The soft side of supply chain management: the importance of trust

Abstract

The growing need for collaboration between organisations to meet market demand in increasingly turbulent global and virtual business environments has focused attention on the formation of effective relationships between organisations. The increasing lack of formal governance arrangements covering relationships within many of these networks and alliances together with the increasing remoteness of interaction within the virtual environment has emphasised the essential nature of trust between members. Irrespective of the time and attention paid to the 'hard' side of managing these allinaces ie the financial and oeprational issues, success will be very difficult to achieve without significant attention being paid to the 'soft' side of alliance management represented by the development and management of effective relationships. Relationships are built on trust. This paper provides analysis of twelve trust factors, divided into goodwill and competence trust dimensions within the context of two Australian agribusiness supply chains. The two trust dimensions are analysed at overall, industry and sectoral level. Results of the analysis show that within the two supply chains on which the study was based expectations of organisations in relation to both goodwill and competence dimensions of trust were not being met.