Mutual trust is essential for successful supply chain results
Trust is the basis of all collaboration. Any working relationship depends on trust. Whether the collaboration involves two or more individuals, two teams, or two companies - the principles remain the same.
If you want Results - you will have to learn to trust, and be trusted
There is no escaping this truism. Those who have problems trusting others, also have problems earning trust. Yet, we all have misplaced our trust in past. It is a bit like standing up to hit another golf shot, after hitting the first one into the woods. Or, taking the wheel of a car after recovering from a massive highway accident.
Trust only develops slowly - in stages
It is the nature of the reptilian brain in humans to develop trust in stages. Only when we see the results of the first stage, do we become comfortable with the idea of moving to the next stage. And, we keep reassessing the risk at every stage of the journey.
That is one of the reasons why most of our projects at Global Supply Chain Group, some lasting several years, started with a two week quick diagnostic, and gradually developed into a full scale business transformation program generating multi-million dollars of additional recurring profitability.
As the concept of trust is rather abstract, it is hard to measure. At the same time, despite all the difficulties and efforts you can be sure that developing trust with your suppliers and customers is worth the effort.
So what is trust and what are the components of it?
How to make sure that there is enough trust between you and your supply chain partners? Is it always worth the investment of your time and effort?
Is there such thing as too much trust within the business-to-business
First of all, trust in supply chain management, as in any other cooperation
between people, incorporates numerous components such as - good communication incorporating honesty and openness, fairness and loyalty, competence and your openness about whether you are qualified for this particular job or not.
All Trust Is Not Equal
I like to make it real – and keep it real. Let me make this point real with an example of the difference between level of trust required for a pharmacist, a general practitioner and an open-heart surgeon.
When you go and buy a medicine from a pharmacy, you do need a certain amount of trust. You need to be confident that the pharmacist will indeed give you the formulation that the doctor has prescribed. You need to be sure that it is pure, unadulterated and sold at the market price.
However the level of trust required from a general practitioner is much higher. Because you will have to literally remove your clothes in front of him. In this case you need the confidence that your general practitioner is able to examine you, to find out what was wrong.
This trust requirement further multiplies when we are talking about a heart surgeon. You need to be completely sure of your heart surgeon as you need to entrust him your own body, because he will be actually cutting you open and looking literally at your heart. Imagine a heart surgeon who lives with the philosophy mentioned earlier.
Trust in Supply Chain Partners
Results from supply chain and business transformation require goodwill and willingness not to exploit your partner’s vulnerabilities. This is even more important because of the confidential information which is shared between supply chain partners.
When you are working with your supply chain partners – suppliers and customers - in innovation, in order to create new products faster, in enhancing the profitability and reducing the cash-to-cash cycle, you know that relying on fakes will only come back and bite you at the worst possible time.
In the situation where people need to share confidential information, where the profitability of your business depends largely on the competence and honesty of someone else, it is critical to make efforts in order to develop trust. A low level of trust in this case may give a bit more independence and space at first but later on it will definitely result in lower productivity and profitability in supply chain.
Trust in Management Consulting
In the situation where people need to share confidential information, where the profitability of your business depends largely on the competence and honesty of someone else, it is critical to make efforts in order to develop trust. A low level of trust in this case may give plausible deniability at first, but later on it will definitely result in lower results.
Management consultants and their customers need to establish a very firm bond of trust with each other.
The clients need to be able to entrust them with a lot of confidential data and information as well as their innermost strategies so that management consultants could work successfully and effectively.
Management consultants need to be assured that the relevant information is being shared openly with them. Only an incompetent or novice management consultant will knowingly accept a project which is set up for failure from the beginning.
If you trust long established brand names only - then you MUST hire only brand name consultants
This point was brought home to me about 16 years ago when a COO commented "How can we pay you the same same rate as McKinsey - there must some reason why you are not at McKinsey."
I knew in that instant that any further justification of the proposal was futile and this man had to make up his own mind. He mulled over the decision for six weeks before, on his own accord, finally giving the go-ahead to the project.
And, we proved to him why we were the best team for this particular project. This was proven in the shape of two extensions to the project - till the results were delivered.
How do you measure trust worthiness? If brand is not an adequate measure, then what is?
Consistent action is the only measure of trust worthiness.
To be able to establish this kind of firm bond of trust you have to make sure that there is no possibility that your customer misunderstands any of your marketing messages. You should be unambiguous about your market position. It takes us to the next point.
It is always better to say clearly and honestly if the required skills or competences for a particular project are not within your company’s skill-sets.
Let me make it real with another example. Very often when we formulate segmented supply chain strategies for our clients’ business, we need to understand the customer segmentation criteria. As part of that activity we need market research data, which is obviously outside the competency set of our business.
I am very clear with my clients when such situations arise. I also say that I am in a position to recommend a few good market research firms, if necessary, but customers are welcome to choose any others that they want to use so long as the required segmentation data is available at the end of the exercise.
Sophisticated clients always appreciate a consulting company which is honest about where their competency starts and where it ends. On the other hand there are consulting firms who pretend that they are able to magically do everything. In most cases they end up doing nothing well enough, and in the long term they usually lose not only the trust of their clients, but also their own self-respect.
Because trust is such an important topic for supply chains - especially as they digitise and become automated and virtualised - I have covered this topic extensively in my books and blogs. You can explore these links to read further on the topic:
- Value of Trust in Supply Chain Management - click here
- Supply Chain Segmentation – The Next Step in Delivering What you Promise in Digital Marketing - click here
- Trust is the only currency of the networked economy - click here