Vertical Collaboration: Increasing Supply Chain Efficiency

Horizontal and vertical collaboration: What’s the difference?

Vertical and horizontal collaboration in a supply chain are quite different from each other. Horizontal collaboration occurs between companies at the same level within the supply chain or industry, often competitors, to share resources, reduce costs and address common challenges. Vertical collaboration involves cooperation between different levels of the supply chain, such as suppliers, manufacturers and retailers, to streamline processes and improve efficiency. While horizontal collaboration aims to combine strengths for mutual benefits without direct competition, vertical collaboration focuses on optimising the flow of goods and services across the supply chain.

Vertical collaboration in the supply chain

Examples of true vertical collaboration in supply chain remain unfortunately rare, however more evidence is gradually emerging to influence outdated attitudes towards the obvious benefits of retailer and supplier integration and to prove the power of the network. University research studies* show that ‘vertical collaboration between retailers and suppliers...has a positive impact on both parties’ output measures, including improved information and inventory visibility’.

When companies in different verticals are working together, effort is reduced, productivity grows, efficiency is high, costs are lower, and the level of customer service increases. It’s important to recognise that achieving effective collaboration is not a one-size-fits-all process, however, with the right tools, it can benefit all members of the supply chain.

“Innovation can only happen with cooperation. We want to continue working together with our retail customers, with FMCG suppliers, and with carriers, to make better use of data, increase capacity and avoid inefficiencies.”

Tim Bruun, Head of Customer Management - Retail and FMCG, Transporeon

 

Real-time Visibility

Effective vertical collaboration can happen only when all stakeholders – from the shipper to the final destination – have shared access to accurate, up to date and reliable information. Hence, gathering and sharing real-time data can help tackle the biggest challenges connected to supply chain capacity and inefficiencies.

“When you still have to manually shuffle 450 trucks back and forth on a piece of paper and by emails, it's incredibly difficult. If your plane misses the landing slot, none of you ever have had to wait 12 hours to disembark. Why aren't we able to react just as flexibly to demand?” 

Guido Schierhofer, Supply Chain Director, Intersnack
 

When the right people have access to the right data at the right time, turbo-boosting traditional manual processes becomes possible. For example, our Real-time Visibility solution, Transporeon Visibility Hub, provides full insight into what’s going on with your shipments on all lanes, as well as the power to action that insight in a way that really can boost the efficiency of the supply chain operations.

In this scenario, the pick-up process and delivery process are not integrated or synchronized – and this is the exact challenge Supply Chain Sync is here to address.

By developing a closed data flow, the time slot can be planned simultaneously by the carriers for both the pick-up and delivery, and at the same time, both sides can get real-time visibility of the shipment. This way, all parties are synchronised and can react to shipments' developments in real time, including dynamic time slot management, for improved efficiency through the whole supply chain.

Supply chain sync provides door-to-door visibility

Time Slot Management becomes dynamic with Real-time Visibility

Time Slot Management, even in 2024, can still be a static, tedious and manual battle for several supply chain parties. Integrating real-time data into Time Slot Management 

to make dock scheduling dynamic offers a big opportunity for businesses of all sizes to collaborate more closely, improve efficiency, reduce waiting times and gain a competitive edge. Current ways of working see buffer times of up to one hundred minutes, which equates to a huge waste of resources. Vertical collaboration can solve this.

Supply Chain Sync takes a comprehensive approach by connecting FMCG manufacturers, carriers, and retailers. It provides end-to-end visibility, enabling better planning through dynamic Time Slot Management, and adds value to the entire supply chain. 

The technology enables retailers to benefit from Transporeon real-time visibility

for inbound shipments and gives FMCG shippers visibility of what’s happening on their customers’ docks. Introducing a dynamic element to Time Slot Management with real-time visibility instantly enables more trucks to be processed and reduces wait times. Greater transparency means proactively providing updates to customers, replacing the old approach where customers had to reach out to enquire about the status of an expected truck.

From the manufacturer to the freight forwarder, to the retail warehouse, Supply Chain Sync delivers advantages for every party involved.

What’s next?

Collaboration across verticals is essential for businesses that aim to turn their supply chain into a competitive advantage. Supply Chain Sync painlessly accelerates retailers’ and shippers’ ability to collaborate. But ‘this can only work if all players work together, suppliers, transport service providers and retailers. It's a joint development path that we have to move on in order to increase efficiency,’ says Tim Bruun.

How to foster a vertical supply chain

To foster vertical collaboration in your supply chain, start by establishing open and transparent communication channels between all stakeholders, including suppliers, manufacturers and distributors. Share relevant data and information in real time to ensure everyone is aligned on goals, timelines and expectations. Regularly hold meetings or check-ins to discuss challenges, opportunities and improvements, fostering a culture of collaboration.

Additionally, invest in integrated technology solutions, such as supply chain management software, that enable seamless information sharing and track the movement of goods. Encourage mutual trust by being transparent about your processes, challenges, and needs and work together to find solutions that benefit all parties.

Offer incentives for partners who demonstrate strong collaboration, and ensure there is a clear understanding of roles and responsibilities within the supply chain. By building strong relationships and focusing on shared objectives, you can create a more efficient, responsive, and resilient supply chain that drives long-term success.

Real-world vertical collaboration examples

Here are a few real-world examples of vertical collaboration in various industries:

Automotive Industry (Toyota and Suppliers): Toyota’s ‘Just-in-Time’ (JIT) production system is a prime example of vertical collaboration. The company works closely with its suppliers to ensure that parts are delivered exactly when needed, minimising inventory costs. Toyota shares production schedules and demand forecasts with suppliers, allowing them to adjust and supply components on time, ensuring smooth and efficient production.

Retail and Distribution (Walmart and Suppliers): Walmart collaborates vertically with its suppliers through its Retail Link system, allowing suppliers to access real-time sales data and inventory levels. This data exchange enables suppliers to adjust their production and delivery schedules based on actual demand, helping Walmart maintain optimal stock levels and reduce excess inventory.

Technology Industry (Apple and Manufacturers): Apple works closely with its manufacturing partners, like Foxconn, to ensure the timely and precise production of devices like iPhones. Apple shares detailed product specifications and production timelines with Foxconn, enabling synchronised operations and ensuring the products are made to exact standards, reducing delays and improving overall efficiency.

How Transporeon supports vertical collaboration

Transporeon supports vertical collaboration by connecting manufacturers, suppliers, and retailers in a seamless, real-time digital ecosystem. It enables end-to-end visibility across the supply chain, allowing all parties to share data, track shipments, and manage inventory more efficiently. With tools like dynamic Time Slot Management and real-time tracking, Transporeon fosters better coordination, reduces delays and improves decision-making. This streamlined communication helps improve planning, enhance operational efficiency and create stronger, more responsive relationships between supply chain partners, ultimately boosting performance and reducing costs.

Ready to move your supply chain operations into the future?

Our dedicated experts are ready to help you make it happen with Supply Chain Sync. Get in touch today

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