Impact of Trust Among Collaborators of Supply Chain in the Performance E-Retail in Saudi Arabia

Published: 2021-08-07
1696 words
7 pages
15 min to read
Harvey Mudd College
Type of paper: 
Literature review
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Businesses operate in a continually changing environment characterized by complicated networks of the supply chain, integration of technology in making and tracking orders and globalization (Ramanathan, & Gunasekaran, 2014). At the center of operations of the business in a global, regional and local levels are the structure of supply chain (Barratt, 2004). A supply chain is a formed whenever any two or more enterprises establish relationships that influence the way they perform transactions. The supply chain operates devoid of the existing level of management between transacting companies. Today, there are increasing trends towards globalized supply chains in which firms from various regions collaborate (Holweg, Disney, Holmstrom, & Smaros, 2005). A more comprehensive definition of collaboration in light of supply chain is a process in which members of a chain agree to invest on resources collectively, share information and responsibilities as well as making joint decisions that result in achievement of an efficient solution to problems (Barratt, 2004). In this form of arrangement, mutual trust, openness to new trends and markets, shared risks and benefits are mandatory and help in sustaining long-term operations (Abdullah & Musa, 2014).

The global nature of modern supply chains implies a need for strategic orientation of the chain management towards competitive standards which is attainable through collaborations and mutual trust among partnering firms (Ramanathan & Gunasekaran, 2014). Trust stands out as a critical asset to facilitate the much needed strategic supply chain management (Chen, Yen, Rajkumar, & Tomochko, 2011). With trust, firms can establish and maintain long-term partnerships among them thus revolutionizing the global economy and the general landscape of international trade (Cai, Jun, & Yang, 2010). Ideally, the concepts of supply chain and supply chain management have undergone episodic evolution to incorporate collaboration between members of a chain or network (Holweg, Disney, Holmstrom, & Smaros, 2005). These partnerships are formed to facilitate achievement of both individual and collective goals.

The issue of trust in supply chains can be viewed from different perspectives. Nonetheless, from both the sociological and economic aspects, it stands out that trust has a significant influence on the organization and operations of the supply chain. Trust has two agents which are the trustor and the trustee (Chen, Yen, Rajkumar, & Tomochko, 2011). The trustor can be an institution, product or organization. In this paper, trust is operationally defined as the extent to which one believes that the other entity in a continuum of relationship will not any way try to exploit the vulnerabilities of others (Abdullah & Musa, 2014). Therefore, trust is a simultaneous process of giving and taking in which the trustor renders confidence while the trustee assures non-exploitation of vulnerabilities (Chen, Yen, Rajkumar, & Tomochko, 2011). In a typical supply chain, trust assumes two unique roles; either as an output or input. As an input, trust existing previously between two firms can be transferred to a business partnership which may occur at the first stages of establishing the business relationship (Matopoulos, Vlachopoulou, Manthou, & Manos, 2007). As an output, development and maintained of trust between two firms is more complicated, rational and calculated. However, in both cases, the trust aims to help the companies gravitate towards a vertically integrated supply chain (Cai, Jun, & Yang, 2010).

It is appreciable that studying inter-organizational trust is problematic since only people who are capable of practicing trust (Matopoulos, Vlachopoulou, Manthou, & Manos, 2007). For instance, it is important to interrogate the question of whether it is an individual salesperson or the organization for whom he works for that develops trust. Irrespective of the direction to which the response to this question goes, it is both people and organizations are capable of generating different kinds of relationships that help in achieving some form of shared interests (Holweg, Disney, Holmstrom, & Smaros, 2005). For instance, through a contractual agreement, a firm may undertake to transport commodities from destination A to B at a given cost which is agreeable to both parties (Hudnurkar, Jakhar, & Rathod, 2014). In any form of partnership such as in supply chain, trust fundamentally reduces costs, minimizes uncertainty and facilitates information symmetry among partnering firms (Montoya-Torres & Ortiz-Vargas, 2014). Based on the preceding, it is evident that trust is a primary factor in developing partnerships among agents of a supply chain. The trust can exist in two interdependent forms including interpersonal trust and inter-firm trust (Hudnurkar, Jakhar, & Rathod, 2014). The trust that suppliers have n the supply chain depends on the frequency and length of interactions that they have had with other actors in the chain (Min et al., 2005). This trust can be called process-based trust which primarily emanates from sustained relationships.

Trust enhances the efficiency of a supply chain since it has the power to reduce the length of time that buyers spend in monitoring or inspecting their orders (Abdullah & Musa, 2014). In most common supply chains where trust is not established, the buyer would spend not only time but also high-cost technology in inspecting the goods at the point of reception (Simatupang, Wright, & Sridharan, 2004). For instance, high sensitivity scanners would be used to read bar codes and testing machines used to ascertain the quality of products if the supply chain operates devoid of a measure of trust (Min et al., 2005). With trust, firms operate with utmost goodwill in ensuring that they meet their utmost obligations hence there is no need to enforce any penalties if a commodity turns out not to be of expected quality.

