Lost in Translation?

Collaboration was a fundamental shift in the evolution of supply chain relationships promising to promote profound changes to supply chain models and major benefits, but subject to many barriers. Within a wider strategic context the best opportunities currently available are in addressing fundamental supply chain processes, I wrote then. Perceived difficulties could be overcome if the approach was right.

But what was good for the US goose was proving richer and more indigestible fare for its Australian gander.

"Alliances have been forged between competitors in circumstances once regarded as unthinkable, the formation of the General Motors, Daimler-Chrysler and Ford e-commerce procurement empire being an outstanding and challenging example," Guy Callendar of the University of Technology Sydney's School of Management told the Smart 2001 conference in Sydney. Yet Australia suffered many disadvantages by virtue of being a small international economy: lack of internal market size and large-scale manufacturing and service provision. "Contracting clout has to do with being large enough to make the logistics of doing business worthwhile as well as achieving that elusive goal of value for money," Callendar pointed out.

To Dr John Gattorna, managing partner in Accenture's supply chain practice, that simply showed one of the main differences between the southern and northern hemispheres: Down Under the benefits of huddling together were greater than the disadvantages of huddling together. Gattorna also saw other major distinctions between what he chose to call the rugby-playing countries of the southern hemisphere (South Africa, New Zealand, Australia and Argentina - all with markets of between 20 and 40 million people) and our counterparts in the north. In the US and other countries in the northern hemisphere the issue of "co-opertition" was a thorny one, he told CIO magazine. When organizations start joining together in collaborative marketplaces there, they were potentially tending to share information via skills and knowledge transfer while gaining less out of the deal than the organizations that join them. That is because it is far from unusual for such organizations to partner with suppliers in some areas and compete wth them in others.

That elevated trusting such partners with sensitive corporate information to a perilous act of faith and raised the whole question of how far the organization should go in opening up to suppliers. Gattorna was dismissive of those worries here, saying most Australian companies were too small to make it a real issue.

"I don't think 'coopetition' is as big a problem, funnily enough, in Australia," he said. "I think it's more black and white here because in Australia we've got smaller markets. I'm preaching the gospel: to hell with all this bull about differential advantage through better supply chain practices internally or better logistics practices. What we really need to recognize is Australia, in just about any market we look at, is sub-world-class, sub-critical. Therefore we have no alternative other than to join together, sometimes with vendors, sometimes with suppliers, sometimes with other people in our industry, and share the pickings if you like: any advantages that we might together create."

Yet the relative size of Australia's markets and our distance from the northern hemisphere gave us a legacy of other disadvantages too. Transport economist Dr Narida Smith, leader of CSIRO's Transport Futures Project, had worked with Queensland's University of Technology on a major study on the impacts of e-business on transport, starting with the trends in e-business, for the National Transport Secretariat. Her findings? Australia suffered because of its financial institutions' and lawmakers' lack of technical sophistication. The SME wanting to install new infrastructure or the truck fleet operator wanting to build in m-commerce capability both typically had huge difficulty getting a bank loan because they could not point to a history of success for SCM or c-commerce.

"We've got lack of understanding of technological issues in the financial and regulatory area," Smith said. "In the regulatory area we're very much governed by lawyers and accountants and that sometimes makes for difficulties in choice of new systems. In fact, we've got difficulties right up the chain in both the regulatory authorities and banking. We don't tend to have people from science and engineering in all of these decision-making roles to the same extent as some other countries, such as Germany."

The failings help to explain a Gartner survey of the time that found more than half Australian CEOs saw their Internet strategy as a costly irrelevance, while a Compass and London Business School study found a similar number of European CEOs played a "major" personal role in their company's e-business strategy.

These issues have yet to play out, but now the ever-evolving picture is becoming even more complicated, as our awareness grows of the extreme fragility of the newly engineered global supply chains.

With all the usual verve and vigour in adapting technology to its purposes, corporations have created a global production system so complex, tightly geared and leveraged that a breakdown anywhere can mean a breakdown everywhere, as Barry C Lynn, author of End of the Line, The Rise and Coming Fall of the Global Corporation, warned recently.

A war on the Korean peninsula could slash global production of DRAM chips by 50 percent and NAND flash chips by 65 percent, massively disrupting the electronics and other industries. Widespread adoption of offshoring means an uprising in southern India could cost many global companies, including banks, their ability to process information. An avian flu pandemic in industrial Asia could destroy the system the US relies on for medical respiratory masks, among other calamities . . .

Hang around. Things are just getting interesting.