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How to Repair Lost Trust in Supplier Relationships

Jonathan Webb | Forbes

Posted: 12/13/17

How to Repair Lost Trust in Supplier Relationships

Trust is key for all commercial relationships. Although losing supplier trust can be a blow, it can be recovered with time and buyer repair work.

Trust is central for all suppliers. Indeed, for strategic relationships, it is critical. Here, trust principally relates to the supplier trust in the buyer.

Supplier relationship management is difficult to run. Collaboration projects are harder still to get right. Both are impossible without supplier trust.

Trust from the supplier can unlock a range of benefits. It decreases transaction costs, enhances the possibility for continuous improvement and heightens the prospects for innovation. Suppliers fear losing intellectual property in business relationships, and winning their trust can overcome these anxieties.

Here are some tips to repair lost supplier trust.

1. Understand The Source Of Mistrust

Breaking trust is not a simple matter of contractual under-performance. In a close supplier relationship, there are layers of assumptions, expectations and unspoken rules. Betraying trust can often transgress these tacit assumptions about the nature of the relationship. It is important to spend some time with the supplier team to understand their perceptions of the partnership and the extent of the transgression.

Remember, trust is a factor between people and not companies. Understanding the human aspects of the event which ruptured the trust will make the plan going forward more precise.

2. Acknowledge The Source Of Mistrust

If an organization is seeking to repair trust, this implies that there has been an event or some variable factor that has undermined the strength of the relationship. This can be an example where one company "betrayed" the other. In one case that I discussed with a buyer, a supplier had bid for an innovative project and received a verbal confirmation from a buyer. Subsequently, a new supplier, with whom the buyer had a somewhat ephemeral relationship, entered with its own superior offer. The buyer elected to remain with original offer. It did so because it felt that to switch to a new partner after its word had been given would cause irreparable damage to the relationship.

Retaining the resolve to avoid such actions is not always easy or possible. Where such a decision has been made, it must be clearly communicated. Where a "wrong" has been perceived, the buyer must recognize the supplier’s story. Where necessary, buyers should feel confident in apologizing, especially where they want to deepen the relationship.

It is not always necessary to show conciliation. Often, there will be undeniable commercial factors that made a decision almost inevitable. It is important, nevertheless, that the perceptions as well as the facts are clearly communicated.

3. Invest In The Future Of The Relationship

An interesting aspect of trust from suppliers is its dynamism. Those in the business world often talk in dramatic, even permanent terms when talking of trust. I often hear executives say things like, “once we have lost their trust, that’s it,” or “once it’s known in the market that we’re not trustworthy, it’s finished for us.” Undoubtedly, trust is an important component in a company’s market reputation, but it is not an absolute. In most business relationships, the future is more important than the past. If a supplier feels as though the partnership has genuine prospects, then they will commit.

The most important indication of a future plan is clear investment. Suppliers must see that the buyer is committed to the relationship and that they are putting serious resources into play. This can be best demonstrated through technical assistance offered or other supplier development arrangements where the vendor can quantify the benefits that will flow towards them.

4. Create A Transparent Plan

Lastly, the company needs to build a credible plan in partnership with the supplier. The supplier will be interested in learning what’s different this time. It will also expect there to be clear set of metrics which makes performance transparent and installs clear lines of accountability between the two parties. The supplier will also be interested in learning the criteria for re-selection.

 

This article was written by Jonathan Webb from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

 

 

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