White Paper Planning The Future Supply Chain Together HOW TO MANAGE SUPPLY CHAIN RELATIONSHIP AND COLLABORATION?

Transcription

1 White Paper Planning The Future Supply Chain HOW TO MANAGE SUPPLY CHAIN RELATIONSHIP AND COLLABORATION?

2 Acknowledgements The ISLI Supply Chain Forum Team 2015 would like to warmly thank the following persons involved in the preparation of this white paper: BABAI Zied, Professor KEDGE Business School DUCONGE Emilie, Assistant KEDGE Business School ESTAMPE Dominique, Professor KEDGE Business School FERREY Marc Principal, CAPGEMINI Consulting GOMBERT Louis Francois, President, Club Demeter JAEGLER Anicia, Professor KEDGE Business School JI Jessie, Supply Chain Operational Design Manager, BASF China KLIBI Walid, Professor KEDGE Business School LEE Sherrine, Supply Chain Director, HUAWEI Singapore MONTALBANO D AMICO Sandy, Director of Media, RESHORING INITIATIVE RAY K.S., General Manager Sales & Marketing, ASLTOM India ROCHET François, Associate, DIAGMA RIM Eugene, CEO, EUSU HANJIN LOGISTICS Authors ISLI Supply Chain Forum Team 2015 ISLI Program Students Master of Science in Global Supply Chain Management ALLAM Marion BAKLEH Maxime BANERJEE Suman GLUSMAN Benjamin HAAKE Beau KANAKOPOULOS Konstantinos LAINAS Alexis MAITRE Océane MALDEME Marie NAVIA Laura ORLUC Céline PETRIKOVA BELGOUZIA Larissa WEI Linjun 2

3 EDITORIAL The KEDGE Business School ISLI program specialized in Global Supply Chain Management hosts for 25th year in sequence 300 Supply Chain leaders from all around the world. It is a moment during the year where professionals within the field can come together to discuss, exchange, and share amongst themselves and the future supply chain players, their experiences and their vision. There are numerous factors that impact the supply chains and appear to challenge more and more their ability to adapt. These factors include: the environmental constrains, the models of consumption, the emerging technologies and the consequences of the current economic models. Therefore, the solutions of today will no longer work for the problems of tomorrow, and without a doubt there will be a need to combine adaptability with durability. That is why the ISLI forum wishes to bring together the best supply chain specialists to discuss the following themes: Sustainable Supply Chain Insure your Supply Chain Control: Critical Success Factors Sourcing Strategies: Re shoring vs Offshoring How to manage Supply Chain Relationship and Collaboration? New Technologies: Big Data, 3D Printers, Drones The discussion and a summary of the proposed solutions will be grouped in 6 White Papers White paper Planning the Future Supply Chain HOW TO MANAGE SUPPLY CHAIN RELATIONSHIP AND COLLABORATION? Dominique Estampe, Director ISLI KEDGE BS 3

4 Table of Content I. HOW TO MANAGE SUPPLY CHAIN RELATIONSHIPS AND COLLABORATION?... 5 OVERVIEW... 6 FINDINGS... 8 A. Supplier Relationship Management (SRM)... 8 B. Customer Relationship Management (CRM) C. Competition Relationship Management D. Confidentiality Management BUSINESS CASES OPPORTUNITIES REFERENCES

5 I. How to manage Supply Chain Relationships and Collaboration? 5

6 Overview Nowadays, the business environment is presenting more and more challenges for organizations, due to several factors such as: globalization, technology, innovation and faster information flow. As a consequence, businesses confront new competitors, multiple changing scenarios and more demanding customers every day. So what can they do to succeed and stay strong within the market? During the past decades companies have started to increase their efforts to apply strategic management in order to achieve sustainable competitive advantage, the goal of which is to develop a superior performance to excel. According to different managements experts the best way to reach so, is throughout a foundation of effective relationships with the parties involved within the whole supply chain network, supply chain management is about relationship management and the supply chain is managed link by link, relationship byrelationship (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012). Moreover, The ability to effectively and efficiently build and maintain tailored business relationships may become a key competency for executives looking for competitive advantage. (Lambert, Knemeyer, & Gardner, 2004). The message is clear; organizations can use their supply chain relationships to improve their competitiveness therefore, their leverage. However, there are certain parameters that should be consider before engaging in these associations since, there are many ways these relationships can be useful and bring multiples benefits, while, at the same time there are many ways they can be worthless and even harmful for the organization. Nevertheless, the success or failure of the outcomes of these relationships will remain mainly on how they are managed. Subsequently, the key question that follows is: How to manage relationships and collaboration to increase leverage? Throughout the following white paper the reader will find different notions and approaches about the subject of relationship management in supply chain, attempting to answer the previous question and focusing on three essential relationships that every company must manage within its network: Supplier Relationship Management (SRM), Customer Relationship Management (CRM) and Competitors Relationship Management. Followed, by 6

