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MEASURING COLLABORATIVE PERFORMANCE

12 Feb 13

Dr Andrew S Humphriesandrew.humphries@sccindex.com

+44(0)1908-664119+44(0)7963-241872

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Collaboration Confusion

Traitorous cooperation with an

‘enemy’

The action of working with someone to produce or create something that

neither of you could do alone (1+1=3, 4, 10..)

Or?

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Obtaining Value from Collaboration?

Advantages• Lower Costs• Competitive Advantage• Globalisation• Industry Structure• IT-Enabled• Access to Technology• Access to Resources• Marketing Advantages• Customisation/New Product

Development• Total Quality Management• Non Western Business Philosophies• Defensive Response• Ideas & Innovation• People and Trust• Co-opetition

Disadvantages• Loss of Freedom• Reduced Flexibility• Costs – Management Time,

Complexity, Size• Strategic Resources Exposure - IPR,

Competitive Capability, Cost Structure, Staff

• Opportunism• Anxiety, Paranoia • Dependence• Dominance• Takeover, Oblivion

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Relationship Pressures & Friction

Imprisoned?1 + 1=3, 4……?

15%

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Thriving Under Pressure

Value

Reliability

Creativity

Stability

Communication

Create a win-win relationship in

which each side is delighted to be a

part

Focus on service and product delivery,

lower joint costs and risks, build trust

Promote quality, innovation & long-term

view by encouraging high performance

Synchronise objectives and

build confidence thru investment

Frequent, open dialogue and information-

sharing

RelationshipSuccess Spiral

VfM

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Failing to CopeConfinement

Pressure

Self Interest

LeastEffort

LowCommitment

InformationEconomy

Partners are trapped by limited

choices

Only focus on your own objectives

Do the minimum you can get away

with

Take a short term view and

avoid riskDeliberately

confuse to gain advantage

Relationship FailureSpiral

VfM

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The Science of Measuring Relationship Performance

Relationship TheoryTransaction Cost Economics

Sector Organisation ID Date Positive Comment Negative Comment

Confidence

Failure/Success

Category

Adapting - A

Com

mercial P

racs - C

Com

mitm

ent - M

Com

munication - N

Co-operation - B

Culture - U

Custom

er Focus - OE

quity - GFram

ework C

ontracting - FInterdependence - IJoint P

roblem S

olving - ELogistics - JLong Term

Orientation - L

Managem

ent - VO

pportunistic Behaviour - D

Perform

ance Managem

ent - X

Personal R

elationships - RP

lanning - PP

ower - W

Quality S

ystems & E

thos - Q

Relationship B

uilding - SR

esearch Report - Z

Teamw

ork - K

Trust - T

DLO Land Supplier 5 19/3/01 They hide behind the excuse that their data is not good enough to give us as a means of keeping information from us. They are not open with us.

42 F Communication x x

DLO Land Supplier 5 19/3/01 They are still into buying the cheapest. 12 F Creativity x x xDLO Land Customer 5 5/3/01 Their product support manager is 'Mr

Smooth'.33 F Reliability x x

DLO Land Customer 5 5/3/01 They think that we are constantly stifling their creative ideas.

55 F Stability x x

DLO Air Supplier 6 The basis of some distrust and traditional methods of operation will require significant effort to breach. Us and them is still very apparent at a number of personal levels.

46 F Reliability x x x

DLO Air Supplier 6 Although the business arrangements and operational outputs of the 2 organisations are far from ideal, honesty and openness are not only promoted but are lived every day.

46 F Reliability x x

Interview Data Analysis

1a The relationship encourages the achievement of high performance by both parties 83 100e.g. consistent product quality, on-time delivery, reasonable forecasts.

1b The relationship encourages us to be innovative and flexible in the way we do business 67 100

1c Performance measurement is used to raise standards 60 100

1d Disputes and problems are resolved quickly 100 67

1e Disputes and problems are resolved fairly 100 83

1f The other party is reliable and consistent in dealing with us 100 71

1g The other party is dedicated to making our business a success 83 60

1h When an unexpected problem arises, both parties would rather work out a solution 100 100than hold each other to the original contract terms

2a The other party displays a sound, strategic understanding of our business 100 83

2b The objectives of both parties are clearly stated 100 86

2c The objectives of both parties are fully compatible 83 86

2d Both parties co-operate wholeheartedly 83 86

2e The relationship provides a dynamic business environment within which both 83 100parties can seek increasing rewards

2f I have complete confidence in the intentions of the other party 100 100

3a Where the other party has proprietary information that could improve the performance 100 100of the joint business, it is freely available

