Executive Briefings

Global Supply Chains Are Still All About Relationships

Technology can be a crucial tool in facilitating buyer-supplier transactions, but there's no replacement for face-to-face contact and personal relationships, says Dan Lynch, director of the Centre for International Trade & Transportation at Dalhousie University.

Lynch shares the results of a recent research project involving IBM and several major universities in the U.S., Ireland and Singapore. They were allowed access to IBM's top 200 suppliers and products and services. The survey examined the differences among the products, services and cultures that make up IBM's supply chain.

The findings of the survey underscored the importance of face-to-face communication among supply-chain partners, even in the age of the internet. Personal contact remains all-important. "Out of sight, out of mind," says Lynch, echoing the views of a typical buyer in the chain. "You can do a net meeting, but unless you're here and have somebody in country, we're not thinking about you. If you don't know the name of my kid's soccer team, I'm probably not going to give you business."

The survey's conclusions differed according to the types of products and services involved. Relationships between large high-tech companies can be difficult to sustain, especially if the parties cooperate on some fronts and compete on others. "There's a lot of animosity and distrust," Lynch says, adding that companies should partner in those areas where there interests don't overlap.

Trust is the most important element in any supply-chain relationship, Lynch says. "It takes a very, very long time to build [it]," he adds, "but seconds to destroy it. When you make a mistake, own up to it."

Technology does serve an important role, allowing companies to determine precisely when an item was shipped, and where it's located at any given time. Still, says Lynch, more communication in the form of e-mail, fax, cell phones and other non-personal methods isn't necessarily better. There's no replacement for an extended relationship based on regular, live contact. So companies should strive to have the same individuals on site for as long a time as possible.

To view this interview in its entirety, click here.

Technology can be a crucial tool in facilitating buyer-supplier transactions, but there's no replacement for face-to-face contact and personal relationships, says Dan Lynch, director of the Centre for International Trade & Transportation at Dalhousie University.

Lynch shares the results of a recent research project involving IBM and several major universities in the U.S., Ireland and Singapore. They were allowed access to IBM's top 200 suppliers and products and services. The survey examined the differences among the products, services and cultures that make up IBM's supply chain.

The findings of the survey underscored the importance of face-to-face communication among supply-chain partners, even in the age of the internet. Personal contact remains all-important. "Out of sight, out of mind," says Lynch, echoing the views of a typical buyer in the chain. "You can do a net meeting, but unless you're here and have somebody in country, we're not thinking about you. If you don't know the name of my kid's soccer team, I'm probably not going to give you business."

The survey's conclusions differed according to the types of products and services involved. Relationships between large high-tech companies can be difficult to sustain, especially if the parties cooperate on some fronts and compete on others. "There's a lot of animosity and distrust," Lynch says, adding that companies should partner in those areas where there interests don't overlap.

Trust is the most important element in any supply-chain relationship, Lynch says. "It takes a very, very long time to build [it]," he adds, "but seconds to destroy it. When you make a mistake, own up to it."

Technology does serve an important role, allowing companies to determine precisely when an item was shipped, and where it's located at any given time. Still, says Lynch, more communication in the form of e-mail, fax, cell phones and other non-personal methods isn't necessarily better. There's no replacement for an extended relationship based on regular, live contact. So companies should strive to have the same individuals on site for as long a time as possible.

To view this interview in its entirety, click here.