7 an analysis of one of the main challenges that these relationships bring a long, which is confidentiality management. To develop these propose the paper is built as follows: First, the reader will find key principals about relationships management in supply chain, based on the literature reviewed, the propose of it is to set a base of understanding about the three type of relationships proposed and get some knowledge from the studies developed regarding the subject. Next, we propose the analysis of some business cases and current applications, this in order to give a framework on real business situations. Third, the reader will find a set of expert s opinions and insights about the topic. And last, we propose a brief review of some future opportunities in the field. In summary, this white paper is meant for managers and executives who have understood that Today competition occurs between value chains and not simply between companies (Gomes Casseres) (Dyer, Collaborative Advantage, 2000) and they want to expand their knowledge on the subject based on fundamental bases and actual cases. 7

8 Findings A. Supplier Relationship Management (SRM) In general terms, Supplier Relationship Management (SRM) can be described as the business process that provides the structure for how relationships with suppliers are developed and maintained. (Lambert & Schwieterman, 2012) Furthermore, SRM is the process of executing activities including setting up, developing, stabilizing, and dissolving relationships within suppliers, as well as observing out suppliers, in order to generate and enhance value within these relationships. (Tseng, 2014) There are two mayor approaches in terms of SRM: One, grounded on a traditional view, based on transactional, price based and short term interactions, also known as arm's length model of supplier management that advocates minimizing dependence on suppliers and maximizing bargaining power. (Dyer, Cho, & Chu, Strategic Supplier Segmentation: The next "best practice" in supply chain management, 1998). The second one is established on highly interdependent partnerships or alliances and long term commitment, where the association is a tailored business relationship based on mutual trust, openness, shared risk and shared rewards. (Lambert, Knemeyer, & Gardner, 2004) Though, both approaches are still used in the business environment, the second one, have started to gain importance within the managerial spectrum, the question that rises is why? Why? Supplier relationship management has become a critical business process as a result of: competitive pressures; the need to consider sustainability and risk; the need to achieve cost efficiency in order to be cost competitive; and the need to develop closer relationships with key suppliers who can provide the expertise necessary to develop innovative new products and successfully bring them to market. (Lambert & Schwieterman, Supplier Relationship 8

9 management as a macro business process, 2012) Accordingly, Firms have been exerting effort creating collaborative relationships with their suppliers to enhance their operational efficiency and effectiveness in the supply chain (Gallear et al.,2012). (Tseng, 2014) To prove the positive impact SRM in organizations when it is apply, Douglas M. Lambert has developed an analysis based on the firm s financial performance as measured by economic value added (EVA). Figure 1: How supplier relationship affects economic value added (EVA )Source: Adapted from Lamber and Pohlen (2001) (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) As we can see, both the northern route of the diagram based on profit margin and the southern route based on capital charges are affected by de SRM. According to Lambert s analysis, on the northern route, if we take for instance the cost of goods sold, it is possible to say that they can be reduced as a result of better planning and fewer last minute production changes, less expediting of materials as well as lower costs for direct materials. (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) Likewise, on the southern route supplier relationship management can lead to lower fixed assets as a result of improved asset utilization and rationalization (warehousing and plant facilities), and improved investment planning and deployment. (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) Likewise, according to a Price Waterhouse Coopers inquiry realized in 2013, applied to different executives that work on SRM mention the following when asked to indicate 9

10 which benefits have already been realized with current SRM initiatives. (Price Waterhouse Cooper, 2013): Figure 2: Performance benefits of SRM Source: How key suppliers drive your company s competitive advantage (Price Waterhouse Cooper, 2013) Consequently, it is understandable why companies are starting to be more driven to develop a collaborative relationship with their suppliers. However, if it is as beneficial as mentioned why not everyone does it? Even though, SRM presents multiple advantages as mention before, there are as well some constrains to take into account that limit its functionality. We are going to address some of those main issues. To start with, developing a collaborative strategy requires that the parties involved share their operations information in real time and establish synchronized operations (Tseng, 2014) which is costly to set up and maintain, due to the fact that in most cases this implies the alienation of both companies information s systems which requires a large investment in software, human resources and time. To continue with, this information sharing increases the potential for both interactions and conflicts of interest. Therefore, an enterprise should not only ensure high cultural compatibility with its channel partners, but that their partners should also support their business partners' corporate mission, values, and goals. (Tseng, 2014) Object, which in reality is hard to control. And last but not least, when organizations engage on highly dependable relationships, this reduces its ability to switch away from inefficient suppliers. (Dyer, Cho, & Chu, Strategic Supplier Segmentation: The next "best practice" in supply chain management, 1998) Situation that can lead to reduction of profitability or quality and as Michael Porters 10

