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ASCM Insights

Episode 50: Is Co-opetition the Future of Supply Chain Management?


Bob Trebilcock: Welcome to The Rebound, where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Eshkenazi, CEO of the Association for Supply Chain Management, and Bob Trebilcock, editorial director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now, to today's episode. Good afternoon and welcome to today's episode of The Rebound, Working with Competitors or Why Co-opetition is the Future of Supply Chain Management. I'm Bob Trebilcock.

Abe Eshkenazi: And I'm Abe Eshkenazi.

Bob: Joining us today is Emmanuel Hassoun. Emmanuel is a principal director with Accenture and he's the co-author of an article by the same name that I published in the September 2022 issue of Supply Chain Management Review. Emmanuel, welcome.

Emmanuel Hassoun: Thanks, Bob. Happy to join The Rebound.

Bob: Well, Abe and I are thrilled to have you with us, and this is an episode that I was really excited to do because I think you and your colleagues are onto something. In the same issue as I published your piece, I had an article about the shared e-fulfillment network that American Eagle Outfitters is developing for small to mid-sized retailers and then an article from another consultancy about combining parcel shipments from multiple brands to bring down the cost of the last-mile delivery and, of course, to stop all of us from getting four deliveries from four different carriers.

Soon after we published that issue, Gap announced that it's opening its e-fulfillment network to other retailers to make better use of its assets. I'm sure they're not alone, and that retail isn't the only industry that's exploring this particular concept. From where you sit, having done this article, what do you see going on out there in broader industry, not just retail? Is it something in the water, that led to the article?

Emmanuel: I think all the supply chain have been through several historical disruptions, we can name COVID, when we had the post-COVID bottlenecks, we had the war in Ukraine, the role of overall pressure on ESG for supply chain to be more transparent, more sustainable, you have regulation and foreseeing the disclosure of carbon emission and so on. I think many companies have found out that despite significant investment in their supply chain, these ones are still very complex, they are very sensitive to disruption. Many of them can't provide visibility on the shipment in time, and so on and what we saw is that many of them don't have a plan B in case of major disruption.

I think this has been an eye-opener for many companies. In light of all this challenge, some may say, well, let's continue to invest in-house, and let's upgrade our supply chain, our system, and so on. Some might say well, let's try to pass through to our 3PL and 4PL providers but when you think about it, what they need is a massive amount of reliable real-time data to track their shipment, [unintelligible 00:03:45] real-time, they need forward-looking analytics, digital twins to optimize their distribution network, be able to stress test their supply chain and potentially create what-if scenarios.

When you think about it, it's a quantum leap on the time of digital transformation and several companies might figure out wow, we will not be able to invest that much, we don't have the internal resources to lead this transformation, so could we do something differently and could we do innovative and that's where potentially the resource sharing approach comes in.

Bob: Emmanuel, let's take us a little bit deeper. I know that you're talking about at a macro level digital transformation, which almost every organization is investing in right now, the concept of shared networks, the co-opetition, give us a sense of how you're defining it, how does it work in practice?

Emmanuel: Basically, the purpose will be for different companies to share resources, I would say ideally in the same industry to maximize synergy, but potentially you could imagine different companies from different industries, but having similar supply chain need the same region or geography which could share. I see two ways of sharing. I think one was developed into a September Supply Chain Management Review and it's, for example, a company which is going to invest in some supply chain assets like the 3PL and so on, and it will open this 3PL or these assets, or this digital platform to other companies.

The other one would be, for example, for different companies to put in common their supply chain resources, it could be warehouse, it could be trucks, vessels, air freight capability, capacities and so on and share the same contract and here, it's slightly different because it mean that they have to put this in commands through a virtual [unintelligible 00:05:48] or through a new legal entity and that's to me the two approaches I would see for resource sharing.

Bob: Emmanuel, what are the hurdles or the barriers to make it work as you see it? for example-- and I'm going to talk to retail in a moment. I know you're thinking much broader than retail, but when I was talking to a friend of mine who used to be a VP at Toys R Us, and he was reacting to what some of the other retailers are doing. He said, "Hey, it's an attractive idea. On the other hand, I never would have put money in the pocket of my retailers." Getting companies that may be both competitors but now need to cooperate, how do you get them to work together on this?

Emmanuel: Based on my experience, there's three main barriers. First, it will be the internal barrier. It could be the management buy-in and your own supply chain buy-in. The second one will be the trust and the third one will be some legal aspects. If we go in the first one maybe to detail it further, I think the buy-in, especially the management buy-in is going to be essential to support the discussion with your competitor, to support the future investment to make resource sharing a reality because it's a new concept, and as you describe it, many people say why should I invest to make my competitor stronger?

