Tag Archives: trust

Article

Deeper collaboration between customers and suppliers in the manufacturing industry

The days where someone owned every piece of information are gone. I still can remember when Tesla gave their patents for anyone to be used to take the electric car industry forward. I believe the trend for trust is building to be the most influential topic in the 2020s.

In the manufacturing ecosystem, the trust has been there but without sufficient transparency. Since the collaboration has been on a level where both sides share enough information to be confident that the other side would not use it to gain a better position within the partnership or in the market.

From a close environment to transparency on all levels

I have come across the question so many times in my career: “Can I share this with the 3rd party?”. The question is always phrased in a way that they think the answer is still negative. Why do they phrase the question so that the answer would be, in most cases, negative? Would the answer change if they would ask it the other way or even state that I will share it if you don’t have a good reason to deny me not to do it?

Transparency is a wicked thing in business. Some individuals think it’s about sharing confidential information, and some think it’s obvious to be transparent and honest in business relationships. Where is the value if it’s not to be used for developing the business or the partnerships? Today most of the value chains are more than just one manufacturing company.

Deeper collaboration, investments, and demand sensing

The time when collaboration between two companies meant buying and selling services rather than a partnership is gone. It was still called partnership, but the focus was only to find ways both sides could benefit from each other on a money level. Money was defining the partnership and dictated the way both sides made decisions.

Today more and more companies are building relationships and real partnerships. These partnerships go on a deeper level, not only focusing on the processes or producing the end product for the customer. They go more in-depth and broader throughout both organizations into sharing data in real-time, sharing knowledge, supporting each other to be stronger in the market. 

Both sides invest in the future, but there are other ways to invest in the partnership. The more significant part in the partnership can also do an investment round into the smaller counterpart. These investments can secure the future of both organizations. Investment can also be seen as a way to communicate transparency to the market at the same time.

Demand sensing is one of the hot trends in the manufacturing industry at the moment. Giving something that helps the suppliers to prepare and move faster could define the quality, speed of the delivery, and at the same time, can build a better customer experience.

Knowing that if they would get some insights about the next six to eighteen months of the pipeline, they could prepare their organization, hire more people, buy the materials, and make investments in different levels for it. The most significant influence of this transparency is the investments the supplier could do to be prepared, but also to invest in the future.

Transparency is the new black, and trust is the new big data

Transparency is defining the future of partnerships. Companies have started to think that there are fewer reasons not to share something. Before building every partnership with transparency, the counterpart needs to show that they can be a trusted partner on every level.

Trust is a fascinating thing. In the business context, individuals look at it on an individual level. They think of the people they operate with first and secondly the business as a whole. This creates a mixed truth for these individuals. They could argue in a meeting that they don’t trust the partner even if they only operate and experience the partnership on a person or a team level. Those who look at the partnership from the bigger picture, evaluate the partners on a data level, or have a responsibility towards the customer can give a truthful answer to the question.

Useless data, machine learning, and AI. Trust is the key!

Even if there is development on all levels of technology, still the partnerships are built on trust. The trust also will go to the technology levels. Today we ask that “Can we trust the counterpart on a business level?”, but in the future, we have another question to answer as well. The bigger question in organizations internally, externally, and in the partnerships ask that: “Can we trust that data enough, can we make a business decision based on it?”

Trust in insufficient data could kill companies. Building a business case on data that does not have any relationship with reality could have the worst consequences for the business. 

I believe that transparency comes with a significant burden of trust. The trust comes with the option to make decisions on the data in a way that your organization feels confident in making impactful decisions based on the data transparency gave to your organization.

Article

Deeper collaboration between manufacturing companies and their suppliers

The days where someone owned every piece of information is gone. I still can remember when Tesla gave their patents for anyone to be used to take the electric car industry forward. I believe the trend for trust is building to be the most influential topic in the 2020’s.

In manufacturing, the trust has been there but without transparency. Since the collaboration has been on a level where both sides share enough information to be confident that the other side would not use if to gain better position within the partnership or in the market.

From a close environment to transparency on all levels

I have come across the question so many times on my career: “Can I share this with the 3rd party?” The question is always phrased in a way that they think the answer is still negative. Why do they phrase the question so that the answer would be, in most cases, negative. Would the answer change if they would ask it the other way or even state that I will share it if you don’t have a good reason to deny me not to do it.

Transparency is a wicked thing in business. Some individuals think it’s about sharing confidential information, and some think it’s obvious to be transparent and honest in business relationships. Wheres the value if it’s not to be used for developing the business or the partnerships? Today most of the value chains are more than just one manufacturing company.

Deep collaboration, demand sensing, and joint ventures

The time when collaboration between two companies meant buying and selling services rather than partnership is gone. It was still called partnership, but the focus was only to find ways both sides could benefit from each other on a money level. Money was defining the partnership and dictated the way both sides made decisions.

Today more and more companies are building relationships and real partnerships. These partnerships go on a deeper level, not only focusing on the processes or producing the end product for the customer. They go more in-depth and broader throughout both organizations into sharing data in real-time, sharing knowledge, supporting each other to be stronger in the market. 

