Collaboration between peers was not a concept that entered the minds of many in years gone by. Collaboration was instead seen as being something that was to be avoided at all costs; after all if competitors are going to be able to gain access to internal information, then that will give them a head start and profits will suffer. So instead each company worked in isolation and defended all its information with the utmost secrecy. There was no joint working and certainly no collaboration!
Yet now collaboration between peer companies has reached such an advanced level that BMW and Daimler are now working together in partnership, because they estimate that by the year 2012, this will result in them saving over £82 million each year. So how has this come about and how can they save money?
Joint Procurement Initiatives
BMW and Daimler have spent the last 2 years working together, albeit not as closely as they now work, but still very much in some kind of partnership. They started this when the motor industry generally was going through a very difficult time and the concept was simple; could they buy some components together which would help them have more ‘buying power’? The answer was obviously Yes, more buying power meant that they are able to negotiate lower prices, simply because they were ordering more.
In simple terms, buying items together meant that they could increase their leverage and control on the supply chain. The two companies now aim to actually buy 10% of the components they use, on a joint basis, making procurements streamlined and more cost effective.
Future For Collaboration
It is extremely likely that collaboration will be seen to emerge within other markets also. We have to accept that we now live in a global community and a global economy and companies will definitely be under ever increasing pressure to start working together if they are to survive. The one lesson that companies have learned from the recession is that things can suddenly look very, very bleak even for companies who thought that they were in a strong position. So companies have no choice but to try and equip themselves to ride out any financial or economic downturn; they will have to be strong to survive! In fact, for collaboration to be really successful there may have to be some re-thinking of supply chains and key sourcing decisions.