Supply Chain Management: Commitment and Trust

Trust and Commitment

• Higher degree of trust and commitment in buyer-supplier relationships reduces opportunism and promotes inter-organizational cooperation.
• Commitment leads to the creation of a more sustainable business organization and interdependent relationships between buyers and suppliers.

Supply Chain Performance

• Degree of commitment in buyer-supplier relationships affects supply chain performance.
• Commitment helps in achieving common goals and efforts between buyers and suppliers.

Frequency of Communication

• Frequency of communication refers to the degree of contact and interaction between buyers and suppliers.
• The frequency of communication is based on the benefits perceived by both parties in the relationship.

Relationship Duration

• Duration of relationship reflects the level of experience gained, developed behaviors and norms, and investment in relationship-specific assets.
• Trust is a key factor in determining the duration of the relationship between buyers and suppliers.

Consequences of Trust

• As trust increases, buyers and suppliers act collectively, investing in each other's capabilities.
• Trust leads to joint problem-solving, design of new products, and shared planning.
• Trust results in a longer and closer relationship, enabling parties to share risks and rewards.

Reputation

• Reputation is a main selection criterion and characteristic of suppliers in buyer-supplier relationships.
• Reputation is an intangible asset that reflects the extent to which suppliers are fair, honest, and concerned with their buyers.
• Positive reputation raises the degree of buyer's trust, increases willingness to lengthen the relationship duration, and enhances commitment to the relationship.

Interrelationship between Factors

• Reputation is interrelated with trust, commitment, and relationship duration.
• Positive reputation reinforces trust, commitment, and relationship duration.