?
 
Wolfgang: Collaborative networks focus primarily on network management, engineering and information technology and are driven and differentiated by efficiency of process rather than the assets that underpin the network. The multiple-owner network is about sharing – sharing of vision, sharing of risks, sharing of investments, and sharing of profits. The collaborative model allows companies to offer services and reach beyond their own borders and means. Each partner can focus all efforts on the specifics and dynamics of its market, while the lead entity and partner is ensuring network coherence. The result is a network that responds very well to local requirements and rapidly adapts to changing demand patterns.
 
Ti: How does this work in terms of management processes?
 
Wolfgang: Sole ownership models have a general tendency towards top down shaping which can create a "command and control" culture. For collaborative networks, no partner, not even the lead entity, has total control over assets. This makes this "command and control" approach unfeasible. With this type of model, only strategic vision and operating frameworks are introduced top down, ensuring a coherent business model. Beyond this, operational decisions are generally taken bottom up, though this is within the common framework developed by the lead entity and partner. This ensures coherence, while enabling effective adaptation to local markets.
 
Ti: What are the building blocks that need to be put in place to ensure the success of a collaborative network?
 
Wolfgang: Integration in collaborative networks starts with alignment between partners, which in turn comes through complementary and shared ambitions and beliefs – in effect, there has to be a jointly accepted strategy. This alignment can only be achieved when the leaders, often also the owners, of the participating companies are willing and able to align themselves with each other. Leadership is crucial for ensuring a collaborative network is well integrated, which drives the success of the network and business community as well as the success of each individual partner.
 
Ti: How does a franchise network fit into this set-up?
 
Wolfgang: The franchise concept is an effective tool to integrate collaborative networks and ensure that seamless processes and common standards exist across the network. A franchise provides common frameworks, standards and targets. It outlines the rights and obligations of parties involved, and fosters an entrepreneurial drive amongst franchisees. This ensures a coherent and consistent customer experience, while the entrepreneurial spirit of the largely autonomous franchisees ensures the most commercial approach to the business and different markets.
 
Ti: So, to sum up, why should managers look more closely at collaborative networks?
 
Wolfgang: The collaborative model enables each partner to focus on its core activities and strengths. Although profits are split amongst numerous partners, collaborative models enable expansion beyond the financial and knowledge barriers of individual companies through shared investments and expertise. While decision making and implementation of new ideas may be slower due to the numerous partners involved, this is offset by the natural tendency for collaborative networks to allow for greater operating flexibility in tailoring to the needs of local markets. Applying the collaborative partnership concept to a supply chain eco-system is a very modern and responsible way to run a business – in fact, the collaborative culture promotes the creation of value beyond the organization, for partners and customers alike.
 
Wolfgang Lehmacher is Partner & Managing Director (Greater China & India) at CVA, a global strategy consultancy boutique, and former CEO of GeoPost Intercontinental, the global expansion and network vehicle of French La Poste’s parcel business. He can be contacted at: w.lehmacher@gmail.com.

Quelle: eyefortransport

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