Sometimes it makes good business sense to buddy up with your rivals.Strategic alliances with contract partners start with a level of trust between buyer and seller, and can take many forms. For instance, suppliers have moved staff to their customers' premises to monitor product usage or, in the case of consultants and other service providers, inside the door of their offices and boardrooms, Guy Callendar of the University of Technology Sydney's School of Management told the recent Smart 2001 conference in Sydney. "Alliances have been forged between competitors in circumstances once regarded as unthinkable, the formation of the General Motors, Daimler-Chrysler and Ford e-commerce procurement empire being an outstanding and challenging example," Callendar says.
But he points out that Australia suffers under the disadvantages of being a small international economy: lack of internal market size and large-scale manufacturing and service provision. "Contracting clout has to do with being large enough to make the logistics of doing business worthwhile as well as achieving that elusive goal of ‘value for money'," he points out.
Then again, says Dr John Gattorna, managing partner in Accenture's supply chain practice, that simply illustrates one of the main differences between the southern and northern hemispheres: Down Under the benefits of huddling together are greater than the disadvantages of huddling together. But there are other big differences between what Gattorna calls the Rugby-playing countries of the southern hemisphere (South Africa, New Zealand, Australia and Argentina), that basically all have markets of between 20 and 40 million people, and our counterparts in the north. Gattorna says in the US and other countries in the northern hemisphere the issue of "co-opertition" is a thorny one. When organisations start joining together in collaborative marketplaces there, they are potentially tending to share information via skills and knowledge transfer while gaining less out of the deal than the organisations that join them. That's because it is far from unusual for such organisations to partner with suppliers in some areas and compete with them in others.
That makes trusting those partners with sensitive corporate information a perilous act of faith and raises the whole question of how far the organisation should lift the blinds on their organisation to the probing eyes of suppliers. Gattorna says most Australian companies are too small for that to be a real issue.
"I don't think ‘co-opertition' is as big a problem, funnily enough, in Australia," he says. "I think it's more black and white here because in Australia we've got smaller markets. I'm preaching the gospel: to hell with all this bull about differential advantage through better supply chain practices internally or better logistics practices. What we really need to recognise is Australia, in just about any market we look at, is sub-world class, sub-critical. Therefore we have no other alternative other than to join together, sometimes with vendors, sometimes with suppliers, sometimes with other people in our industry, and share the pickings if you like: any advantages that we might together create." Then again Streamlink managing director Martin Fisk believes many businesses are wary of opening up too much information about their companies largely because they don't have this information in a very accessible format even internally. "Look at the recent stock writedowns of Cisco and Coles Myer in the last two quarters," Fisk says. "If they couldn't predict their own issues, how could their suppliers' customers be expected to use/access/interpret their data?"
But the relative size of Australia's markets and our distance from the northern hemisphere leave a legacy of other disadvantages too. Transport economist Dr Nariida Smith, leader of CSIRO's Transport Futures Project, recently worked Queensland's University of Technology on a major study on the impacts of e-business on transport, starting with the trends in e-business, for the National Transport Secretariat. She believes it is the widest scoping research of its type ever conducted globally. Dr Smith claims Australia suffers because of its financial institutions' and lawmakers' lack of technical sophistication. The SME wanting to install new infrastructure or the truck fleet operator wanting to build in m-commerce capability both typically have huge difficulty getting a bank loan because they can't point to a history of success for SCM or c-commerce. "We've got lack of understanding of technological issues in the financial and regulatory area," she says. "In the regulatory area we're very much governed by lawyers and accountants and that sometimes makes for difficulties in choice of new systems. In fact, we've got difficulties right up the chain in both the regulatory authorities and banking. We don't tend to have people from science and engineering in all of these decision-making roles to the same extent as some other countries, such as Germany."
She said the failings help to explain a recent Gartner survey that found more than half Australian CEOs see their Net strategy as a costly irrelevance, while a Compass & London Business School study found a similar number of European CEOs played a "major" personal role in their company's e-business strategy.
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