11 expressed on his book the Competitive Advantage; this may outcome, as well, on a reduction of the firms bargaining power. As a result, specialists recommend selecting an approach depending of the type of supplier each supplier should be analyzed strategically to determine the extent to which the supplier's product contributes to the core competence and competitive advantage of the buying firm. (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) Then, to strategically segment them in way that the company can reach maximum benefits without investing time and sources where is not as profitable and avoid relationships that do not meet their expectations and/or which might end up in failure (Labert, Emmelhainz, & Gardner, 1996). Then, which suppliers are worthy of being part of this type of relationships? Who is worthy? To understand which suppliers are worthy of been part of an extended relationship managers should analyses some factors that help them to distinct in between suppliers, there is not an establish recipe of these aspects since the appropriate criteria must meet the specific needs and goals of the firm. (Lambert & Schwieterman, 2012). However, there some key elements that most of the organizations can take into account based on the fact that the goal is to segment suppliers based on their value over time and identify opportunities to co create value (Enz and Lambert, 2012). (Lambert & Schwieterman, 2012) Douglas M. Lambert and Matthew A. Schwieterman proposed on their article Supplier relationship management as a macro business process, a set of possible segmentation criteria which include: profitability; growth and stability; criticality; the service level necessary; the sophistication and/or compatibility of the supplier s process implementation; the supplier s technology capability and compatibility; the volume purchased from the supplier; the capacity available from the supplier; the culture of innovation at the supplier; the supplier s anticipated quality levels (Burt et al., 2003); potential to co create value (Enz and Lambert, 2012); and sustainability (environmental, social and economic) (Lee,2010). (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) 11

12 The object of analyzing these criteria should be to recognized that some suppliers contribute disproportionately to the firm s success and that with these organizations, it is important to implement cross functional, cross firm teams. (Lambert & Schwieterman, 2012) which means develop a collaborative relationship. Now that we have established some elements to know how to select the suppliers, we are going to focus on what are the best practices to develop profitable and endurable relationships with them. Best practices Supplier Relationship Management implementation is a process that has multiple phases, some strategic some tactical, each company has its own way of applying them. However, there are some common practices that have can be followed to achieve the best results when developing a collaborative relationship. Product and service agreements Product and service agreements (PSAs) refer to the framework in which the relationship will progress. The goal is to develop PSAs that address the major business drivers of both the organization and the supplier. (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) Drivers, meaning, objectives or expected outcomes from the relationship from both parts. PSAs come in many forms, both formal and informal, and may be referred to by different names from company to company. However, for best results, they should be formalized as written documents. (Lambert & Schwieterman, 2012) Cross functional Cross Firms teams Lamber proposes to create Cross functional teams with representation from each of the functional areas. In the case of key suppliers, each team is dedicated to a specific supplier and meets regularly with a team from the supplier organization. (Lambert, Knemeyer, & Gardner, 2004) The object of this practice is to allow a mutual space to share and integrate as much as possible both parts of the relationship. 12

13 Figure 3: Cross functional Cross Firms teams Source: How key suppliers drive your company s competitive advantage (Price Waterhouse Cooper, 2013) Internal and external alignment In order for your supplier management efforts to be successful, it cannot just be part of your supply chain department. It has to be part of your corporate culture, and it must be coordinated at all levels within a company, from sourcing executives to business unit staff to senior executives. (SIRVA Worldwide, 2013). This will facilitate the configuration of the alliance with the supplier. Moreover, If the values, business practices, and objectives of an organization and its suppliers do not align before the formation of a relationship, it is unlikely that the relationship will survive (Du Plessis et al. 2001: 285). (Van Zyl, 2005). Performance evaluation As every other process applied in a company SRM should be monitored, the organization must be able to measure the quality of these relationships the ultimate measure of success for each relationship is the impact that it has on the financial performance of the firms involved. Consequently, it is necessary for each firm to have the capability of measuring the performance of the suppler relationship management in terms of their impact on 13

