cost oF Mistrust
Mike Robinson, director of Berkshire Consultancy, is a specialist in business process improvement
and supplier management. In this article, he argues that businesses must resist the temptation to let
today’s economic conditions create an environment of mistrust within the supply chain.
S upplier relationships operate at their greatest level of
efficiency when there is mutual trust between the service
provider and the customer, but this confidence can be
easily undermined. The tough economic conditions in which we find
ourselves have created an extremely tense business environment
and the pressure to demonstrate efficiency and a positive return
on investment has never been greater. However, this pressure can
manifest itself as an anxiety and nervousness that may be detrimental
to the supplier contract, serving only to exacerbate existing problems.
In a deepening recession, it is to be expected that customers will
find themselves scrutinizing the value of contracts; but, as the pressure
mounts, there may be a tendency for customers to slip into behaviours
that can prove to be counterproductive. There is an understandable
temptation to start ‘over’ monitoring the supplier’s progress to ensure
that milestones are being met or to apply pressure to get improved
services at lower costs. This can lead the supplier to feel that their work
is being impeded as a result of reporting demands and being asked to
justify their actions to an unnecessary extent. In addition, customers
may be tempted to resort to an “I’m the boss” mentality and even use
the knowledge that times are tight to ‘squeeze’ or even bully suppliers.
This will lead to a lack of goodwill and, potentially, a breakdown in the
relationship, with reduced trust and honesty between parties. The
negative impact of this cannot be understated!
Trust is vital within the supplier relationship, as is the confidence
to manage with a ligh