Trust among collaborating firms enables information sharing between them. In business activities, sharing of prompt, reliable and real-time information among partners is critical in helping them make strategic decisions on operations, products or structures (Montoya-Torres & Ortiz-Vargas, 2014). Sharing of information among collaborating businesses not only helps businesses in the chain to create more visible and predictable demand in the system, but is also easier to implement compared to the conventional customer-specific control processes (Lotfi, Mukhtar, Sahran, & Zadeh, 2013). Trust, therefore, makes the inter-firm flow of information as seamless as possible so that businesses along the chain become more responsive to changes in the market such as fluctuating demands or changing customer preferences (Montoya-Torres & Ortiz-Vargas, 2014). Since trust between collaborating firms engenders in all actors the responsibility of upholding utmost good faith in all dealings. Therefore, companies at lower levels who are in direct contact can collect crucial data that help suppliers in the higher levels forecast market trends. The resultant visibility of the market helps in reducing delays in serving orders or excessive supply (Holweg, Disney, Holmstrom, & Smaros, 2005). A trustworthy supply chain thus improves the traditional methods of weighting market behavior through primarily relying on orders sent by the retailer. Eventually, a well-coordinated supply chain that is managed with utmost trust helps in removing delays in translating demand and eliminates unnecessary uncertainty throughout the business ecosystem (Lotfi, Mukhtar, Sahran, & Zadeh, 2013).

Collaboration in supplies chain results in inherent power asymmetry. This asymmetry arises from over-reliance one firm that having more resources becomes more powerful than the rest (Simatupang, Wright, & Sridharan, 2004). In such a possible scenario, trust and perceives risks become essential in ensuring that the power imbalance serves the general interests of the other businesses in the ecosystem as opposed to suppressing their autonomy (Montoya-Torres & Ortiz-Vargas, 2014). Through mutual trust, influential companies in the chain that are well endowed with resources will use such wealth to conduct market research, transform the general nature of supply chains, disseminate critical decisions necessary for planning within the other enterprises and strengthening the ideals of their collaboration (Simatupang, Wright, & Sridharan, 2004). Trust also orients firms in a chain to select the appropriate information-data sharing technologies and techniques that benefit all partners (Montoya-Torres & Ortiz-Vargas, 2014).

According to Natour, Kiridena, and Gibson (2011), trust among collaborators is essential because the current business environment is challenging and organizations need to control internal sources of competitive advantage and struggle for harness synergies in various supply chains. Agency theory should also be used in the collaboration and interrogation of the supply chain when enhancing operational performance. The current business environment is very competitive. Thus, it is essential for one to have trust with the collaborators of supply chain performance. The collaborative supply chain also plays a significant role in the problematic manufacturing environment. Although operating in supply chain helps an e retailer to achieve higher operating advantages, it is essential to gain trust among the collaborators (Inaam, Abderrahman, & Yasmina, 2016). Some of the essential things to consider in a collaborative supply chain include goal congruence, information exchange, cooperative communication, resource sharing, and decision synchronization.

In E retail, it is crucial for one to gain trust among the collaborators. However, it is also significant to get the appropriate collaboration that will enhance the required order winners, which result in the improved business outcome (Banchuen, Sadler, & Shee, 2017). Furthermore, cost and quality firms should create an operational collaboration to help achieve resource efficiency. Having trust among the collaborators in the supply chain management in e retail is significant as it helps in achieving innovation and market improvement (Banchuen, Sadler, & Shee, 2017). Furthermore, the opportunity provided with digital marketing in the making a profound rationalization in buying supplies is turning to be indispensable in competition among companies considering the positive effects of reducing the costs incurred by the firms adopting e-procurement (Piera et al., 2014). Furthermore, e-procurement, e-collaboration, and e-supply chain can only be successful if there is trust among the collaborators.

In the current world, technology has redefined the parameters of engaging in business. It is opening doors for new opportunities, and many obstacles are coming using IT tools in business (Khan, Ahmad, & Abdollahian, 2013). The supply chain also regarded as one of the core focuses on the emerging technology in the current days. Companies are also looking for revenue using the emerging digital tools (Khan, Ahmad, & Abdollahian, 2013). Things have become easier for many businesses as people can order online and the goods are delivered. Therefore, it is essential for a company or an individual conducting business to have trust among the collaborators. By having trust that the right goods will be delivered then business will be able to maximize its services and profit. Trust is also essential in every business as it helps in driving supply chain integration.

In the past, companies have been able to...

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