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Overcoming Trust Issues at the Executive Level

Collaboration has been an alluring concept in the world of supply chain for years, but many have found that pilots often fail to expand beyond the honeymoon phase. Part of the problem may be trust gaps at the senior executive level that are worse than at lower managerial levels. This is not irrational, but reflects the fact that top executives see a struggle over jointly created value that is less obvious further down the organisation. - Kevin O'Marah, Chief Content Officer and Head of Research, SCM World

Overcoming Trust Issues at the Executive Level

Collaboration makes a better supply chain. SCM World field research shows that collaboration is critical in supply chain. Nine out of 10 practitioners agree that collaborative relationships are more cost effective. Eight out of 10 agree that inventory buffers are lower. Collaboration also makes us more resilient to risk (74 percent), more effective in experimentation (82 percent) and quicker at solving problems.

When we asked a group of more than 20 senior leaders who met at General Mills' headquarters in Minneapolis on 9 September 2013 about the benefits of collaboration, they were pretty clear what came first - innovation. But the data also shows that expectations about who carries the ball on cost efficiency definitely lean toward the supplier.

Biggest benefits of collaboration. Collaboration may be desired by all, but expectations differ a lot depending on whether you are on the customer or supplier side. Suppliers arrive at the proverbial meeting expecting to learn about their customers' needs and hopefully sell more. Customers sit down looking for savings and may be willing to hear new ideas, but mainly where those ideas lead to lower costs.

Trust is bigger barrier at top than in trenches. The views of these top executives point to a persistent problem with collaboration, which is that all desire innovation as a value creator but don't necessarily want to share the jointly created value equally. Customers expect suppliers to give it up, but suppliers are wary of getting short-changed. Our data shows that trust is their biggest barrier to collaboration.

Biggest barriers to collaboration. The interesting observation comes from comparing this data with answers to a more thorough analysis of barriers to collaboration conducted by SCM World across 374 practitioners at lower levels. This found that trust is significantly less problematic than simple information connectivity and process integrity issues. Lack of information sharing, speed of issue resolution and such basic issues as inconsistencies in both the timeliness and granularity of information exchanged far outweigh concerns around trust.

Neither view is wrong, it's just that the senior folks are higher up the mountain and can see farther into the distance. Collaboration for people working day to day is often reasonably congenial and usually concentrated on smoothing the flow between companies. They want and know how to use systems for demand and supply visibility, and will keep working to lean things out indefinitely.

At the top, senior leaders see the creation of intellectual property at the junction between businesses. Who deserves the lion's share of profits from a packaging innovation that can only work with a reformulated product? What's worth more, a special high-tech polymer or the manufacturing process that turns it into a long-life tyre? What is the value of software without hardware to enable it?                                                 

                                                          The Outlook

Collaboration demands joint working and problem solving at all levels. Senior leaders need to table their trust concerns and look for ways to share jointly created value fairly. Operational personnel require more and better information visibility and consistency. Cost savings, which all parties seek, and innovation, which promises even more value over time, make the pie bigger. Worries over how to split the pie should not be allowed to get in the way.

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