Trust, but verify. That old Russian proverb, famously quoted by President Reagan during disarmament talks with the Soviet Union in the 1980s, should also be the mantra of companies doing collaborative business in 2001.
While trust is the cornerstone of collaboration, ground rules for verification also should be set up at the beginning of a relationship. Participants in a collaborative initiative may be required to sign nondisclosure agreements or confidentiality agreements. Contracts among supply-chain partners should specify how, where, and why collaborative data is to be used.
In the retail industry's collaborative planning, forecasting, and replenishment initiative, a key piece of the verification process is the "scorecard," a regular audit of shared data to ensure that each partner did make or sell the volume it said it would or at least came reasonably close. The audits check the accuracy of data such as sales and manufacturing forecasts, in-stock positions, and average selling price. "CPFR is a business agreement, and the scorecard is the core of it," says James McLaughlin, director of global processing systems at Gillette Co. and a board member of the Voluntary Industry Collaboration Standards group, a retail consortium.
The health-care industry also offers a model for verification as it works to comply with data-protection rules in the federal Health Insurance Portability and Accountability Act. Under HIPAA, all entities with access to protected health information must sign agreements with their trading partners promising to protect that data. At MDeverywhere Inc., a Durham, N.C., provider of handheld billing systems, that means promising doctors and patients that it won't aggregate protected data--even if patients aren't identified--for any purpose. "We're custodians of information of our customers and the patients they service," says Jon Easter, the company's chief privacy officer.
Ryder System Inc., as the lead logistics manager for Dell Computer, has a master agreement that requires Ryder to use Dell's information only to serve Dell. But Gene Tyndall, Ryder's executive VP of global markets and E-commerce, warns against putting too much faith in such agreements. "Partners don't need contracts to collaborate," Tyndall says. "Trust your partners--or get different partners."
For an interview with Gene Tyndall, go to informationweek.com/848/tyndall.htm