Supply chain collaboration between rivals is essential for boosting profitability and sustainability, says Dan Myers

Collaboration has become the latest in a long line of supply chain management buzzwords, but what does it really mean?

If, in a nutshell, it refers to sharing resources to save cots, what's new? Grocery manufacturers have long been sharing space in warehouses and on trucks.

Historically, organisations that have enjoyed access to best-in-class distribution operations have been reluctant to share the competitive advantage this brings.

Nowadays, however, this emphasis on distribution as a differentiator is increasingly inappropriate. Major food stores achieve competitive advantage by their product assortment, availability and price not necessarily by how products arrive at store.

Increasingly, therefore, collaboration involves 'sleeping with the enemy', requiring a new level of openness and trust between companies. This is happening directly between manufacturers, as evidenced by the collaborative distribution partnerships formed by UB and Nestlé in the UK for example. In most cases, the grocery retailers rely on a number of logistics service providers and increasingly expect their partners to work together to deliver continuous improvements.

True collaboration brings fair and equitable benefits to both parties, which, in some cases, transcend transactional relationships.

Norbert Dentressangle makes a daily collection from the site of a neighbouring manufacturer of chilled products and runs this into a retailer's DC in West Yorkshire.

On the return leg the vehicle calls in at another customer's premises and collects and delivers a second load into another retailer's DC.

While this is a typical backhaul scenario, later in the day the chilled products manufacturer uses its own vehicle to do the same. The supplier is not a Dentressangle customer and, as this is effectively a cost-neutral transaction, no money changes hands.

As the grocery supply chain continues to shift from push to pull and fuel prices inexorably escalate, collaboration is the key to flexibility, profitability and sustainability.

Dan Myers is business unit director at norbert Dentressangle Logistics UK.