3b We have a shared data ‘environment’ where market, planning, technical and pricing 100 67information are made freely available

3c We understand the information requirements of all participants in the supply chain 100 67from suppliers to customers

3d Exchange of information in this relationship takes place frequently and informally 83 100– not just according to specified agreement

3e Objective performance measurement is an important part of this relationship 100 86

3f We are aware of the performance requirements for all participants in our supply chain 83 100from suppliers to customers

3g We provide the other party with regular information including long-range up to date 80 60forecasts and market developments to enable him to do his business better

4a The quality of the contract outputs e.g. consistent product quality, fulfilled on-time 83 100orders, is entirely satisfactory

4b The quality of service e.g. billing, prompt payment, administration, delivery is entirely satisfactory 67 80

4c The relationship is character ised by a continually improving product quality philosophy 83 100

4d Problems are solved in a joint, open, constructive manner 100 83

4e Such is the goodwill in the relationship, the other party would willingly put him/herself out 60 50to adapt to our changing requirements

4f We trust the other party to act in our best interests 83 80

4g The responsibility for making sure the relationship works is shared jointly 100 71

4h The other party provides us with useful cost reduction and quality improvement ideas 50 0

4i The other party is always totally open and honest with us 67 83

4j The other party always does what he says he will do 100 83

5a The gains from this relationship are equitably shared between both parties 60 100

5b We do not feel ‘imprisoned’ or restricted within the current relationship 80 100

5c We are willing to invest more i.e. money, time, information, effort, in the current relationship 100 100

5d We are happy that our future is bound to the success of our relationship partner 80 100

5e We feel totally committed to this relationship 100 100

5f The other party is genuinely concerned that our business succeeds 83 100

5g Both sides are working to improve this relationship 83 100

Performance Metrics

1.Build relationship with carriers2.Review Supply Chain roles3. Upgrade forecasting system4. Hold regular performance reviews

Detailed report & Recommendations

Customer (Counts)Copy block valuesto Success (3&4) 5 4 3 6 6 6 5 5 6 6 5 5 5 6 5 5 5 5 5 5 4 5 2 5 5 3 5 6 2 4 5 3 4 5 4 6 5 5All relationships Failure (1&2) 1 2 2 0 0 0 1 0 0 0 1 1 1 0 0 0 0 1 0 1 1 1 1 1 0 2 1 0 2 2 0 2 1 0 1 0 1 1Summary or No Answer (0) 0 0 1 0 0 0 0 1 0 0 0 0 0 0 1 1 1 0 1 0 1 0 3 0 1 1 0 0 2 0 1 1 1 1 1 0 0 0Sector Summary Total responses 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6

Customer - Creativity Q1a Q1b Q1c Q1d Q1e Q1f Q1g Q1h OV Customer - StabilityQ2a Q2b Q2c Q2d Q2e Q2f OV Customer - Communication Q3a Q3b Q3c Q3d Q3e Q3f Q3g OV Customer - ReliabilityQ4a Q4b Q4c Q4d Q4e Q4f Q4g Q4h Q4i Q4j OV Customer - ValueQ5a Q5b Q5c Q5d Q5e Q5f Q5g OVSuccess -% 83 67 60 100 100 100 83 100 87 Success -% 100 100 83 83 83 100 92 Success -% 100 100 100 83 100 83 80 92 Success -% 83 67 83 100 60 83 100 50 67 100 79 Success -% 60 80 100 80 100 83 83 84Failure - % 17 33 40 0 0 0 17 0 13 Failure - % 0 0 17 17 17 0 8 Failure - % 0 0 0 17 0 17 20 8 Failure - % 17 33 17 0 40 17 0 50 33 0 21 Failure - % 40 20 0 20 0 17 17 16No Answer - % 0 0 17 0 0 0 0 17 4 No Answer - % 0 0 0 0 0 0 0 No Answer - % 17 17 17 0 17 0 17 12 No Answer - % 0 50 0 17 17 0 0 33 0 17 13 No Answer - % 17 17 17 17 0 0 0 10

Supplier (Counts)Success (3&4) 7 7 6 4 5 5 3 7 5 6 6 6 7 7 4 4 4 7 6 5 3 7 4 6 5 2 4 5 0 5 5 2 5 4 4 5 3 4Failure (1&2) 0 0 0 2 1 2 2 0 1 1 1 1 0 0 0 2 2 0 1 0 2 0 1 0 1 2 1 2 3 1 1 0 0 0 0 0 0 0No Answer (0) 0 0 1 1 1 0 2 0 1 0 0 0 0 0 3 1 1 0 0 2 2 0 2 1 1 3 2 0 4 1 1 3 0 1 1 0 2 1Total responses 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 5 5 5 5 5 5 5