Investments in a new level

Both sides invest in the future, but there are other ways to invest in the partnership. The more significant part in the partnership can also do an investment round into the smaller counterpart. These investments can secure the future for both organizations. Investment can also be seen as a way to communicate transparency to the market at the same time.

Sharing insights from sales to suppliers 

Demand sensing is one of the hot trends in the manufacturing industry at the moment. Giving something that helps the suppliers to prepare and move faster could define the quality, speed of the delivery, and at the same time, can build a better customer experience.

Knowing that if they would get some insights about the next six to eighteen months of the pipeline, they could prepare their organization, hire more people, buy the materials, and make investments in different levels for it. The most significant influence of this transparency is the investments the supplier could do to be prepared, but also to invest in the future.

Transparency is the new black, and trust is the new big data

Transparency is defining the future of partnerships. Companies have started to think that there are fewer reasons not to share something. Before building every partnership with transparency, the counterpart needs to show that they can be a trusted partner on every level.

Trust is a fascinating thing. In the business context, individuals look at it on an individual level. They think of the people they operate with first and secondly the business as a whole. This creates a mixed truth for these individuals. They could argue in a meeting that they don’t trust the partner even if they only operate and experience the partnership on a person or a team level. Those who look at the partnership from the bigger picture, evaluate the partners on a data level, or have a responsibility towards the customer can give a truthful answer to the question.

Useless data, machine learning, and AI. Trust is the key!

Even if there is development on all levels of technology, still the partnerships are built with trust. The trust also will go to the technology levels. Today we ask that “Can we trust the counterpart on a business level?”, but in the future, no one cares about that anymore. The bigger question in organizations internally, externally, and in the partnerships ask that: “Is that data accurate (enough), can we make a business decision based on it?”. 

Trust in insufficient data could kill companies. Building a business case on data that does not have any relationship with reality could have the worst consequences to the business. 

I believe that transparency comes with a significant burden of trust. The trust comes with the option to make decisions on the data in a way that your organization feels confident in making impactful decisions based on the data transparency gave to your organization.

Article

Circular economy, new aspect to managing supply chains?

The world gets more complex each year that passes, and we need strong leadership in the supply chains more than ever. But what if we bring yet another new aspect to the picture, circular economy? Circular economy is raising its importance which is excellent news for companies, who can bring vital value in the end-to-end circular economy supply chain. I would like to highlight a few ideas on how to enhance the green supply chain in an economical way that is good for the environment, too.

The famous 3R’s (reduce, reuse, recycle) is gaining space also in developing countries, which is great. Companies operating in a circular economy should boost end-to-end view and support the 3R’s 100 %. It’s important to see the bigger picture and challenge that the 4th R could become revalorization, which could be turning the end waste to for example energy rather than landfill it. Waste-to-energy as renewable energy and future baseload is still rather new concept in many parts of the world. The concept is well proven in Nordic countries but still quite unknown for example in Africa. Someone needs to be the first. Should we add another R to the formula?

Circular economy integrates many stakeholders directly and indirectly. How to manage the data flows? Information technology platforms can bring much-needed transparency to the supply chain and among the supply chain players. Key role and responsibility remain with the product owners who control the chain of information. Information must flow and there must be trust among the parties. But what brings the trust? I argue that trust is built with a strong vision from the end users who empower the whole chain of stakeholders to follow the same goals, together. Information management in the supply chains is maybe more vital than ever but does it really bring value? I see yes, it does, if integrated to the management systems properly and used as a support function to run supply chains effectively.

Big corporations have finally started to place effort on green values and raised the importance of circular economy throughout the whole supply chain. There are already good examples by the Tech giants from this kind of initiatives. Sustainability in the supply chain is a KPI that is still rather difficult to monitor but which has a direct positive impact on the environment when done right. Such an index could act as one enabler for suppliers to get selected to become part of the supply chain? Would that be valued by the end Customers and does that increase the cost? I think not, just look at how the renewables such wind and solar are doing now cost wise against traditional energy forms. I believe that people can find a solution to any problem when given the right reason close enough to their values.

Want to know more? Comment the post or contact me directly. I’m happy to tell you more about turning your waste into wellbeing with WOIMA Circular Economy Solutions.

Article

How to cope with contradictory goals of buying cheap and building trust?

Current purchasing professionals face contradictory goals. While the ordinary administrative and transaction management goals of purchasing highlighting price, quality, and effectiveness remain valid, purchasers face additional goals of relationship management to build long-term close relationships with suppliers. Purchasers’ boundary-spanning roles are thus multifaceted in that they are responsible for establishing and maintaining supplier relationships, while they also need to respond to the needs of multiple parties within their organization.

Customer – supplier relationships are not faceless organization-level entities but inherently interpersonal arenas of interaction, making the role and action of individual purchasers and other supply management professionals important for network management. Networks and inter-organizational relationships differ from organizations in two ways. First, they do not have an owner and second, they cannot be managed on the basis of hierarchical position held by managers. In other words, purchasers do not have any formal authority over suppliers in the network. That is why they must use other means to influence network members.