14 incremental revenues, costs and investment. (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012). Therefore, it is vital to elaborate a performance evaluation that should be designed to measure the profit impact of individual suppliers on the firm as well as the firm s impact on the profitability of suppliers (Lambert, 2004 ; Lambert & Schwieterman, 2012). Moreover, Joseph Youssef, director of global technology supplier management for McDonald's says that supplier related decisions should be based on the outputs of those measurements (Monczka, Handfield, Giunipero, & Patterson, 2009) and he suggests four measurements that should be taken into account. First, day to day tactical measurements such as, quality, service, responsiveness, and delivery performance. Second, contract management; making sure that previously agreed to contractual agreements are followed. Third, financial management: which confirms that invoices are correct and the buyer is paying for the agreed upon services under the contract. Forth, buyer supplier relationship refers to the level of two way of communication between the parties. (Forrest, 2006) One common practice to evaluate performance is the use of balanced scorecards. Applying this approach across all suppliers allows you to compare and better understand your top performers. (SIRVA Worldwide, 2013) Conclusion As conclusion, organizations that want to engage on a SMR initiative should keep in mind that there are multiple benefits that could come from developing a close relationship with the suppliers in several levels, and when it is well manage this could create a competitive advantage. Nevertheless, it is important to remember that, there should be a segmentation, based on potential of the supplier, looking to develop a cross functional relationships with a small number of key suppliers, and maintain more traditional buyer and salesperson relationships with the others (Dryer et al., 1998) (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012). Moreover, every company has its own criteria and ways of developing these relationships according to its needs, but, there some best practices that can be useful to take into account 14

15 when doing it, like: product and service agreements, cross functional cross Firms teams, Internal and external alignment and performance evaluation. 15

16 B. Customer Relationship Management (CRM) Customer relationship management (CRM) refers to technologies, strategies and practices that companies use to manage and analyse customer interactions and data throughout the customer lifecycle, in order to improve relationships with customers, assist in customer retention and drive sales growth. CRM systems are designed to compile information on customers across different channels or points of contact between the customer and the company which could include the company's website, telephone, live chat, direct mail, marketing materials and social media. CRM systems can also give customer facing staff detailed information on customers' personal information, concerns, buying preferences and purchase history. Customer relationship management (CRM) has become one of the most influential technologies in the world, and companies are increasingly implementing it to create value. Successful firms often endeavour to assure competitive advantages through the relationships with their customers. Lambert (2010) states that customer relationship management is one of the critical business processes. It becomes increasingly important among other eight macro business processes identified by Global Supply Chain Forum as it has a critical impact on supply chain profitability and robustness. CRM provides the structure for how relationships with customers are developed and maintained (Lambert 2010). CRM helps to understand existing customers, differentiate them according to their profitability, service requirements, buying patterns or other distinctive trait and communicate to the customers more effectively addressing them with tailor made offerings. This affects the firm s profitability by increasing lifetime customer value and customer retention rate as according to Lambert (2010) there is an evidence that profit growth, customer loyalty, customer satisfaction and the value of goods delivered to customer are strongly related. 16

17 Figure 4: How customer relationship affects economic value added (EVA ) Source: Adapted from Lambert and Pohlen (2001) (Lambert & Schwieterman, Supplier Relationship management as a macro business process, 2012) In 2009, Lambert shows how the CRM process can affect the firm s financial performance as measured by economic value added (EVA). It illustrates how CRM can impact sales, cost of goods sold, total expenses, inventory investment, other current assets, and the investment in fixed assets. For example, CRM can lead to higher sales volume as a result of strengthening relationships with profitable customers, selling higher margin products, increasing the firm s share of the customer s expenditures for the products/services sold, and/or improving the mix, that is, aligning services and the costs to serve. Cost of goods sold can be reduced, as a result of the better planning that comes from collaboration with customers. Cost savings occur due to fewer last minute production changes and, less expediting of inbound materials and shipments to customers. For wholesalers significant cost savings can occur as a result of fewer order changes. CRM leads to better targeting of marketing expenditures (Turnbull et al., 1996). A number of expenses can be reduced as a result of better tailoring of the firm s marketing and logistics programs to customer needs while giving full consideration to the profitability of each customer. Trade spending also can be improved. Services to low profit customers can be eliminated or reduced and reallocated to more profitable customers to drive revenue growth. Better knowledge of customer requirements and the reduction of services to lowprofit customers can lead to a reconfiguration of the physical network of facilities resulting 17

18 in cost savings. Less profitable customers may be served using wholesalers/distributers, which may represent a new channel of distribution (Lambert and Sterling, 1990). Reductions are also possible in the costs of customer service and order management, human resources, and general overhead and administrative. In addition to reducing expenditures, there is the opportunity through CRM to better allocate resources to customers which can be measured in terms of increased revenue. Properly implemented, CRM can result in reductions in current assets such as inventories and accounts receivable as well as fixed assets. Inventories can be reduced as a result of improved demand planning, lower safety stocks, and/or the shift to a make to order manufacturing environment. Accounts receivable can be reduced as a result of fewer disputed invoices that typically are caused by incomplete orders, missed deliveries, incorrect pricing, and/or products shipped in error. Finally, successful CRM can lead to lower fixed assets as a result of improved utilization/rationalization of plant and warehousing facilities, and improved investment planning and deployment. Once the team has an understanding of how CRM affects the firm s financial performance as measured by EVA, metrics must be developed for each of the individual activities performed and these metrics must be tied back to the firm s financial performance. Management should focus on those activities that increase the profitability of the total supply chain not just the profitability of a single firm. Conclusion Management s goal should be to encourage actions that benefit the supply chain network while at the same time equitably sharing in the risks and the rewards. If the management team of a firm makes a decision that positively affects that firm s EVA at the expense of the EVA of customers or suppliers, every effort should be made to share the benefits in a manner that improves the financial performance of each firm involved so all involved parties have an incentive to improve overall supply chain performance. 18

