A Trust Gap Exists Between Supply Chain Executives and Their Customers

There is a disconnect between the trust executives have in their supply chains and what their customers believe, with leading suppliers overestimating customer trust by as much as 25%. The average gap is 20%, according to research from Deloitte Insights survey report titled “Is your supply chain trustworthy?”

Of more than 1,000 executives from large global organizations 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.

The survey also revealed that 44% of supply chain leaders expect to experience a supply chain shock in the next 24 months due to challenges such as price volatility, inflation, resource shortages, and geopolitical instability.

“The supply chain trust gap is far bigger than our responding executives seem to realize, suggesting there are blind spots in key areas their customers care about,” James Cascone, a Deloitte Risk & Financial Advisory partner and sustainability, climate and equity leader with a focus on supply chains, Deloitte & Touche LLP, said in a statement. “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.”

Cascone told Supply Chain Management Review that the disconnect may stem from specific KPIs or other metrics that the supply chain organization measures and what the customer may view as important.

“Many customers want more transparency in their supply chain … and suppliers may believe they are providing that transparency to their customers, but what we are finding is that customers are looking for more transparency into the supply chain,” he says. “Some customers don’t think that’s sufficient.”

Leading suppliers prioritize trust indicators like reliability and predictability of their supply chains and were 2.5X more likely to have achieved 15% or higher annual growth rate in the last year as a result. They were also 1.6X more likely to say their organizations are resilient against external shocks or crises.

A more detailed look at the survey’s findings finds executives and customers are quite a bit apart on a number of trust and reliability issues. 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%).

When it comes to supply chain shocks, price volatility (46%), inflation (44%), labor shortages (42%), materials shortages (41%) and geopolitical instability (32%) were the primary concerns. North American executives were more likely to cite financial market instability and inflation as their primary concerns, compared to Asia/Pacific and Europe/Middle East/Africa leaders, where price volatility is their top concern.

When asked to assess their organizations as “leading organizations,” the executives that did so 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 organizations are resilient against external shocks or crises (34% versus 12% for non-leading suppliers).

Cascone says that about 41% of respondents identified themselves as leading organizations, but more are interested in improving. For instance, he notes that some organizations are adding chief trust officers as they seek to improve trust with their partners. There is also more collaboration taking place, especially between departments within supply chain organizations such as procurement and supply chain/logistics as companies look to break down silos.

Cascone adds that while there is a significant gap in trust between supply chain companies and their customers, it is no insurmountable. Deloitte measures 19 different domains to monitor trust, but Cascone says it comes down to a single question: “Why is there a lack of trust?”

“This is an example of where customers and suppliers may have certain expectations, they may not be communicated well and they may not be aligned in their [organizations] because these are global organizations there are going to be disconnects,” he says. “There is definitely an increasing focus on improving trust…we are seeing some organizations added a chief trust officer. We are seeing more executive level roles…and more emphasis on handling trust because companies are recognizing the importance.”

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