Purchasers can use three different tactics when trying to influence suppliers.  They can take an authoritarian position which manifests itself in their communication as in utterances highlighting for example own firms position as a customer or own firms better knowhow on how things should be done. They can also take the role of buyer highlighting the threat of competition and in that way refer to competition or market situation in order to strengthen the influence of own message. Suppliers, for example, blame customers for using the ‘China card’ in negotiations or other interaction episodes, by which they refer to the customers’ urge to highlight the ‘another alternative’ from a low cost country. Business partners can also be influenced by using the relational tone in interaction. Relational interaction is based on trust, commitment and unity between the parties and the win/win principle is often highlighted as the basis for partnerships. The above authoritarian, competitive and relational tactics available for purchasers reflect general organizational ideologies of relationship governance.

To influence suppliers, purchasers can thus use rhetorical means when communicating with them. Rhetoric concerns the persuasion-oriented part of discourse and it is to bring about attitudinal or behavioral change. Referring to Aristotelian rhetoric, broadly defined as the art of persuasion, a task oriented goal in a conversation between a buyer and a seller can be boosted by emotional or other utterances in the discussion. A purchaser’s persuasion tactics rely on psychological influence to convince or compel a partner firm’s representative to assent to her position and act accordingly. For its persuasion-oriented part, boundary spanning behavior can be colored by the above mentioned organizational ideologies. Consider the following three examples of communication where a purchaser discusses supplier’s quality problems.

  1. “You have recently had serious quality problems in your deliveries. This low level of quality is hard to tolerate because there are plenty of qualified suppliers in the market and we seriously consider opening negotiations with one of those.”
  2. “You have recently had serious quality problems in your deliveries. As a customer we cannot tolerate this low level of performance from any supplier and expect you to tackle this issue as soon as possible.”
  3. “You have recently had serious quality problems in your deliveries. Would it be possible to look at the problem together with our specialists?”

The task oriented issue in each of the examples deals with supplier’s quality problems, but the rhetoric by which the message is expressed varies. In the first example (a), the speaker uses competitive tone, in the second example (b) hierarchic tone and in the last one (c) relational tone. Boundary spanning behavior thus refers to a particular type of rhetoric, which indicates how an issue is communicated.

In a recent study, we developed a tool to measure purchasers’ communication style when interacting with suppliers. The aim was to measure the tendency (or orientation) of individual purchaser’s communication. A data consisting of 349 purchasing professionals were analyzed and we found four different types of purchasers in terms of their orientation to persuade suppliers: Comprehensive, authoritarian / competitive, relational and neutral. The purchasers having a comprehensive orientation tend to use each means of persuasion (authoritarian, competitive and relational). Their colleagues with authoritarian / competitive orientation mainly used quite harsh rhetoric by taking an authoritarian role as a professional buyer. Purchasers with a relational style mostly refrained from using competitive and authoritarian rhetoric and position, but strongly highlighted trust, fairness, unity and the importance of long business relationships. Purchasers with a neutral style did not color their messages with rhetorical means, but concentrated on issues as such. To conclude, certain purchasing professional can combine seemingly contradictory rhetorical ways to influence suppliers. A subsequent follow-up study of five typical respondents of each category also revealed that where the purchasers with a comprehensive orientation were sensitive on varying situations the other purchasers were more or less stuck in their basic style. Especially the purchasers with an authoritarian / competitive orientation tended to be very inflexible with their communicative style.

What is then, the best possible style for a purchaser from the customer firm’s perspective? As said, supply chain management is a special managerial task in that managerial power is not at the purchasing agents’ disposal owing to a lack of direct authoritarian power. For that reason, other means to influence supply chain members become important to coordinate, develop, and manage relationships. From that point of view, a neutral purchaser orientation is probably not a style firms expect their purchasers to adopt. A relational purchaser orientation sounds good from the point of view of social acceptability. It is also currently connected to professional supply chain management as a boundary-spanning activity to build trust and long-term relationships. However, knowing the realm of practice with changing and critical situations requiring resolute managerial actions, a purely relational approach might be somewhat idealistic. The authoritarian / competitive orientation of purchasers as opposed to relational style, is something that do not fit very well to the era of networked business even if it may produce short-term wins. So, what is left is the comprehensive style with purchaser-specific sensitivity to varying situations and the capability to use a rich arsenal of persuasive tactics. This orientation and purchaser competence may offer a firm the best possible alternative to cope with partly contradictory supply chain management goals.

If supplier relationships are an important part of a firm’s supply chain strategy, then managerial consideration directed to boundary spanning behavior and issues alike becomes relevant. Boundary spanning behavior with various persuasion tactics offers important means to influence on suppliers. The point is deliberate definition of firm’s boundary spanning behavior tactics in a general level and particularly in different supplier categories where the effect of different persuasion tactics may vary. It may also be useful to fine-tune persuasion tactics even at relationship level, because firm’s and boundary spanning individuals differ from each other in so many ways.

 

Read more about network management:

Vesalainen, Valkokari & Hellström (eds.) (2017). Practices for network management. In search of collaborative advantage. Palgrave – MacMillan.