Trust and information sharingThe negotiation exerciseWhy do these behaviors exist ?Key pointSlide 5Inter vs. Intra organizational trustBuilding trustSome other elements of trustMeasurementStructure- is also linked to trustProcesses and trustNeed to build a culture of trustFrom trust to information sharingInformation and information systemsSome ways to share / leverage informationWhy the bar code scanner matersSlide 17State of the Industry todaySlide 19Slide 20Slide 21Slide 22Slide 23End result of project - theoryEnd result - realityBuilding on our exampleInformation managementInformation in a supply chainFor example – demand forecastsWhy is getting this data hard?For example– new product / service developmentIncreased information sharingYou should be aware of:What is happening right now?E-commerce – is this a revolution?What is different today continuedSo what has changed?Other changesThe “revolution” from a SCM perspectiveLets start with the most hyped stuffCan new technology do more than just lower prices?Jet BlueLower costsCompetitive advantageLong term CA continuedTo gain a CA from information technologySlide 47Slide 48Slide 49Slide 50Examples of leveraging new technologyLets step back - a supplier perspectiveEdison’s CurseE- commerce equivalentsElectricity to e-commerceHamel’s key pointConclusionsTrust and information sharing•The key to optimizing a supply chain is information sharing•The technology to do this exits –reading 2•Most supply chains do not do a good job leveraging information–No trust•The exercise we did last class should give you a good feel for why trust is so hard to build and so easy to destroyThe negotiation exerciseWhy do these behaviors exist ?•Measures–Car salespeople (and other salespeople) offer the most obvious example•We have always behaved this way–Micro-soft article–Once this type of behavior starts it is really hard to stop•If you became CEO treating employees, suppliers and customers like crap what will you assume?•Google – did they really set out to piss off other members of the chain? –“do no evil”Key point•Before we can start to share information there has to be trust between the various links in the supply chain.•Almost everything we will talk about this term is predicated on being able to share information openly with the appropriate members of the chain. Trust is then a key foundation of SCM.Trust•What does it mean?•Main types of trust we are concerned with–Trust that information is truthful–Trust that other party is being open and honest•Can you “tell the truth” and still not be open and honest? –Trust that other party has all supply chain members’ interests in mind as opposed to just their own interests–Microsoft–Car salesperson –In your exercise was there a super-ordinate goal?Inter vs. Intra organizational trust•I am mainly looking at trust across chain members. They may be within the same company but they are distinct entities.•Hopefully you know how hard it is to build trust even within our own boundaries–What does that imply for trust between different companies?Building trust•Some rules of thumb from Handfield and Nichols (1999)• Be reliable – follow through on your commitments and act in a predictable way–Over time this is one of the best ways to build / destroy trust•Assign competent people to the interface –technical knowledge•Assign competent people to the interface –people skills•Both sides need to be somewhat vulnerable–This is a key and often overlooked point •Be loyal – supply chain relationships are often likened to marriagesSome other elements of trust•Moving to SCM is change- and most people fear change–If you fear something you are not going to trust it’s proponents –The people who profit from the existing systems are not going to want to change for obvious reasons•Microsoft –yesterday and today •Jostens•Like any other change moving to SCM needs to be top downMeasurement•“Tell me how I am measured and I will tell you what I will do”–Is the car salesperson acting rationally?–Were you (if you value free food) acting rationally?–What my pay is tied to–“your” focus on grades not what you learn•Change does not occur if measurement and rewards do not change–Saturn dealerships – totally different pay structure to create a totally different car buying culture–Dogs and SkunksStructure- is also linked to trust•Within an organization or across a supply chain you generally do not want to create conflict–Many structures create unneeded competition for resources or duplicated effort•Why both Jostens and Dana Engine Controls (in Independence KS) have national purchasing contracts–Creates a much tighter relationship with suppliers •I did not go with my wife to functions in the English department when at KSU. The business school was considered the enemy by the English faculty (even though we supplied them with many customers –and cash). And the business school did not leverage the English department’s capabilities very well either.Processes and trust•Process tend to be housed in an individual function or company. Yet in reality almost all functions are linked to other functions and or companies. •Therefore it is suggested that managing as many processes cross functionally as is possible is a way to build trust.–In many companies (BAE systems) they have material management people who are responsible for the flow of materials from the moment it is loaded on a truck at the supplier’s until it leaves the plant. The material manager then interfaces with the supplier, the purchasing people, the warehouse people, the manufacturing people and the shipping people. •MC Ink / Tow vehicles–Chrysler’s design process was one of the key reasons Mercedes bought themNeed to build a culture of trust•Different members of the supply chain need to have:–A reason to work together–Measures that encourage them to work together•If I had told you ahead of time that my measure of success for the negotiation exercise was going to be the combined scores the first thing you would have done was share information–Structures that encourage cross functional process•Combined this will build a culture where various chain members can trust each other and share information –so that they work toward supply chain goals not individual goalsFrom trust to information sharing•See the