The Pros and Cons of Collaborative Planning

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The Pros and Cons of Collaborative Planning
S. McVey - September 12, 2000


The rapid advance of the Internet and related technologies are quickly turning business-to-business collaboration into a reality. Among its promises are real-time information sharing, the ability to maintain personalized relationships between buyers and sellers, and greater efficiency for all companies joined in the expanded enterprise. Unfortunately, excitement surrounding B2B collaboration often drowns out the simple truth that collaboration products are still in a formative stage and their promise, largely unfulfilled.

In this case, B2B collaboration software vendors do not shoulder the largest part of the blame. The culprit is simply the absence of a commonly held and coherent view of how collaborative planning should be performed. Consolidating the various approaches to collaboration into a finite set of methodologies is a daunting endeavor, but one that many software vendors struggle to do. These vendors assume leadership roles in standards organizations and work with users to design an overarching solution from the top-down.

Other, less ambitious vendors bypass the larger issues surrounding collaboration among external and internal trading partners and simply code software that automates current chains of communication and information sharing. Feedback from users serves as a corrective factor, influencing future release functionality and steering it iteratively toward a better design.

Both kinds of vendors, the theoretical and the empirical, have produced collaborative planning solutions that address many important parts of the collaboration puzzle.

Despite the ongoing evolution and variety of collaborative planning applications, it is instructive to take a snapshot from time to time and make comparisons. Most collaborative planning products have three things in common: emphasis on role as member of a trading partner community, real-time communication of a wide variety of data among trading partners, and access through a Web browser. Like most strengths, these have an associated downside or "every silver lining has a cloud," and here we examine the pros and cons of each.

Key attributes of collaboration software include:

  • Emphasis on role as member of a trading partner community

    Pro: Companies see their enterprises as components of the larger collaborative network.

    The widely held belief that technology is making the world smaller applies to the corporate world as well. Collaborative planning is more than simply buying and selling online but is, in fact, an extension of a company's business processes into those of its trading partners and vice versa. Technological aspects aside, the mindset that inwardly focused corporations must adopt to make effective use of collaborative planning is vastly different from even that required to make the jump from ERP to supply chain planning.

    Con: Requires companies to have smoothly running internal processes.

    Before companies can expect to benefit from having better visibility into their trading partners' operations, they must first get their own house in order. This is because companies must provide accurate data to the right partners at the right time. In a very real sense, information becomes as much a product as is an ingot of steel, a crate of detergent, or a box of microchips; and getting it to the customer with routine good performance is important to building a trust. Some companies embark on collaborative planning implementations thinking that all they need to ensure is that data are plugged into the proper places and the Internet will take care of the rest. Painful months spent tracking down bad and missing data are the consequence of a premature move to collaboration.

  • Real-time communication of wide variety of data among trading partners

    Pro: Instantaneous sharing of mission-critical business information.

    Data typically of interest in collaboration schemes include available inventories, outstanding orders, new purchase requisitions, unpaid invoices, engineering changes in bills of material, service part status, and shipment locations. The improved visibility afforded by collaboration products allows planners to respond quickly and accurately to changes.

    Con: Potential exists for inadvertently giving trading partners access to sensitive information.

    User education and careful planning are critical in the early stages of an implementation. Users should understand what data will be shared, how and when it will be transmitted outside the company firewall, and what responsibilities they have to the integrity of the data. Without taking the time to ensure that everyone knows how collaborative planning software works, companies can compromise and destroy valued, long-standing relationships with suppliers and customers.

  • Access through a Web browser

    Pro: No software installation necessary and a low (or zero) cost of entry for business partners.

    Perhaps the most attractive technical characteristic of B2B collaboration solutions is access via the Internet through a simple browser program. This gives companies who host the software a powerful argument for convincing suppliers and customers to join. Partners reap the rewards of access and visibility without needing to purchase, install, or maintain the software.

    Con: Incomplete or nonexistent integration to core enterprise applications and potential for duplication of data.

    Although Enterprise Application Integration (EAI) or middleware tools combined with data repositories can solve the problem of connecting data received over the Internet to a company's internal applications, implementing the links is still a complicated process requiring skilled integration resources. Proper synchronization of data received via the Web with data circulating internally also presents a host of difficulties and some compromises in when data are updated are inevitable.

User Recommendations

Though solutions promising to deliver instant collaboration are available now, much work remains in forging a consensus on how collaborative planning should be accomplished. Finding the best balancing among the pros and cons requires input not only from individual enterprises, but also from their trading partners and members of the extended network that can cross multiple industries, time zones, disparate business cultures, and languages. Flexibility is a must for collaborative planning solutions so that enterprises can model internal processes as desired while still maintaining the ability to participate effectively with other members of the network.

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