You might also have at some point, when you share with competitor, you will have to disclose some information. If you have the rights buy-in in-house, people will start saying we cannot share that, this is confidential, we need NDA in place, and so on. Right or wrong by the way, because when you think about it if you use 3PL as all your logistic information, and they are also your competitors, it's not really a major issue. Buy-in is going to be definitely a key element or key barrier to overcome. When it comes to trust, for me, this is a switch for. First, it will be the trust that people have in the concept because yes, it seems to be interesting but it's a bit complicated especially when you go more into detail. People will start questioning, could it work in the long term? Is it sustainable? Is it profitable and so on.

The second aspect of trust is the trust in the operating model. Also, you're going to agree on a way to share resources with competitor, you will always have people, especially on the business side, on the management side will ask, "This resource sharing, do we have the best performance? Can I have a better return by doing myself and am I treated the same way like my competitor? All these are valid questions that through your party model you will have to address. The third one is trust in your competitors, themselves. How do you rely on the scope basically, when you start discussing with them? How do you share costs? How do you decide on future investments if you want to scale up, or you want to expand the scope of studies?

That's all the type of question you will have to address. I know, you can say it seems very simple but let's take one example. Let's say, for example, you want to share a truckload with two or three of your competitors, and you want to do it for (unintelligible). How do you share the cost? Do you do it based on mileage? Do you do it based on the load, on the space in the truck? Is it a combination of all these criteria? Do you need some other criteria? Now let's assume that, you have a truckload you also have some access volumes, you might have different idle times, offloading time depending on the company. How do you share these costs?

You also have the topic of HSE standard. Many company you have some HSE standard which could be different from a company to another and then which standard do you adopt? Do you adopt the least demanding standard or the most demanding standard, knowing that this could have some cost and limitation in terms of supplier qualification, overall service price and so on. Then this is just for one truckload.

If you try to put this in place as a strong service, it needs to be simple enough, transparent enough to be automated. That's where the trust in your competitor is essential, because you need to come to a certain level of agreement. You need to agree on some rules. These rules should be discussed on weekly, monthly, whatever basis if there's an issue. The last point that I said was legal. In some case when competitors start sharing, you might face some antitrust regulation. This is where the different participants of resource sharing will have to very early involve some lawyers. Consultant, for example, cannot provide legal advice.

You will need the legal department of the companies and you will need some specialized lawyers to support making sure that what you plan to do is in line with the regulation, does not raise any antitrust issue and it's properly addressed. That, as you can imagine, you're putting lawyers of different companies together, this also can be a barrier if it's not properly organized upfront and managed.

Abe: Emmanuel, great description of some of the hurdles that the organization faces outside and developing that trust-based relationship which you identified is really critical to establishing that long term vision. Give me a step inside the organization. What are the steps that the company needs to take within the organization to prepare themselves? How do you create that framework for a trust-based relationship? My gut tells me that not everybody is going to jump on board immediately within the company.

Emmanuel: No, for sure. I think for me, if you want to put in place resource sharing, definitely I see six steps. The first one is as a supply chain leader, you need to define what you want to achieve for your company. How do you support the business, what value do you create for your clients, what do you want to achieve and how potentially resource sharing is going to support that? The second one is to find a scope. You cannot cover everything they want. Basically, to support create value for your clients, what do you want, what could you share as a starting point and how could you potentially expand?

The third point to me is who do you want to work with or who can you work with well? We know that on some markets, some competitors, they base all their competition on the opposition between their company and their competitor. Would you start with this type of company to work with, to share? Probably not. The idea is really, I think the selection of the people you want or the competitor you want to work with is essential for the future success. At some point you need to have similar value, similar objective and similar scope. When you have this, you can start working on the business case and get the buy-in because at the end all this is about value. If there's no value, nobody will make the effort.

You can start figuring out how much is going to generate cost reduction. Potentially, if you expect to create a service line and want sharing, how much revenue it could generate and show that, to some extent, this is going to be self-funded and will enable the company to put in place or to develop a world-class supply chain and digital platform to support the supply chain. When you have this, I think this is a step where you can have also the buy-in and so on. When you have it, this is where you start digging deeper into the operating model.

Going back to the catalog of service you want to provide. How do you face them, what type of service, what depth of service do you offer to the different participants and how do you offer the service? How do you operate? Do you operate through a new legal entity? Do you offer services to competitors, or you buy everything and then you reach out to your competitors? The last point when you have all this organization in place, the idea is to test it and then implement it at scale and at speed in order to support the operational needs.

