However, finding the right suppliers to meet a company’s needs isn’t always easy. According to the recently released results of a Deloitte survey, there’s an average 20% trust gap between leading suppliers and their customers.
“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,” Deloitte said.
“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,” 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.”
Here, we’ll dig into the report and discuss how one company — Trust Your Supplier — is working to reduce onboarding headaches and bridge the supplier-trust gap in the process.
“Is your supply chain trustworthy?”
The new Deloitte Insights survey report, “Is your supply chain trustworthy?”, found the perception-of-trust gap between supplier executives and their customers to be most significant in four supply chain areas:
“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 organizations working to identify and prioritize 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.”
In a deeper dive of survey findings, Deloitte analysts underscored the importance of trusting relationships to optimize supply chain performance and described several key factors that can help earn and maintain trust.
“In our study, among different enhancements that are adding ‘significant value’ to an organization’s financial performance, the second most cited were enhancements that improved trust with customers,” they wrote.
However, the analysts also pointed out a mismatch between what organizational leaders say about the importance of trust and efforts to boost it.
“A recent poll suggests only 14% of executives have a way to track stakeholder trust across the organization, and 63% of board members admit that they either do not discuss trust or have no fixed cadence to discuss trust,” they said.
In addition to a discussion about the four significant supply chain areas previously mentioned, the analysts listed several actions that can help to enhance stakeholder trust:
Invest in technology to foster reliability: “Leading suppliers are investing in actions that help create a more reliable—and predictable—supply chain. This is especially true in the realms of technology and intelligence. …”
Make visibility into sustainability a priority: “Transparency is foundational to trust and, by close extension, performance. Perhaps for this reason, we see the leaders putting an additional emphasis on supply chain visibility—particularly in regard to scope or greenhouse gas emissions. …”
Demonstrate humanity to create a competitive differentiator: “While reliability and transparency are critical trust factors, humanity is an important factor that can create a competitive advantage in terms of both talent acquisition and customer value. …”
Using blockchain to build trust
Although not directly related to Deloitte’s survey findings, one company has deployed a technology platform to help bridge the supplier-trust gap — while also addressing the typically cumbersome supplier onboarding process.
In a recent article for Harvard Business Review (HBR), Kate Vitasek and Alan Amling describe how Trust Your Supplier, a “new blockchain-based platform that is open to everyone” can help streamline this critical process.
Defining supplier onboarding as the “process of collecting the information and data required to set up an organization as an approved supplier,” Vitasek and Amling note that doing so is an essential but dreaded process which can take up to six months for some large organizations.
“Whether 30 days or six months, the pain and delay stem from manual processes that buying organizations use to vet supplier data and documentation such as ISO certifications, bank account information, tax documents, and certificates of insurance,” they write. “While frustrating, the work is foundational to ensuring new suppliers comply with relevant laws, regulations, and corporate standards.”
Although several companies offer digital solutions for this process — which is an improvement over manual tedium — they note that suppliers are still required to repeat the process with each new customer.
Enter Trust Your Supplier, which they refer to as a “potentially better solution: A more holistic supply chain platform approach that helps streamline work across a supply chain ecosystem of trading partners.”
Both faculty members at the University of Tennessee, Vitasek and Amling say their research related to “highly collaborative business partnerships” included the study of a “creative strategic alliance between IBM and Chainyard, a digital transformation company that focuses on blockchain solutions.”
“The strategic partnership caught our eye because the parties were teaming up to develop an industry- and company-agnostic platform solution to address supplier onboarding, compliance, and risk-management issues plaguing virtually all companies,” they write. “The result of the partnership: A patent jointly held by both Chainyard and IBM and the formal launch of Trust Your Supplier (TYS), a blockchain network solution.”
A blockchain refresher
Before we head into further detail about Trust Your Supplier, here’s a quick blockchain refresher from a post we published last year about how this technology is making a difference in the supply chain.
IBM defines blockchain as “a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.” The firm notes that assets can be tangible or intangible and that “virtually anything” can be tracked on a blockchain network, which helps to reduce both risks and costs for those involved.
According to IBM, blockchain is important to business because it “provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.” This shared, “single view of the truth” provides end-to-end visibility of each transaction, which enables a variety of benefits—such as increased trust, more efficiencies, and the potential for new opportunities.
IBM describes the key elements of a blockchain as:
Distributed ledger technology—which gives all participants access to a shared ledger in which transactions are only recorded once.
Immutable records—meaning that transactions cannot be changed once they’ve been recorded in the shared ledger. If an error needs corrected, an additional transaction must be added to reverse the error.
Smart contracts—which are a set of rules stored on the blockchain that are automatically executed to help speed transactions.
Describing how blockchain works, IBM says individual transactions are recorded as a “block” of data that contains any type of information needed. Each block is then connected to the blocks before and after it, which creates a chain of data that provides visibility into each transaction so network members can view the exact time and sequence of transactions.
Since the blocks are linked securely to one another, there’s no ability to alter the sequence of the existing blocks. Additionally, “each additional block strengthens the verification of the previous block and hence the entire blockchain. This renders the blockchain tamper-evident, delivering the key strength of immutability.”
Trust Your Supplier
Launched in August 2019, Trust Your Supplier (TYS) was described in the initial announcement as a “new blockchain network designed to improve supplier qualification, validation, onboarding and life cycle information management.”
“Traditional methods of managing suppliers often involve cumbersome manual processes, which make it difficult to verify identities and track documents like ISO certifications, bank account information, tax certifications, and certificates of insurance throughout the lifecycle of a supplier,” the press release said. “By using a decentralized approach and an immutable audit trail built on blockchain, Trust Your Supplier is designed to eliminate manual time-consuming processes and help reduce the risk of fraud and errors, ultimately creating frictionless connectivity across supply chains.”
On its website, TYS says that within its commitment to create “trust and transparency in supplier management,” its platform “simplifies and accelerates supplier onboarding, validation, and life cycle information management for buyers and suppliers, providing a trusted, secure, and immutable record of supplier information.”
The offering is touted as a win-win for both buyers and suppliers — providing a streamlined onboarding process that improves transparency and builds trust.
This TYS “Cycle Time Reduction Case Study” demonstrates how that win-win is achieved.