On Management

Dec. 21, 2004
Plenty of technology, but a shortage of trust

I sometimes wonder why superb supply-chain management is not more common. Certainly, it's not because of a shortage of technical know-how. Today's software and hardware make it possible to manage the supply chain better than ever before. The technology is awesome. Software lets you view the supply chain backward and forward -- and new improved versions seem to appear as rapidly as wildflowers after a spring rain. So why aren't more companies managing their supply chains better? Concerns about Y2K may have slowed systems development, but technology isn't the problem. Something else is standing in the way. The weakest link in the most advanced supply chains is not technology, not software or hardware, but people -- or rather the level of trust among people who must cooperate and collaborate to get results. Perhaps the term "supply chain" holds an additional clue. A chain is only as strong as its weakest link and, while most chains are linear in nature, the supply chain assuredly is nonlinear. It is actually a network, not a chain. In a network, the transactions occur between the links and the nodes. The links are the physical moves of material or information. These moves rely on people at the nodes who control the flow of both goods and information. It is the people interaction that produces the physical results in the supply network. Usually, the problems inhibiting performance at the nodes can be traced to a lack of trust between people that, ultimately, reduces the performance of the entire supply network. The lack of trust often stems from past problems. It also may exist because of simple fear or insecurity -- perhaps because of conditions within the company or industry. Often it is caused by a lack of leadership and poor communication between groups of people. Sometimes the mistrust is traceable to untrustworthy leadership. Lack of trust can exist both within a company (or its divisions or departments) and between companies. There is not much difference in the effects. In either case, they are damaging to efforts to improve the management of a supply chain. However, there is a considerable difference between dealing with a lack of trust within a given company and improving the relationships between companies. The style of the leaders in each of the companies -- and how they behave when things go wrong -- dramatically influences the trust level in their respective organizations. Trust is damaged when placing blame for failures becomes more important than finding the root causes and resolving them. Unfortunately, unless there is communication across the so-called "boundaries" -- both intercompany and intracompany -- collaboration is hindered or blocked entirely. Without collaboration, the collective wisdom of the businesses cannot be harnessed. People must work together to improve those parts of the supply network that they influence. Collaboration is totally a "people thing." It is people working together and collectively utilizing their respective strengths and knowledge. Collaboration requires extensive sharing. Since all of the people involved view some part of their positional power as being linked to the knowledge and information they control, sharing represents a risk. "What's in it for me?" they wonder. "And what risk do I take for that reward?" Overcoming the tendency toward risk avoidance requires trust -- trust that others will use the shared knowledge and information for the good of all parties, and not for some self-serving purpose such as placing blame. Companies often cause their own problems by establishing an untrusting internal environment. And feelings of mistrust can spread far beyond the boundaries of the company into the other members of its supply network. Lack of trust then becomes epidemic. Technology and know-how are only as effective as the willingness of people to work together. And trust is the essential ingredient. John Mariotti, a former manufacturing CEO, is president of The Enterprise Group (www.shape-shifters.com). He lives in Knoxville. His e-mail address is [email protected].

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