Building Trust in a Supply Chain Network

As humans, trust is a complex emotion that can often take years to build. It’s also a highly important factor in business, which can impact on everything from speed of innovation to the perceived wealth of a nation. For this episode of LokadTV, we discuss this topic with Sheri Hinish the “Supply Chain Queen”.

Sheri focuses on advocating, sharing and rethinking supply chain. She mainly concentrates on strategy, providing insights on emerging trends such as social media with a purpose.

We can say that there is a widespread lack of understanding about the concept of trust in general, when it’s actually a vital ingredient in modern economics. In supply chain, there are also many simple yet counterintuitive elements that almost automatically create distrust - penalties being one example.

Although it may seem very rational to claim and establish stock-out penalties for your suppliers, the instant you try and claim money, no matter how inconsequential the sum, you enter into a complicated web of ego and ultimately distrust. The same can be said for financial incentives, for example financial rewards for buyers to get the lowest price, which often creates the messy situation of extremely high MOQs, which in turn leads to a sense of distrust towards the buying team. We can say that distrust is often a product of pseudo-rationalism within supply chains.

We go into more detail about cartels and the importance of networks of trust, particularly within the aerospace industry to avoid highly costly and disruptive AOG incidents. In addition, we talk about the role of Excel, digital supply chain tools and the applicative landscapes of companies that are often riddled with “bloatware” and too many layers, which adds to confusion and eventually to distrust.

To conclude, we discuss how companies can create a space for change and how to establish this tricky idea of trust, especially in a world where networks are becoming ever more vast, interconnected and complicated.

Timestamps

00:08 Introduction

01:43 Can you tell us the story behind the Supply Chain Queen? Where does the name come from?

02:38 Joannès, what are your initial observations on how to build trust in a network?

04:12 Some of the most successful companies in the world have been able to build a level of trust with both suppliers and clients. How did they manage to do this?

05:43 What leads to distrust?

08:18 From a supply chain perspective, how do the different networks interact?

10:11 What have you observed in terms of ambiguity between competitors and customers in industry? How does it affect how organisations work together?

12:13 Would you say that the supply chain practitioners trust the tools and softwares they are using?

15:05 Do they really understand the tools they are using?

17:26 What about large multinational corporations? Is it difficult to build trust in networks of that scale?