Build Trust–Carefully–With Suppliers and Customers

The age-old issue of trust rears its head once again as the hosted supply chain model allows—and encourages—enterprises to let their suppliers and customers look behind their collective firewalls. According to Noha Tohamy, Forrester Research supply chain and pricing solutions analyst, most companies feel that multienterprise integration is the only way that they can improve their supply chains “but when the rubber meets the road, companies are very cautious about what information they will share with their trading partners, and certainly what, if any, type of integration they are willing to have directly between their and their partners’ systems.”

Ranga Jayaraman, CIO of Hitachi Global Storage Technologies, agrees that these issues must be smoothed out before the real benefits of supply chain integration can be realized. “The trust between companies has to be there,” Jayaraman says.

One way to decide how far to go with suppliers and customers is to analyze the nature of the partnership and make some hard decisions. Is it a small supplier that you can afford to lose?—in which case you might consider dropping it rather than getting stuck dealing with its manual entry work—or is it your most important supplier?—in which case you may do everything short of paying its monthly bills to get it to use your hosted service. Is the supplier’s facility totally dedicated to your company, or does it supply other customers from which it draws higher margins on its products?—in which case it may be more resistant to your blandishments.

For example, Imperial Sugar VP and CIO George Muller is trying to help one of Imperial’s biggest customers get up and running on some basic EDI transactions (as well as with its SAP rollout), which will lessen manual work for both companies and lay the foundation for an integrated supply chain with Imperial in the future. Because this is such an important customer for Imperial, Muller says he’s putting in the hours and providing his expertise for his customer’s benefit, doing everything he can to make it work. If the customer were not so important, Muller might not be extending himself to that extent.