Why Information Should Be Shared, Not Guarded

Henry Ford once said, “Coming together is a beginning; keeping together is progress; working together is success.”  His application of this principle led to Ford Motor Company’s profoundly positive and enduring influence on supply chain efficiency. ArrowStream has also made the practice of teaming up with trading partners for mutual success across the supply chain one of our guiding principles. It is a way of working that allows us to partner with customers and their suppliers to eliminate waste, enable timely and informed decision-making, achieve rapid speed to market and enhance profitability.   

But coming together and sticking together is not easy when many and varied businesses are involved. Barriers to true information sharing (such as systems limitations as well as cultural, business and training constraints) can easily hinder effective supply chain synchronization among trading partners. The temptation to keep information in silos as a way to protect margins or perceived territory is a universal one, which is why information is often purposely made unavailable to trading partners.

In order to overcome information protectionism and get businesses to work together effectively and openly across the supply chain, it is crucial for trading partners to establish trusting relationships and understand the bottom-line value of sharing business data. Consider leading national food services chain Applebee’s as an example in laying the groundwork for greater supply chain information sharing and partnership. In an effort to reduce costs and improve efficiencies, the company recognized the need to obtain comprehensive views of supplier, distributor and restaurant data and to gain insight into hidden freight costs.  But before an information sharing process could be established, distributors had to be convinced to share critical freight management information, historically a sheltered income stream for distributors. 

Applebee’s was able to convince its manufacturing and distributor partners to participate in the ArrowStream Network of 2,300+ foodservice manufacturers, distributors and chain operators by demonstrating the significant freight and process efficiencies they stood to gain. The bottom-line argument was that by using the volume of more than just one retail chain, tapping into ArrowStream Logistics’ patented freight optimization technology and leveraging the capacity of The Network’s 200+ Distribution Centers and 61,000 routes, the distributors would have more full trucks.  Costly Less-Than-Truckload (LTL) percentages would be significantly reduced.  Inventory velocity would increase.  Distributors who participated in The Network would share in the savings. 

This mutually beneficial model convinced Applebee’s partners to participate. And while making a successful argument was a challenge, the significant and recurring freight savings across the supply chain that all trading partners now benefit from have been well worth the effort. Today Applebee’s has significantly reduced its LTL percentages and has achieved measurable freight savings as a result, all while gaining real understanding of its freight costs. 

Additionally, by breaking down the freight barrier with its distributors, Applebee’s opened up the opportunity for even greater information sharing across the entire supply chain resulting in over one million dollars in recovery of overcharges on an annual basis. Leveraging the Arrowstream OnDemand technology, Applebee’s is able to quickly and accurately integrate information from all its trading partners.  Applebee’s and its partners share complete information on things such as: supplier shipments, on-hand inventory at the distributor, demand and fulfillment data at the restaurant level, as well as have comprehensive views of contract, pricing and compliance information. This level of supply chain visibility enables Applebee’s to quickly identify trends within a promotion and ensure the right products are getting to the right locations at the right time.  It also ensures franchisees are getting charged correctly, producing optimal profitability and efficiency.

It’s a simple supply chain equation: The ability to work together cooperatively fosters the ability to effectively share information. The ability to share data expands competitive advantage and bottom-line success for all contributors. Before this equation can be applied, you must first establish trust among your trading partners so everyone is rest assured that you are committed to helping them increase their bottom-line rather than take money out of their pockets.

As more companies look to share information across the supply chain the more benefits all trading partners will see.

This entry was posted on Thursday, October 8th, 2009 at 3:27 pm and is filed under Distributors, Industry Trends, Manufacturers, Real Time Data, Restaurant Chains, Supply Chain, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.