Executives Overestimate Customer Trust in Supply Chains
A recent Deloitte Insights survey report "Is your supply chain trustworthy?" has unveiled that supply chain executives might be overconfident about how much stakeholders trust their supply chain abilities and intentions.
Findings suggest a significant disparity in perception: 89% of executives from over 1,000 large global organisations, who recognise themselves as leading suppliers, are confident that their customers trust their supply chain operations. However, only 68% of the 500 surveyed customers share the same sentiment.
On deeper examination of these perceptions, a clear trust gap emerges:
Reliability in Supply Chains: While 90% of leading suppliers are confident in their reliability, only 65% of customers share this sentiment, revealing a 25% disparity.
Humanity: Focusing on the just and respectful treatment of workers, customers, and partners, there's a notable 24% gap. Although 91% of leading suppliers believe in their humane practices, only 67% of customers agree.
Transparency: A trust gap is evident here too. While 85% of leading suppliers vouch for their transparency, just 63% of customers align with this view, resulting in a 22% gap.
Capability: Concerning the ability to maintain operational consistency, 91% of leading suppliers express confidence. In contrast, only 75% of customers resonate with this belief, marking a 16% variance.
Deloitte Risk & Financial Advisory Partner and Sustainability, Climate and Equity Leader, James Cascone, emphasises that this trust gap is more significant than executives might realise. This disconnect is especially significant given that many challenges that arose during the COVID-19 pandemic era remain unresolved, even with the best of efforts.
"Unfortunately, such wide gaps in trust indicators like reliability and transparency against pre-pandemic expectations stand to worsen as new supply chain risks emerge," he warned.
Deloitte’s research also revealed that 44% of all supply chain executives anticipate a supply chain disruption in the upcoming two years, with threats like price volatility, inflation, resource shortages, and geopolitical instability looming. Regionally, North American executives are more anxious about financial market instability and inflation, whereas their counterparts in Asia/Pacific and Europe/Middle East/Africa are more concerned about price volatility.
Michael Bondar from Deloitte Risk & Financial Advisory urges supply chain leaders to bridge this gap, especially in such uncertain times. He acknowledges that leading organisations are taking action to enhance their supply chain's reliability and predictability, emphasising strategies such as developing a digital thread and investing in other advanced technical capabilities.
Interestingly, executives from leading supplier organisations consistently showcased a higher adoption of advanced tools and reported growth. They were almost four times as inclined to utilise predictive analytics for forecasting and to have a fully deployed digital thread. Furthermore, a significant number reported achieving an annual growth rate of 15% or higher and felt that their organisations were resilient to external shocks.
"An intentional focus on building supply chain trust can bring about improvements that go beyond just trust," said Michael.
Terence FOO of Deloitte Southeast Asia reinforced the importance of trust, especially in a volatile market landscape. "To foster stakeholder trust, executives must prioritise supply chain transparency and visibility, particularly concerning ESG reporting. Elevating humanity, too, can serve as a differentiator in talent acquisition and delivering customer value," he advised.
For more information, access Deloitte’s Insights survey report "Is your supply chain trustworthy?" here.