19 C. Competition Relationship Management Recently, a type of relationship and collaboration strategy has started to appear into the scene as a way to increase leverage, this one, different from the CRM and SRM presents the competitors as the second party involved in the association. Some scholars have named it co opetition, which is defined as a strategy embodying simultaneous cooperation and competition between firms. (Gnyawali & Park, 2011) But, why organizations would want to collaborate with their competitors? Why? There are multiple reasons that have motivated companies during the past years to get involve in relationships with their industry pairs, we are going to name a few of them. First, Collaborations provide timely access to knowledge and resources that are otherwise unavailable, and firms can combine each other s resources in perusing innovation projects that that involve high risk and requires heavy investment. (Gnyawali & Park, 2011) Secondly, as a result of the previous reasons a strategic alliance can strengthen both companies against outsiders (Hamel, Doz, & Prahalad, 1989). However, in some cases, cooperation becomes a low cost route for new competitors to gain technology and market access. (Hamel, Doz, & Prahalad, 1989) Either way, the main objective is to create a winwin situation for both firms. Best practices Nonetheless, archiving this win win balance is not that easy to accomplish, according to Hamel, Doz & Prahalad on their article Collaborate with Your Competitors and Win Companies that benefit most from competitive collaboration adhere to a set of simple but powerful principles : They enter alliances with clear strategic objectives, and they also understand how their partners' objectives will affect their success. This means that they always keep in mind that even though they are in a partnership they still are their competition. 19

20 They use the alliance to build skills in areas outside the formal agreement and systematically diffuse new knowledge throughout their organizations. The company understands that the alliance is an opportunity to learn and expand its capabilities. Cooperation has limits. Companies must defend against competitive compromise. Meaning that there must always be a control over what is being share with their partners. Last an additional point to Hamel, Doz & Prahalad study that should be mention is that competitors collaborate within activities far from the customer, while competing in activities closer to customer interaction. (Gnyawali & Park, 2011) Meaning that, even though, the purpose of the partnership is to satisfy the customer, it should not involve a direct interaction with it, as this might put at risk the firm s competitiveness. Conclusion Competition Relationship Management is a challenging initiative do to the fact it invites to collaborate with rivals. Nonetheless, as we presented there are some interesting points to take into account that makes it an attractive idea such as, wider knowledge and resource access for innovation and growth. However, as this implies sharing with competitors, it should be treated carefully and there should some guidelines to follow like, having clear objectives since de beginning, having the understanding that use of the alliance is to build skills and last, there should be limits in the relationship to avoid risky situations. 20

21 D. Confidentiality Management Why is Confidentiality Important? Nowadays, that in the business world the level of competition is very high and keeps increasing, confidentiality has a significant role and effect in firms all around the world. When confidential business information is not properly secured and protected, the result can lead to the loss of business/clients. In the wrong hands, confidential information can be misused to commit illegal activity (e.g., fraud or discrimination), which can in turn result in costly lawsuits for the employer. Many states have laws protecting the confidentiality of certain information in the workplace. The disclosure of sensitive employee and management information can lead to a loss of employee trust, confidence and loyalty. This will almost always result in a loss of productivity. In 2010, a relevant article of Jules Halpern Associates LLC analyses the idea of confidentiality in depth. What Type Of Information Must Or Should Be Protected? Confidential workplace information can generally be broken down into three categories: employee information, management information, and business information. Employee Information: Many states have laws which govern the confidentiality and disposal of personal identifying information (e.g., an employee s Social Security number, home address or telephone number, e mail address, Internet identification name or password, parent s surname prior to marriage or driver s license number). The Americans with Disabilities Act of 1990 (ADA) requires employee medical and disability information be kept confidential and limits access to those employees who have a business need to know (e.g., supervisors who need to know about restrictions on the work of an employee or other reasonable accommodations that need to be made, safety personnel handling medical emergencies, government officers investigating complaints of disability discrimination). 21

