The last decade has seen a significant push by companies to collaborate more closely with suppliers. Typically, says Kilgore, the effort will take the form of sharing information on demand, supply and orders. "Horizontal" collaboration, by contrast, "is taking it to another level."
The practice goes beyond relations with trading partners to collaborating with peer companies that might or might not be in one's industry, he says. Manufacturers, for example, can share best practices on how to improve the extended supply chain. In addition to information, however, they're sharing resources and assets.
The notion of working with nominal competitors is likely to elicit some red flags. But Kilgore says companies can avoid that possibility and focus instead on "complementary peers or product categories within their supply chains." For example, horizontal collaboration might involve producers of different grocery items serving a common retail outlet.
The benefits are many, claims Kilgore. They include making better use of shared capacity and assets for transportation and warehousing. Partners can realize "economies of scale that they couldn't necessarily achieve on [their] own." They can reduce empty miles and build more economical loads.
Examples of horizontal collaboration can be found in Europe, says Kilgore. Kimberly-Clark and other CPG companies are sharing transportation capacity for shipment to common destinations. North America is just beginning to see the idea being put into practice, he says.
