According to Deloitte’s 2023 ‘Global Supply Chain Executive Trust Survey’, reliability and transparency are paramount to organisational performance: These two factors demonstrate a statistically significant relationship with annual revenue growth and an organisation’s ability to maintain operational consistency through supply chain shocks.
In 2023, many companies continue to navigate turbulence. Energy costs remain high, some labour shortages still persist, regional geopolitical uncertainties are still limiting availability and increasing the price of key raw inputs in some areas, and continued high costs of living continue to shift consumer preferences.
For leaders of large, complex supply chain networks, some of the seismic challenges from the COVID-19 years may have eased, but for many, significant challenges remain. Having worked hard to weather the storms of this decade, an important question remains: How do you continue to earn or rebuild stakeholders’ trust in your supply chain in this uncertain environment?
Leaders need to build trust
Recently, Deloitte spoke to 1,000 supply chain executives across the globe to understand their current situation, worries, challenges and strategies to continue building trust going forward. The survey confirms that many supply chain executives still battle with high levels of volatility. For example, 46% are currently concerned about price volatility, 44% are concerned about inflation and financial instability, 42% worry about materials shortages, and 41% worry about labour shortage.
When it comes to trust, most supply chain executives recognise that supply chain challenges impact stakeholder trust. Yet, a recent Deloitte survey suggests 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.1
At its core, trust is based on the relationship between an organisation and its stakeholders. Trust is the outcome of high competence and the right intent, which in turn typically rests on factors such as capability, reliability, decency and transparency.
When trust is impaired, the damage usually cascades across the business ecosystem. At its core, customers may not trust they can purchase the brand’s products when they need them most, suppliers may lack confidence in the ability to scale demand, and board members and investors may lose trust in the organisation’s ability to navigate an ever-more-complex environment. 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.
In our 2023 ‘Global Supply Chain Executive Trust Survey’, we clearly see that trust plays a big role for companies’ overall performance as well as the specific performance of the supply chain:
- First, our analysis shows that stakeholder perceptions of reliability and transparency are paramount to organisational performance. These two factors demonstrate a statistically significant relationship with annual revenue growth and an organisation’s ability to maintain operational consistency through supply chain shocks.
- Secondly, higher capability scores also correlate with an organisation’s ability to maintain operational consistency. These findings are intuitive when considering the organisations that have weathered the shocks of the past three years and have the necessary agility to drive performance in uncertain environments.
- And finally, the decency or humanity with which organisations treat their stakeholders in the supply chain is also an essential element of trust. Treating workers, customers and partners fairly and with respect matters. Other Deloitte studies also indicate that caring about employee well-being and prioritising ESG issues throughout the supply chain have a significant impact on trust levels.2
What can leaders do differently?
Given the importance of supply chain trust, how can organisations invest in capabilities and actions that help elevate trust? Our analysis points to several critical long-term factors, including investing in technology to better forecast demand and drive visibility, and aligning with customer and employee values.
However, In the short term, to nurture the momentum and support needed to help cultivate meaningful trust in the supply chain function, executives can take the following two steps:
- Widen the stakeholder relationship lens. Trust in your supply chain is an asset that you should manage as you would likely manage other critical organisational assets. And while shareholder value and cost optimisation should almost always be supply chain priorities, too myopic of a view on these dimensions may inadvertently erode trust – and eventually, the bottom line. Rather, it is important to nurture trust across the wide array of stakeholders in the supply chain ecosystem. Whether it be customers, employees, vendors, communities, investors, regulators, or others, each can play an important role in building a trusted supply chain.
- Measure trust, intentionally. With so many stakeholders in balance, it is important to have a pulse on progress and the trade-offs made to help ensure trust is upheld. A clear view of progress can help supply chain leaders determine where additional resources are required and perhaps most importantly, whether trust is truly at the centre of the ecosystem.
In short: Supply chain leaders that systematically foster reliability, elevate technical capabilities, prioritise supply chain transparency, and insist on building decent relationships everywhere can create a competitive advantage.
1 Many C-suite Executives Say Their Organizations Want to Build Trust in Year Ahead, Yet Few Have Leadership and Tracking Capabilities in Place
2Hey bosses: Here’s what Gen Z actually wants at work
Forfatter spotlight
Lars Kissow
Ask me about: Supply Chain Management, Supply Chain Planning, Supply Chain Resilience, Advanced Planning Systems (SAP IBP, Kinaxis etc), SAP Supply Chain Transformations, Digitalization, Operating models & Sustainability in Supply Chain Lars is a partner in Deloitte and the Nordic Lead of our Supply Chain Practice. Lars has a background as an SAP and Supply Chain consultant, with more than 25 years of experience in Supply Chain and SAP transformation programs, where the underlying theme is end-to-end supply chain optimization enabled by IT. Lars works with Danish as well as Nordic companies, advising on Supply Chain transformations in close collaboration with our SAP & Digitalization offerings.