22 The Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulates healthcare providers use and disclosure of individually identifiable health information (known as Protected Health Information). The Immigration Form I 9s must also be protected from accidental disclosure. The information contained on these forms (e.g., national origin, age) should be kept confidential so as to avoid discrimination claims from employees. Management Information: Confidential management information includes discussions about employee relations issues, disciplinary actions, impending layoffs/reductions in force, terminations, workplace investigations of employee misconduct, etc. While disclosure of this information isn t necessarily illegal, it is almost always counterproductive and can seriously damage the collective psyche of a workplace. Business Information: We oftentimes refer to confidential business information as proprietary information or trade secrets. This refers to information that s not generally known to the public and would not ordinarily be available to competitors except via illegal or improper means. Common examples of trade secrets include manufacturing processes and methods, business plans, financial data, budgets and forecasts, computer programs and data compilation, client/customer lists, ingredient formulas and recipes, membership or employee lists, supplier lists, etc. Trade secrets does not include information that a company voluntarily gives to potential customers, posts on its website, or otherwise freely provides to others outside of the company. What Steps Can Be Taken To Better Protect Confidential Information? Develop written confidentiality policies and procedures: Every business/organization should have a written confidentiality policy (typically in its employee handbook) describing both the type of information considered confidential and the procedures employees must follow for protecting confidential information. At the very least, we recommend employers adopt the following procedures for protecting confidential information: 22

23 Separate folders should be kept for both form I 9s and employee medical information. All confidential documents should be stored in locked file cabinets or rooms accessible only to those who have a business need to know. All electronic confidential information should be protected via firewalls, encryption and passwords. Employees should clear their desks of any confidential information before going home at the end of the day. Employees should refrain from leaving confidential information visible on their computer monitors when they leave their work stations. All confidential information, whether contained on written documents or electronically, should be marked as confidential. All confidential information should be disposed of properly (e.g., employees should not print out a confidential document and then throw it away without shredding it first.) Employees should refrain from discussing confidential information in public places. Employees should avoid using e mail to transmit certain sensitive or controversial information. Limit the acquisition of confidential client data (e.g., social security numbers, bank accounts, or driver s license numbers) unless it is integral to the business transaction and restrict access on a need to know basis. Before disposing of an old computer, use software programs to wipe out the data contained on the computer or have the hard drive destroyed. A confidentiality policy should also describe the level of privacy employees can expect relating to their own personal property (e.g., for your own protection, do not leave valuable personal property at work and do not leave personal items especially your purse, briefcase or wallet unattended while you are at work ) and personal information (e.g., your medical records are kept in a separate file and are kept confidential as required by law ). Finally, all businesses/organizations should have their confidentiality policies reviewed to ensure compliance with state law. For example, the New York Employee Personal Identifying Information Law, which became effective January 3, 2009, requires the creation of policies and procedures to prevent the prohibited use of personal identifying information and requires employers notify employees of such policies and procedures. 23

24 Train management and employees on confidentiality policy: Oftentimes, simply having a written confidentiality policy is not enough. In order for the confidentiality policy to be effective, managers, supervisors and employees must be educated on confidentiality issues and the company s policies and procedures. Management and employees should be allowed an opportunity to ask questions about the policies, and everyone should be trained to avoid putting sensitive information in e mails. Many companies and organizations include this training as part of the new hire/orientation process. Management should also be instructed as to the proper way of communicating with the company s inside and outside counsel so as to ensure that certain work related documents and e mails are protected by the attorney client privilege. Enforce Confidentiality Policy: This is one of the most important steps a business/organization can take to protect its confidential information, and unfortunately, many times the one step that is ignored. All the policies, procedures and training in the world will not matter if those policies and procedures are not enforced. In order for a confidentiality policy to have teeth, employees who violate the policy must be disciplined in accordance with an employer s corrective action procedures. Consider Having New and/or Current Employees Sign a Non Disclosure Agreement: These agreements go by many names. Sometimes they are called non disclosure agreements, and other times they are called proprietary information agreements. Regardless of title, these agreements are contracts designed to protect the confidential business information described above (e.g., trade secrets ). These agreements are vital to most businesses today, especially considering the ease in which employees can now electronically transfer large amounts of information, much of which would be incredibly damaging in the hands of a competitor. When it comes to confidentiality, prevention and deterrence is key. The first question we ask our clients when they contact us in response to a potential confidentiality breach is do you have a confidentiality policy and/or non disclosure agreement? The stronger your policies and agreements, the better you are prepared to take quick and effective action to protect your business/organization. Of course, we are always available to counsel employers in the area of confidentiality and to develop policies and agreements that provide businesses with the proper safeguards. 24

