Third Annual Symposium on Supply Chain Management Toronto, September 2005 Trust Enabled™ Supply Networks Uncovering the trust-building secrets of highly collaborative supply chains. Alex Todd, President & CEO, Trust Enabling Strategies AlexTodd@TrustEnablement.com http://www.trustenablement.com/ 1
Food Replicator Similar to transporters, food replicators can synthesis food from raw organic material via matter/energy conversion. 2
Business on Demand “An enterprise whose business “An enterprise whose business processes -- -- integrated end integrated end- -to to- -end end processes across the company and with key across the company and with key partners, suppliers and customers -- -- partners, suppliers and customers can respond with speed to any can respond with speed to any customer demand, market customer demand, market opportunity or external threat.” - - IBM IBM opportunity or external threat.” 3
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Leaders Want Nimble Organizations Fluctuations in Fluctuations in Interest Rates Capital Markets How can my business respond on demand? Change in Demand Change in Supply Fluctuations in Oil Prices Change in Customer Change in Price Preferences 5
Speed to Seize New Opportunities "Trust equals speed…. Once people have stopped worrying about what the other guy's agenda is, you can make changes much more quickly” – David Berdish, Organizational Learning, Ford “…the key intervening variable in achieving organizational flexibility is the level of trust ….” – Lorenz, The Helen Kellogg Institute for International Studies (1990) “…distrust is the highest barrier to implementing advanced e- business applications, such as supply chain management and product design collaboration systems that link companies to their suppliers, customers and business partners.” – National Post (May 2002), based on survey by NerveWire. 6
“Of all the elements critical to managing supply chains, trust is one of the most commonly cited elements, yet one of the most difficult to measure.” - Handfield, R.B., and Bechtel, C. (2004) “Trust, power, dependence, and economics: can SCM research borrow paradigms?”, Int. J. Integrated Supply Chain Management , Vol. 1, No. 1, 2004. 7
Value Supply Chain Configuration Maturity High Trust Gap Moderate Co-opetitive Collaborative Coordinated Communicative None Agility Time 8
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Value of Trust for Procurement Seller Buyer ! ! Fewer invoice disputes Reduced purchasing effort ! ! Fewer returns Fewer invoice disputes ! ! Reduced logistic-related labour Better error handling ! ! Lower inventory requirements Fast inventory turnaround ! ! Higher "up-sell" opportunities Lower inventory levels ! ! Differentiate on quality and Improved A/P days ! depth vs. product Improved contract compliance ! Faster collection times 10
“Buyers tend to be reluctant players” Robert E. Speckman " Shared values " Common vision " Merits of closer ties " Sharing of key information " Supply chain champion " Seizing opportunities to exploit expertise/capability throughout the entire supply chain RISK MANAGEMENT " Belief that competitive success depends on the entire supply chain moving in unison 11
Trust Enablement vs. Risk Management Trust Enablement Risk Management " Trust-based # Control-based " Optimistic # Pessimistic " Offensive # Defensive " Active # Passive " Stakeholder-oriented # Organization-oriented " Bonus: Golden Rule compliant # Loss: Isolated self-interest 12
Trust = Acceptable Uncertainty 13
Trust the information, despite its source. 14
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eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 16
eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 1. Authoritative Sources ID Verify from Equifax $ Product Opinions & Grading $ Product Appraisals $ Privacy Policy $ TRUSTe seal $ 17
eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 2. Experiential Sources Feedback Forum $ Tradenable escrow $ Product authentication $ 1. Authoritative Sources ID Verify from Equifax $ Product Opinions & Grading $ Product Appraisals $ Privacy Policy $ TRUSTe seal $ 18
eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 2. Experiential Sources Feedback Forum $ Tradenable escrow $ Product authentication $ 1. Authoritative Sources ID Verify from Equifax $ Product Opinions & Grading $ Product Appraisals $ 3. Ability Privacy Policy $ Industry practices $ TRUSTe seal $ (SSL, etc.) 19
eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 2. Experiential Sources 4. Motivation Feedback Forum Policies (comprehensive) $ $ Tradenable escrow SafeHarbor investigations $ $ Product authentication Disallowed products $ $ SquareTrade dispute $ 1. Authoritative Sources resolution ID Verify from Equifax $ VeRO notice of IP $ Product Opinions & Grading infringement $ Product Appraisals $ 3. Ability Privacy Policy $ Industry practices $ TRUSTe seal $ (SSL, etc.) 20
eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 2. Experiential Sources 4. Motivation Feedback Forum Policies (comprehensive) $ $ Tradenable escrow SafeHarbor investigations $ $ Product authentication Disallowed products $ $ SquareTrade dispute $ 1. Authoritative Sources resolution ID Verify from Equifax $ VeRO notice of IP $ Product Opinions & Grading infringement $ Product Appraisals $ 3. Ability Privacy Policy $ Industry practices $ TRUSTe seal $ (SSL, etc.) 5. Trust Empowerment Identify reliable providers of $ feedback 21
eBay Builds Confidence Trust Establishing Services Trust Ensuring Services 2. Experiential Sources 4. Motivation Feedback Forum Policies (comprehensive) $ $ Tradenable escrow SafeHarbor investigations $ $ Product authentication Disallowed products $ $ SquareTrade dispute $ 1. Authoritative Sources resolution ID Verify from Equifax $ VeRO notice of IP $ Product Opinions & Grading infringement $ Product Appraisals $ 3. Ability Privacy Policy $ Industry practices $ TRUSTe seal $ (SSL, etc.) 5. Trust Empowerment 6. Risk Transfer Identify reliable providers of User Agreement $ $ feedback Fraud Protection Insurance $ PayPal Buyer Protection $ 22
Isn’t trust different for a supply chain? 23
Blazer Barn 24
Blazer Barn 25
Proctor & Gamble 26
Proctor & Gamble 27
Toyota 28
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Linux 30
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Thank you. Alex Todd +1 416.487.1497 AlexTodd@TrustEnablement.com http://www.TrustEnablement.com 33
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