The Art of Establishing Trust

Everyone knows communication is essential, but what is more important than communicating? What is the one thing that, once is gone, can rarely be restored ever again? That, my friends, is trust. On week eight (8) of my Certified Sourcing Professional (CSP) Program, I was introduced to the What’s In It For We mindset. The WIIFWe attitude represents a collaborative ideology, whereas all parties in a negotiation share risk and benefit. As SIG University states, it is a “there’s enough for all” mindset.

 

Trust has benefits in a sourcing environment. It simplifies the processes of procuring goods/services, improves overall efficiency, engagement, and productivity, and leads to increased profit. Professor John Henke, who spent the last decade studying the automotive industry, stated in week 8’s learning module that Chrysler alone lost about 24 billion dollars of profit from 2000 to 2014 due to a lack of trust within its corporation.

 

He links supplier trust to profitability, and I agree. Professor Henke’s study shows that belief can affect a firm’s bottom line, and we, as sourcing professionals, must continue to build and maintain trusting supplier working relations. Doing this can maximize supplier-provided benefits and drive meaningful and substantial supplier price concessions.

 

I also learned in this lesson that it is impossible to force others to be trustworthy. We can only control how we act – to affect their trustworthiness. We must be responsible for our communication and actions. Shifting to a WIIFWe mindset will perform in the best interest of both parties. Another significant factor is leaving money on the table – both parties have to win. Leaving money on the table promotes trust. The buyer shows confidence by understanding that the supplier needs to be profitable, and the supplier offers faith by not abusing market conditions and making too much profit.

 

Oliver Williamson states, “Always leaving money on the table can thus be interpreted as a signal of constructive intent to work cooperatively.” Leaving money on the table also shows a commitment to a long-term relationship because both parties refuse to act for short-term gain and are being fair. The question now is, how do I apply what I learned in this lesson about trust to my current role as a sourcing co-op analyst.

 

First, I can start by being self-aware, making sure I am practicing transparency, and working to create that trust-promoting environment. Then I would educate those around me on the benefits of a WIIFWe mentality on our bottom line, effectiveness as sourcing professionals, and how it can enhance our future supplier working relationships. We can maintain suitable, honest suppliers for more prolonged, maximize the benefits for both parties, and we can close deals quicker. 

 

I also plan on practicing a win, win mindset by leaving money on the table and acknowledging that both buyer and supplier have to benefit from the engagement. I’ll also keep in mind to create a repetitive relationship with each supplier to create value. There is a five-step “Getting to We” process that I learned from the Certified Sourcing Professional program.

 

Its fundamental elements are straightforward, so I know I can practice it throughout my interactions with suppliers. The key here is to lead by example and establish a solid relationship structure. Business is dynamic, it is never in a constant state, and I think that is why programs like CSP from SIG University are essential. They are vital in keeping sourcing professionals equipped with the best industry trends and knowledge.