25 Business cases Refrigerants Naturally (Competition Relationship Management) Refrigerants Naturally, is a not for profit initiative result from the partnership for sustainable development within the field of refrigeration technologies between four main consumer goods firms in the world: Coca Cola Company, PepsiCo, Unilever and Red Bull. It was created in The objective of this alliance between competitors is to promote a shift in the point ofsale cooling technology in the food and drink, food service and retail sectors towards F gasfree refrigeration technologies that do not harm the Earth's climate and ozone layer and to do this whilst improving or (at least) equaling energy efficiency compared to existing fluorocarbon based technology. (Refrigerants Naturally, 2015) As we can see this collaborative relationship with competitors has innovation as a mission, in a field where all of the parties have common interests, reduce their impact on climate change, and are expecting similar outcomes, do it while maintaining or improving the efficiency. To do so, the four companies have committed to share technical information about alternative refrigeration between the partners of the initiative via regular meetings, special events/workshops and bilateral exchanges. (Refrigerants Naturally, 2015) As a result, By the end of 2012, The Coca Cola Company has placed units using natural refrigerants and is committed to phasing out HFCs (Harmful Fluorinated Gases) in all new equipment by Unilever has placed over 1 million units reaching into every country that they operate in. With units of its efficient ECO cooler, more than one third of Red Bull units worldwide use natural refrigerants. PepsiCo has reached over HFC free units. (Refrigerants Naturally, 2015) The Refrigerants Naturally initiative creates leverage and value for these companies in terms of sustainable development innovation, which is an important factor of 25

26 competitiveness in the current business environment. Moreover, this example not only reflects an actual use of a collaborative relationship between rivals, but, it illustrates how it is possible to do it and have positive results, while still competing in other aspects. Health & Wellness Product Development (Confidentiality) This case study is about a new product that Cargill Health & Food Technologies (H&FT) and The Coca Cola Co. introduced in the beverage market. This product was the Minute Maid Premium Heart Wise orange juice. This was proven the first juice ever reducing cholesterol. To produce this juice, Cargill used an ingredient called rebiana. Coca cola benefitted from this collaboration by increasing the firms competitive advantage. Utilizing Cargill s CoroWise cholesterol reducing plant sterols ingredient, Coca Cola reinforced its category leadership in health and wellness innovation by introducing one of the most important new product offerings since calcium fortified orange juice was introduced to consumers in 1986 (Cargill Coca Cola collaboration case, 2004). On the other hand, Cargill benefitted from this partnership by getting access to the largest distribution system in the world. These two companies showed confidentiality to each other and shared information in order to be able to work together successfully and solve product development and regulatory hurdles, capitalizing on consumer trends and insights to launch a successful mainstream functional beverage (Cargill Coca Cola collaboration case, 2004). However, when Mr Strickland was asked in which of Coca Cola s products is the company going to apply the rebiana ingredient he refused to comment. He did not give this type of information because he did not want the competitors to be aware of Coca Cola s strategy on that matter. This business case is a typical example that shows how to companies can work together by showing confidentiality to each other but when it comes to the market, confidentiality policy is very strict. 26

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28 Opportunities The spectrum of relationships management in supply chain has a large range of matters to deal with. The contend of the previous white paper attempted to cover the main issues, however there is still a lot to be said and researched on the subject. Here, we are going to briefly address some of those points. Supplier Relationship Management (SRM) For future research it would be interesting to go in depth in the following topics regarding Supplier Relationship Management: Developing a SRM initiative requires technology that is more user friendly, provides realtime visibility, is better integrated, enables more effective collaboration with the supply base, and has more powerful analytic and simulation capabilities. (Capgemini Consulting, 2013) Therefore it would be interesting to explore the choices of technology available to do so and analyze which are the criteria to take into account when integrating a collaborative relationship. Another, technology issue that could be interested to develop is the use of e procurement systems to simplify control and automate the purchase of goods and services from multiple sources. (Capgemini Consulting, 2013) And see how this affects SRM or how it could be used as tool according to the type of suppliers. In terms of human resources, it could be interesting to analyze what are the skills necessary to manage a SRM initiative within a company. Moreover, if there should be some sort of training program within the organization to do so and achieve better results. Customer Relationship Management (CRM) The opportunities that can occur in the future for CRM are highly linked with the evolution of technology. 28

