Executives Overestimate Customer Trust in Supply Chains

KUALA LUMPUR, 26 July 2023 — Deloitte’s new report on customer trust in supply chains revealed that supply chain executives significantly overestimate stakeholder trust in their supply chain capabilities and intentions. Among 1,000 executives from large global organisations surveyed, approximately 89% who self-identified as leading suppliers said customers trust their supply chain operations, compared to just 68% of roughly 500 customers who said the same.

The divide between supply chain executives and customer perceptions of supplier trust were apparent. The gap was highest when measuring reliability in supply chains, which reported a 25% gap between leading suppliers and customers, followed by humanity (24% gap), transparency (22% gap), and capability (16% gap).

“The supply chain trust gap is far bigger than our responding executives seem to realise, suggesting that there are blind spots in key areas their customers care about,” said James Cascone, a Deloitte Risk & Financial Advisory partner and sustainability, climate and equity leader with a focus on supply chains, Deloitte & Touche LLP. “From the customer perspective, many COVID-19 pandemic-era supply chain challenges remain unresolved, despite improvements executives have worked hard to achieve. Unfortunately, such wide gaps in trust indicators like reliability and transparency against pre-pandemic expectations stand to worsen as new supply chain risks emerge.”

Additionally, nearly half (44%) of all supply chain executives surveyed expect to experience a supply chain shock in the next 24 months due to various external challenges including price volatility (46%), inflation (44%), resource shortages (e.g., labour and materials; 42% and 41% respectively), and geopolitical instability (32%). Executives ranked external challenges similarly across regions; however, those in North America were more likely to cite financial market instability and inflation as their primary challenge compared to Asia/Pacific (APAC) and Europe/Middle East/Africa (EMEA) where price volatility was top of mind for supply chain leaders.

According to Jan Thomas Nicholas, Tech Sector and Semiconductor Industry Leader at Deloitte Southeast Asia, trustworthiness is a combination of reliability, credibility, and intimacy with customers. “In our highly uncertain environment, where performance reliability is often dependent on external factors beyond the control of supply chain executives, it is doubly important to focus on credibility and customer intimacy. The key to both is empowering executives with the visibility and analysis to engage customers proactively to minimise surprises and get ahead of emerging issues that could affect the customer relationship,” he commented.

Terence Foo, Supply Chain and Network Operations Leader at Deloitte Southeast Asia, added, “These are trends that we are observing across the globe, including in Southeast Asia. This means that an intentional focus on trust is equally important for companies operating in the region. While factors such as price volatility, inflation, and market instability may prove disruptive to supply chains and can impact stakeholder trust, executives can also foster reliability by focusing on increasing supply chain transparency and visibility, especially with regard to ESG reporting, and elevating humanity as a source of differentiation in terms of talent acquisition and creating customer value.”

The report also highlighted the increasing need for organisations to invest in capabilities and actions that help elevate intent, strengthen competency, as well as fuel organisational growth and resilience. Executives who self-assessed their organisations as “leading suppliers” were 3.9 times more likely to have a fully deployed digital thread and 3.8 times more likely to use predictive analytics to forecast demand. Leading suppliers were also 2.5 times more likely to have achieved 15% or higher annual growth rate in the last 12 months and 1.6 times more likely to say their organisations are resilient against external shocks or crises.

“We are seeing industry leaders driving programs to improve visibility and execution across supply chains, order management, customer and supplier collaboration, inventory management, and shop floor execution. Currently, there is a race among top companies to leverage recent advancements in supply chain technologies, and companies without a comprehensive strategy to drive supply chain credibility will risk being left behind,” Nicholas said.

About the survey

Deloitte Global’s “Is your supply chain trustworthy?” survey report was fielded in January and February 2023 and surveyed more than 1,000 executives from large global organizations operating complex supply chains in North America (44%), EMEA (31%) and APAC (25%). This survey analysis was supplemented with findings from Deloitte Consulting LLP’s “2023 US Supply Chain Stakeholder Trust” survey of approximately 500 supply chain customers.

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