Dutch companies achieve critical supply chain maturity breakthrough

After years of slow growth, the supply chain maturity of Dutch companies has now broken through a critical barrier. Internal collaboration has become a reality, and collaboration with external chain partners is making serious progress. Companies are realizing that supply chain collaboration is necessary to cope with today’s major crises. This is the key conclusion from the National Supply Chain Monitor, the biannual survey by Nyenrode Business Universiteit and BLMC. They describe this year’s scores as “spectacular”.

The National Supply Chain Monitor (NSCM) has been measuring Dutch companies’ internal and external supply chain collaboration since 2013. The fifth edition of the NSCM has just been published, and the results broke through the critical barrier of 3.2 (on a scale of one to five) for the first time. “The NSCM distinguishes different stages of supply chain maturity. A score of 3 and above indicates internal horizontal collaboration. In other words, departments are more focused on corporate goals than on their own departmental goals. People work together across departments to achieve those goals and create value. Supply Chain takes the lead in this,” says Jack van der Veen, Professor of Supply Chain Management at Nyenrode Business Universiteit and one of the two initiators of the monitor.

External collaboration finally getting off the ground

Impressive progress has also been made when it comes to external collaboration. Michel van Buren, the other co-initiator and Director of BLMC, comments: “Both collaboration with customers (3.2) and collaboration with suppliers (3.1) scored much higher than in the previous edition. These higher scores reflect what we hear when talking to companies. In a time of supply uncertainty, significantly higher costs and material scarcity, communication between chain partners is crucial.” In particular, companies in the retail sector have achieved strong scores, meaning they have gained a lot of ground this year. Jack van der Veen: “Retailers traditionally have a lot of supply chain power which can make them dominant. These scores show that retailers are paying greater attention to their relationships with supply chain partners and to creating value in the whole chain.”

The need for a holistic approach

Anyone involved in supply chain management knows that effective supply chain collaboration makes you more agile, reduces costs and increases value. That realization is even beginning to sink in at boardroom level. Nevertheless, some companies are still somewhat reluctant to collaborate externally. They are afraid of harming their competitive position, or fear that the risks and rewards associated with collaboration will not be shared equally. “Fortunately, this year’s results show that many companies have overcome their reluctance. In a supply chain, you are dependent on each other; all the links are interconnected. In today’s unpredictable market in which we face new challenges every day, collaboration is crucial for survival,” states Van Buren.

Researcher Gijs Dolmans adds: “From other studies, we know that both internal and external chain collaboration must be based on an organizational culture focused on the common interest, complemented by coaching and servant leadership. And the NSCM gives cause for optimism in that respect too, because in absolute terms the aspects of organizational culture and leadership received the highest scores this year.”

Integral approach works best

The NSCM also examined the highest-scoring aspects among the frontrunners, which revealed a surprising insight, according to Van der Veen: “Leaders score proportionally higher on all aspects, and correlation analysis shows that all aspects are strongly interrelated. Successful companies focus on all aspects: strategy, culture, leadership, processes and systems as well as external relationships. These also reinforce each other, giving these companies more information, more clout and more impact. Isolated, rigid companies can’t compete with that.”

“Supply chain management used to be seen as a purely operational issue that revolved around processes such as plan, source, make and deliver. Companies are now realizing that the supply chain can actually be a key differentiator, provided that it is deployed as an integral management method in which value creation is more important than cost, and that people work towards shared goals. As the discipline evolves into a corporate, strategic factor, supply chain directors are increasingly getting a seat at the boardroom table,” Van Buren concludes.