29 First of all, technology can provide new CRM systems that can reduce serious expenses. CRMs of the future should be purchased and upon first use recommend and identify customers for your business (Shirazi, 2013). This can be a revolutionary solution for cutting down the expenses of hiring special management teams to find good leads. Shirazi (2013) gives the following very good example. If someone is selling janitorial services to office buildings, a CRM system should be able to provide him every day a list of office building management companies which are the most suitable customers. This list will be based on existing customer base, quality controls, and marketing response. Another opportunity for grater CRM efficiency is the implementation of workflow in CRM systems. CRM workflow automation is an idea that is starting to gain a lot of attention lately from many firms. This idea provides an organization the opportunity to write its own rules regarding how CRM is applied to sales and support tasks, moving data to the right people at the right time, generating alerts and s, and generally leading to more efficient CRM (Earls, 2014). Competition Relationship Management Throughout the previous analyzes of Competition Relationship Management we mainly develop the subject of information and knowledge sharing. However, there is a new initiative that proposes resource sharing, known as the Physical Internet which suggests transforming the way physical objects are moved, store, realized, supplied and use, aiming towards greater efficiency and sustainability (Montreuil, 2012) by sharing resources such as hubs, consolidation facilities, trucks and containers. Even though, it sounds like a challenging idea in terms of developing a collaborative relationship with competitors, could be a new way of resource optimization. Therefore, is very interesting to develop in the future. Confidentiality Management Confidentiality in the business world has is very important since the competition is very high. In the future confidentiality will have an even bigger effect on companies. Keeping important information hidden will allow companies to be safe in terms of patterns and ISLI KEDGE Business School White Paper Planning The Future SCM 29

30 innovating inventions. Opportunities are not likely to occur since the ways of protecting information will not change a lot. However, technology can help firms to avoid intrusions from hackers with creating even safer protection systems. Now there is an opportunity for a firm to lead the competition to false assumption. This can happen if a firm uses less safe protections systems on information that point in a different direction of the actual one. This type of information can confuse the competition. For example, if someone uses a strategy which he wants to keep safe, he can deliberately leak information that shows that he uses a different strategy. This will show to a competitor a false strategy and keep him away of the actual one believing he has the right information. Besides that, there is not much that can be used in a different way as today in terms of confidentiality. ISLI KEDGE Business School White Paper Planning The Future SCM 30

31 References Supply News & Analysis. (2004, Septembre 22). Retrieved from NewHope360: news amp analysis/cargill and coca cola present minutemaid premium heart wisetm orange jui 0 Analysis, S. N. (2004, September 22). newhope360. Retrieved February 2015, from news amp analysis/cargill and coca cola present minutemaid Associates, J. H. (n.d.). halpernadvisors. Retrieved March 2015, from why isconfidentiality important: Capgemini Consulting. (2013). Supplier Relationship Management (SRM) Research. Netherlands: Capgemini Consulting. denanteuil, H. (2013, May 29). Advantages and disadvantages of Customer Relationship Management (CRM). Retrieved February 2015, from Talcod: anddisadvantages Dyer, J. H. (2000). Collaborative Advantage. New York: Oxford University Press. Dyer, J. H., Cho, D. S., & Chu, W. (1998, Vol.40). Segmentation: The Next Best Practices in supply chain management. California Management Review, pp Dyer, J. H., Cho, D. S., & Chu, W. (1998, Vol. 40). Strategic Supplier Segmentation: The next "best practice" in supply chain management. Californa Management Review, pp Earls, A. (2014, January). SearchCRM. Retrieved February 2015, from TechTarget: the future of CRM in 2014 andbeyond Earls, A. R. (2014, January). SearchCRM. Retrieved from TechTarget: the future of CRM in 2014 andbeyond ISLI KEDGE Business School White Paper Planning The Future SCM 31

32 Etter. (2007, May 31). The Wall Street Journal. Retrieved March 2015, from Forrest, W. (2006). McDonald s Applies SRM Strategy to Global Technology Buy. Best Practices Xchange forum on global strategic sourcing and supply chain management (p. 16). Oak Brook, USA: The Mpower Group. Gnyawali, D. R., & Park, B. J. R. (2011, January 13). Co opetition between giants: collaboration with competitors for technological innovation. Elsevier, pp Gomes Casseres, B. (n.d.). The Alliance Revolution. Harvard University Press. Grayson, D. (2014, August 4). The Guradian. Retrieved February 16, 2015, from business/collaborating competition businesssense sustainability h.denanteuil. (2013, May 29). Advantages and disadvantages of Customer Relationship Management (CRM). Retrieved from anddisadvantages customer relationship management crm Hamel, G. (n.d.). Advantages & Disadvantages of Confidentiality. Houston, Texas, USA. Hamel, G., Doz, Y. l., & Prahalad, C. (1989). Collaborate with your Competitors and Win. Harvard Business Review, Helper, S. (1991). How Much Has Really Change between U.S Automakers and Their Suppliers. Sloan Managment Review. Jules Halpern Associates LLC. (n.d.). why is confidentiality important. Retrieved from halpernadvisors: L. Etter, B. (2007, May 31). articles. Retrieved from The Wall Street Journal: Labert, D. M., Emmelhainz, M. A., & Gardner, J. T. (1996, Vol. 7). Developing and Implementing Supply Chain Partnerships. The International Journal of Logistics Management, pp ISLI KEDGE Business School White Paper Planning The Future SCM 32