Which of the following relationship activities is most impacted by a lack of trading partner trust?
- Collaboration
- Coordination
- Cooperation
- Communication
Answer(s): A
Explanation:
A lack of trust among trading partners often creates a condition where every transaction has to be scrutinized and verified, thereby increasing the transaction costs to an unacceptably high level. Productivity is lost and efficiency and effectiveness, cornerstones of supply chain goals, will be compromised. Creating value-added activities with such partners becomes almost impossible and the supply chain tools used to improve efficiency, effectiveness and productivity (such as vendor- managed inventory (VMI), cross-docking (CD), and collaborative forecasting, planning and replenishment (CFPR)) eventually become ineffective. Under the less than open-trust conditions, decision makers often spend their time mostly on analyzing their trading partner's credibility, reliability and trustworthiness, rather than optimizing their operations. Although there are studies focusing on the relationship between related variables and the level of trust, there is a lack of empirical studies that examine the relationship between trust and the ultimate facilitator of supply chain success, commitment. This study attempts to bridge the gap in supply chain management.