Business models for horizontal collaboration: a practical case study with reusable crates

This project is centered in the topic of horizontal collaboration. The first part focuses on finding business models for horizontal collaboration. The second part is a practical case study at Kuehne + Nagel. Horizontal collaboration consists of two or more independent companies that plan and execute supply chain operations with the objective of achieving better results that if they work separately (Simatupang & Sridharan, 2002). Value obtained from a horizontal collaboration includes cost reductions, improvement of service levels, or decrease in the environmental impact. Still, few successful cases can be found in practice due to the difficulties of implementing projects with third parties. In order to find business models for horizontal collaboration, we start by defying 3 major roles in a horizontal collaboration: partners, suppliers, and Community Manager. The role of Community Manager involves the coordination of the collaboration at an operational level and a strategic level. When we look at operational processes behind a horizontal collaboration, we find that even when looking at different set ups of collaborations, many activities are repeated. This indicates that the complexity of operations cannot be considered a real impediment for horizontal collaboration, but other factors will have greater importance, like difficulties of building relationships with other companies. The practical case study at Kuehne + Nagel focus on the management of CBL crates. CBL crates are reusable plastic containers used in the distribution of products in the supermarket chain. The collaboration called G8 has as partners the 7 biggest suppliers of AH and AH. The objective of this collaboration is to increase availability of crates, and to increase the percentage of crate collected from locations preferred by the partners. Kuehne + Nagel will be the Community Manager of the collaboration. A simulation model was built to predict how the system will behave once G8 is implemented. This model helped predict performance of the system and the evolution of stocks. Also this model helped select a allocation rule for crates in G8. This allocation rule was then implemented in a operational management tool that can be used by Kuehne + Nagel to perform a weekly plan for all crates in the G8 collaboration. To conclude, this project helped start defining business models for horizontal collaboration. Different collaboration set ups are presented, and the operational process behind them are described. Also, in the practical case study, a simulation model helped the Community Manager of a real collaboration predict how the collaboration will work in practice and make decisions that help maximize the performance.