The role of trust in supply chain governance

Abstract

Purpose -The purpose of this paper is to provide and illustrate a framework for the role of governance mechanisms in information sharing among supply chain members. The importance of trust in governing interorganizational relationships is emphasized. Design/methodology/approach -Trust, bargaining power, and contract are three key constructs supporting the governance of information sharing and material flow coordination in supply chains. A conceptual framework showing how these governance mechanisms affect coordination and ultimately, supply chain performance is presented. Four types of trust -calculative, competence, integrity, and predictability -are thought to play an important role in determining the efficacy of information sharing. Three research questions are posed on the relationships among trust, bargaining power, contracts, and information sharing in supply chain coordination. These governance issues are shown to be key factors in the supply chain business model, as illustrated in a case study from the retail distribution industry in the USA where collaborative planning, forecasting and replenishment is used to exchange supply and demand forecasts. Findings -An example from the retail distribution industry shows that the three constructs of the governance framework are intertwined. Trust as a governance mechanism plays a crucial role in sharing information among business partners.Research limitations/implications -The proposed framework is illustrated with a single case. It will need to be tested empirically for supply chains across different industries. Originality/value -The paper presents a governance mechanism framework for supply chain information sharing. Knowledge of the role of governance mechanisms in information sharing coordination will help chain members to realign business relationships and contribute to improved overall operational performance of the chain.

A Classification of Supply Chain Problems

“…As such, the solutions recommended for these problems are methods for increasing trust, rather than eliminating security threats. Trust increases information flows and plays an important role in supply chain governance (Ghosh & Fedorowicz, 2008). As Dyer and Singh state, "governance plays a key role in the creation of relational rents because it influences transaction costs, as well as the willingness of alliance partners to engage in value-creation initiatives" (p 669, 1998).…”

An Analysis of the Automaker-Systemist Supplier Relationship in an Automotive Industrial Condominium

“…The different types of connection can influence the type of information, the mechanisms of performance control, and the forms of production management, among various other aspects. Several studies have found that more cooperative relations among companies in the chain lead to gains (GHOSH & FEDOROWICZ, 2008;SOOSAY, HYLAND & FERRER, 2008;HADAYA & CASSIVI, 2007). Supplier relations management is a central process in the model of Lambert et al (1998).…”

A Systematic Literature Review of Collaborative Planning Forecasting and Replenishment

“…Trust is the most cited enabler in the literature (e.g., Barratt and Oliveira, 2001, Larsen et al, 2003, Attaran and Attaran, 2007, Chang et al, 2007, Chen et al, 2007, Småros, 2007, Chang and Wang, 2008, Büyüközkan et al, 2009, Choi et al, 2010, Smith et al, 2010, Yuan et al, 2010, Büyüközkan and Vardaloğlu, 2012, Yao et al, 2013. Trust refers to the confidence between trading partners that no one of them will exploit vulnerabilities by one of them (Ghosh and Fedorowicz, 2008). It also refers to trading partners treating each other fairly and honestly (Attaran and Attaran, 2007).…”

“…Larsen et al (2003) quote that CPFR is more appropriate for price-driven, highly differentiated products operating a many to many relationship in the SC. Product characteristics are also viewed as enablers in CPFR such as: highly differentiated or branded products (Attaran, 2004, Attaran and Attaran, 2007, Danese, 2007; short product life cycles (Chen et al, 2007, Sari, 2008b, Yuan et al, 2010; high elasticity of demand related to product promotions (Danese, 2011); innovative products (Fliedner, 2003); high volume/high value products compensating for high implementation costs (Stank et al, 1999, Ghosh andFedorowicz, 2008).…”

“…While it is acknowledged that information and communication technology (ICT) enables information sharing (Ghosh and Fedorowicz, 2008), there is no consensus regarding the required level and complexity of ICT, which can vary from simple tools, such as a fax machine, to more advanced Internet-based solutions (Danese, 2006). VICS (2004) and Ramanathan (2014) contend that while ICT can make the process more scalable, it…”