Executives Overestimate Customer Trust in Supply Chains

MANILA, 26 July 2023 — Supply chain executives significantly overestimate stakeholder trust in their supply chain capabilities and intentions, according to a new Deloitte Insights survey report titled “Is your supply chain trustworthy?” Of more than 1,000 executives from large global organisations surveyed, 89% on average who self-identified as leading suppliers said customers trust their supply chain operations, compared to just 68% on average of roughly 500 customers who said the same.

In looking more closely at the divide between executives self-identifying as leading suppliers versus customer perceptions of supplier trust, the gap was highest when measuring reliability in supply chains (25% gap; leading suppliers = 90%, customers = 65%), followed by humanity (e.g., treating workers, customers and other partners fairly and with respect; 24% gap, leading suppliers = 91%, customers = 67%), transparency (22% gap; leading suppliers = 85%, customers = 63%) and capability (e.g., ability to maintain operational consistency; 16% gap, leading suppliers = 91%, customers = 75%).

“The supply chain trust gap is far bigger than our responding executives seem to realise, suggesting 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.”

Nearly half (44%) of all supply chain executives surveyed expect to experience a supply chain shock in the next 24 months as a result of 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.

“With the potential for distrust to grow amid uncertain market conditions, it’s increasingly important that supply chain leaders find a way to shrink the gap,” said Michael BONDAR, Deloitte Risk & Financial Advisory's enterprise trust leader and a principal, Deloitte Transactions and Business Analytics LLP.
“We see leading organisations working to identify and prioritise actions most likely to enhance the reliability and predictability of their supply chains — ranging from developing a digital thread to investing in other, advanced technical capabilities to help earn stakeholder trust, enhance business performance, and serve as a competitive differentiator,” he added.

Executives who self-assessed their organisations as “leading suppliers” were 3.9 times more likely to have a fully deployed digital thread (27% versus 7% for non-leading suppliers) and 3.8 times more likely to use predictive analytics to forecast demand (38% versus 10% for non-leading suppliers). Leading suppliers were also 2.5 times more likely to have achieved 15% or higher annual growth rate in the last 12 months (38% versus 15% for non-leading suppliers) and 1.6 times more likely to say their organisations are resilient against external shocks or crises (34% versus 12% for non-leading suppliers).

“It seems that when executives prioritise improving supply chain trust, advancements result that extend well beyond trust-building alone,” continued Bondar.

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.”

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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