InformationWeek

f knowledge is power, sharing it can build even more business muscle. That's the idea behind collaboration. Yet that concept can prove a tough sell in a business culture raised on the belief that sharing knowledge is surrendering power.

Precor Corp., a Bothell, Wash., exercise-equipment manufacturer, is in the midst of such a culture challenge. VP of engineering Tom Moran says that for years Precor built all the components for its equipment--from the circuit boards that ran the digital timers and panel controls to the labels that carried the company logo. "There was a belief in the company that it was better to control your own quality, and we could do it all more efficiently," Moran says. "If we all of a sudden found out we were short on circuit boards, because it was our own circuit-board company, we could tell them to make some more or work weekends."

Precor's do-it-all-yourself approach was challenged after the company was taken over by Illinois Tool Works in Glenview, Ill. The new parent company believed that Precor needed to focus on its core business of designing, assembling, testing, and shipping exercise equipment, which brought in 80% of Precor's revenue.

To outsource its manufacturing, Precor soon figured out it had to open itself up to collaboration on product design with other manufacturers. For circuit boards, it now uses product-development software from Agile Software Inc. to share design specifications with a supplier in its home town, Applied Technical Services.

Moran recommends starting collaboration with small steps to get both sides used to the relationship, and paying close attention to what information is passing back and forth. "We don't let them have access to all the information," Moran says. For instance, Applied Technical Services sees only the electronic boards that it will be manufacturing. "I don't open up everything to anybody," he says. "It's on a need-to-know basis."

Working more closely with the supplier has created a relationship that's less adversarial. "We understand their costs completely, and we share any cost savings that we have," Moran says. "We want them to be a profitable company, too."

Buyers that want to bring collaboration to the supply chain find they have to tread carefully between coaxing companies to become willing participants and ramming it down suppliers' throats. InFocus Corp., a Wilsonville, Ore., maker of computer-projection systems, finds collaboration with suppliers on product design makes the process more efficient. Today, InFocus just posts product design documents on Agile Systems' hosted service for suppliers to view online. Next, it wants to push suppliers to adopt systems that can support more online collaboration in product design and changes. As one of the nation's largest computer-projection companies, InFocus believes its request will carry weight because of its sizable contracts with its biggest suppliers, says Joyce Dixon, documentation manager for InFocus. However, the company is treading carefully, knowing that success requires willing partners in collaboration, not hostages. "We're not trying to come across as a big bully and say 'This is what you have to do,'" Dixon says. "When we go out to look for new suppliers or to renegotiate, we pose this as a suggestion to them to help both of our organizations be more efficient."

Still, many remain unconvinced that collaboration can deliver a financial return. Del Taco Inc., a privately held fast-food chain in Laguna Hills, Calif., isn't ready to enter into a more collaborative relationship with suppliers. CIO Henry Volkman says the risks to bargaining power as well as security are too great. "If you knew how well we were doing, you'd probably want to jack the price up," Volkman says. "If you open up [your data] for all the vendors to look at, then I don't know how you can ensure that your competition won't be looking at it, too."

Irving Tyler, CIO of $267 million chemical supplier Quaker Chemical, is well aware of those risks, but is pushing ahead to find ways to link customers, partners, and suppliers in its chemical, steel, and auto markets. Tyler says implementing collaboration technology--a flexible business-intelligence network run over a WAN--was relatively simple. The bigger challenge is getting staffers to think of themselves as part of a larger, collaborative organization. "The system is there, but people have to use it," he says. "Changing people's behavior doesn't come easily, especially if they've been used to working independently."

Part of the answer was organizational--Quaker realigned teams along business lines instead of geography. "Our labs in Europe almost never collaborated with our labs in the United States," he says, "but now some of those workers might be focused on the same business, so they have to interact."

Having succeeded in getting internal users to collaborate, Tyler wants to connect all Quaker's business partners via the network. That won't be easy, given the potential for compromising security and losing competitive advantages. But he won't be deterred. "Things can get pretty dicey because we're dealing with intellectual property," he says. "But at some point, people will figure out that the benefits outweigh the risks."