According to a recent article from Supply Management, a lack of trust throughout the supply chain is impacting the operations of suppliers and buyers, increasing exposure to risk and exacerbating volatility.
This was the outcome of a recent report from Deloitte, which supports the view that proactive inbound supply chain management is a question of trust rather than data.
Between January and February of 2023, Deloitte Global surveyed 1,037 executives from large global organisations operating complex supply chains. These executives work for a cross-sector of industries and are located across 10 different countries, spanning North America (44%), EMEA (31%) and Asia Pacific (25%).
The survey measured trust by assessing how an organisation performs across each of four trust factors (humanity, transparency, capability and reliability), to understand how well they believe buyers down the chain view the company’s performance across each factor, which were then compared to a study that asked buyers to assess their supply chain partners.
The results reveal that executives overestimate the trust in their organisations’ supply chains by an average of 20% across all four factors.
“Even when customers think of their leading suppliers, they still have lower trust in those suppliers than executives believe,“ the report emphasises.
“These findings suggest executives have potential trust blind spots in areas that customers care about—areas that may need to be explored and analysed“.
It also highlights that among different enhancements that are adding ‘significant value’ to an organisation’s financial performance, the second most cited were enhancements that improved trust with customers.
However, while trust is “deemed important in boardrooms and in the C-suite, insufficient attention is often being paid to this topic today,“ it says.
Further adding that only 14% of executives have a way to track stakeholder trust across the organisation, and 63% of board members admit that they either “do not discuss trust or have no fixed cadence to discuss trust”.
But why is trust so important?
“C-suite executives should maintain and grow trust in their supply chain to help mitigate operational risk, improve resilience, protect the brand, make strategic decisions and enable growth. When trust is impaired, the damage usually cascades across the business ecosystem,“ the report states.
“Alternatively, when trust is strong between an organisation and the stakeholders in its ecosystem, the organisation is typically much better positioned to collaborate with customers and vendors, share critical information, and capitalise on market opportunities in a concerted manner“.
Meanwhile, the analysis shows that stakeholder perceptions of reliability and transparency are deemed ‘paramount’ to organisational performance, with these two factors demonstrating a statistically significant relationship with annual revenue growth and an organisation’s ability to maintain operational consistency through supply chain shocks.
For both of these trust factors, when stakeholder assessments move from lower scores to higher scores, the likelihood that organisations experience growth rates of 15% or more increases 14% for reliability and 25% for transparency.
Higher capability scores also correlate with an organisation’s ability to maintain operational consistency.
When it comes to humanity and building trust, executives in large organisations and stakeholders both agree that treating workers, customers and other partners fairly and with respect matters.
Prior Deloitte Consulting research examined the impact of humanity from an employee perspective, revealing employees are 2.6 times more motivated at work because of humanity.
In fact, Gen Z professionals specifically are 3.3 times more likely to look forward to work and are less likely to leave their job if they feel that their leaders demonstrate empathy and kindness.
Deloitte closes the report by outlining how organisations can invest in capabilities and actions that help elevate intent, strengthen competency, and fuel organisational growth and resilience.
This includes investing in technology to foster reliability, making visibility into sustainability a priority, and demonstrating humanity to create a competitive differentiator.
Additionally, the report suggests that executives should widen the stakeholder relationship lens – in order to nurture trust across the wide array of stakeholders the supply chain ecosystem encompasses – plus measure trust intentionally to ensure that metrics probe deeply into areas such as digital privacy and protection, supply chain employee experience, conduct and compliance, and visibility across supplier tiers.
This begs the question for supply chain managers: do you trust your suppliers and do they trust you? After all, they know that you could easily bypass them, so nurturing trust is key. It’s time to scrutinise your approach to trust and find ways to fortify it.