Supplier - Creativity Q1a Q1b Q1c Q1d Q1e Q1f Q1g Q1h OV Supplier - StabilityQ2a Q2b Q2c Q2d Q2e Q2f OV Supplier - Communication Q3a Q3b Q3c Q3d Q3e Q3f Q3g OV Supplier - ReliabilityQ4a Q4b Q4c Q4d Q4e Q4f Q4g Q4h Q4i Q4j OV Supplier - Value Q5a Q5b Q5c Q5d Q5e Q5f Q5g OVSuccess -% 100 100 100 67 83 71 60 100 85 Success -% 83 86 86 86 100 100 90 Success -% 100 67 67 100 86 100 60 83 Success -% 100 80 100 83 50 80 71 0 83 83 73 Success -% 100 100 100 100 100 100 100 100Failure - % 0 0 0 33 17 29 40 0 15 Failure - % 17 14 14 14 0 0 10 Failure - % 0 33 33 0 14 0 40 17 Failure - % 0 20 0 17 50 20 29 100 17 17 27 Failure - % 0 0 0 0 0 0 0 0No Answer - % 0 0 14 14 14 0 29 0 9 No Answer - % 14 0 0 0 0 0 2 No Answer - % 43 14 14 0 0 29 29 18 No Answer - % 0 29 14 14 43 29 0 57 14 14 21 No Answer - % 60 0 20 20 0 40 20 23

J Sainsbury Creativity Stability Communication Reliability Value OverallSuccess -% 87 92 92 79 84 87Failure - % 13 8 8 21 16 13No Answer - % 4 0 12 13 10 8

Cranswick Creativity Stability Communication Reliability Value OverallSuccess -% 85 90 83 73 100 86Failure - % 15 10 17 27 0 14No Answer - % 9 2 18 21 23 15

Joint Creativity Stability Communication Reliability Value OverallSuccess -% 86 91 88 76 92 86Failure - % 14 9 12 24 8 14No Answer - % 7 1 15 17 16 11

Joint Q1a Q1b Q1c Q1d Q1e Q1f Q1g Q1h OV Supplier - StabilityQ2a Q2b Q2c Q2d Q2e Q2f OV Supplier - Communication Q3a Q3b Q3c Q3d Q3e Q3f Q3g OV Supplier - ReliabilityQ4a Q4b Q4c Q4d Q4e Q4f Q4g Q4h Q4i Q4j OV Supplier - Value Q5a Q5b Q5c Q5d Q5e Q5f Q5g OVSuccess -% 92 83 80 83 92 86 72 100 86 92 93 85 85 92 100 91 100 83 83 92 93 92 70 88 92 73 92 92 55 82 86 25 75 92 76 80 90 100 90 100 92 92 92Failure - % 8 17 20 17 8 14 28 0 14 8 7 15 15 8 0 9 0 17 17 8 7 8 30 12 8 27 8 8 45 18 14 75 25 8 24 20 10 0 10 0 8 8 8No Answer - % 0 0 15 7 7 0 14 8 7 7 0 0 0 0 0 1 30 15 15 0 8 14 23 15 0 39 7 15 30 14 0 45 7 15 17 38 8 18 18 0 20 10 16

Survey Data Analysis

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Taking Relationships to Another Level

The Tool can be used to gauge relationship effectiveness: Internally within an organisation Between a pair of partners or customer and supplier Between an organisation and a portfolio of partners or customers

or suppliers Between the members of an alliance/consortium

The Tool may be used: To help an ailing relationship recover To increase loyalty between customer and supplier or team

members To initiate or sustain a change programme As a key part of corporate governance

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A Vision for FM

The catalyst for defining joint opportunities to increase revenue and shareholder value

Increases customer satisfaction from better product/service quality and delivery

Strengthens the bond between partners and enhances their ability to innovate

Reduces administration and production costs Bridges the hidden gaps in teamwork, thru more cohesion,

integration and fulfilment, and increased transparency Builds joint capability to seize future business opportunities

The big shift in focus will be away from price and compliance and toward how organisations address innovation and change through their agreements.

Bill Huber, Information Services Group (IACCM – The Future of Contracting)

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Facilities Management Relationship Appraisal Tool

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Dr Andrew S Humphriesandrew.humphries@sccindex.com

+44(0)1908-664119+44(0)7963-241872

BP

Boeing