Bob: Emmanuel, are there industries or industry verticals that you think would be most receptive to this? If we put aside the verticals, are there supply chain processes that you think are likely candidates as a sort of a starting point?

Emmanuel: I think if you start with the industries, I think to me, the preferred industries are the one where you have high intensity of supply chain assets and transaction. There are industries which can be grouped in the industrial hub or industries which support a huge base in of population and customers. If you take the industrial hub, I think typically oil and gas could be a good candidate because if you take, for example, in West Texas, the Permian, you have dozens of companies which are next to each other, which are doing exploration and production in a small geographical area.

Same in Gulf of Mexico, same in North Sea and so on. You have in a very small geographical area, plenty of competitors doing the same things on their own. Another industry could be automotive. When you have a car plant, usually all around you have dozens of OEM plants which need to support and serve this plant. Here, again, you could say why not sharing warehouses? Why not sharing trucks? Why not sharing supply chain? The industry supporting huge customer area, for me, you have the fast consumer goods industry, definitely. Retail, as you mentioned, is also a good candidate. Parcel delivery is also for me, potentially a very good candidate for resource sharing.

Now, when it comes to process, which could be the early win, I would say definitely planning because everything is driven by planning in resource sharing. If you have the right planning, the right visibility, the right discipline, you can improve your scheduling, your consolidation. You can optimize your distribution and you can expand at scale because you will have enough visibility to forecast the future needs and so on, how it should grow and develop.

Abe: Emmanuel, last question and let's take it in two parts. First, assuming a company can make this work, what do you see are the benefits both short term and long term? More importantly, why is it an imperative today that we establish these types of co-opetition or collaboration relationships?

Emmanuel: On the benefits, for me, I see it as the ability for the companies who embarks this journey to develop world-class supply chain at lower cost. Because at the end, when you think about it, instead of having, let's say five companies developing, doing the same stuff, implementing the same type of planning, the same type of supply chain control tower, here you will have one project which will have much more funding to achieve the most innovative practice, processes or implementation of the digital platform just because all these companies put in common their funding.

I see also as a benefit, the possibility to create a new service line for supply chain and to move from supply chain being a cost center to supply chain being a profit center. That at the end, it's a strong change in the perception of supply chain. It means that at some point supply chain, because it generates revenue and profit, can be also autonomous in its way of investing, developing itself and digitizing itself. It doesn't have necessarily to beg to the management for support.

Another benefit would be definitely access to resource because, instead of being one small company or having the needs of one company, you will have multiple companies putting their need on the market, and because they have the right digital platform, they can put also the full visibility and transparency on the need. It means that if they need a truckload on a certain day, it's certain that at the specified date, hour, the truck will be loaded and will be able to move versus when you don't have the right planning or when you don't have the right data, we know that the truck can arrive and wait for the load and then it's additional cost for the supplier.

I think definitely, this type of digital shared approach will be much more interesting for suppliers. At the end the benefit overall it's a much better asset utilization. We did some project where we identified that companies could increase their asset utilization, and asset you could say could be from the truck utilization, truckload utilization, vessel load utilization from 20% to 30%. It can be significant, honestly. Now, in terms of imperative, why it's extremely important? It's because the need for more efficiency, more trust, more cost control as explained before. The resource access is also very important because depending on the business cycle, the economic cycle, not so long ago it was very difficult to have access to trucks because there was not enough CDL drivers in the US.

When you represent a huge volume and you have a clear planification, definitely supplier will prefer working with you than with a customer which we don't have the same visibility, transparency, and predictability of it. I think the last one, employee. In the future, one of the most important is the sustainability. Because at the end, when you increase your asset utilization by double digit, when you show that to reduce your carbon footprint, you can go beyond traditional reluctance to work with your competitor. Definitely here, I think it's a very positive message and it's a message that you can even convey down to your customers and which could make a difference for the company.

Abe: Emmanuel, thank you so much. This is just fascinating and I think we're going to see quite a bit more over the next few months, if not years on cooperation and collaboration. We think this is an extraordinary step forward. That is all the time that we have today. A special thanks to our guest Emmanuel Hassoun from Accenture. Finally, a special thanks to you for joining us on this episode of The Rebound. We hope you'll be back for our next episode. For The Rebound, I'm Abe Eshkenazi.

Bob: I'm Bob Trebilcock.

Abe: All the best, everyone.

Bob: The Rebound is a joint production of the association for Supply Chain Management and Supply Chain Management Review. For more information, be sure to visit and We hope you'll join us again.

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