Do Faulty Supply Chains Undermine Trust?

The 2016 Edelman Trust Barometer reveals the largest ever trust gap (12 points) between the informed public and mass population, driven by income inequality and divergent expectations of the future.

While trust levels among informed publics are the highest ever in 16 years, trust is below 50 percent for the mass population in over sixty percent of the countries surveyed, having barely moved since the Great Recession. The trust disparity has widened and is now at double digit levels in more than half of the countries surveyed. The U.S. presents the largest divide at nearly 20 points followed by the UK (17 points), France (16 points) and India (16 points).

“We are now observing the inequality of trust around the world,” observes Richard Edelman, president and CEO of Edelman. “This brings a number of potential consequences including the rise of populist politicians, the blocking of innovation and the onset of protectionism and nativism.”

The widening gulf is directly linked to income inequality. A double-digit trust gap between high-income and low-income respondents is present in nearly two-thirds of the countries, with the U.S. (31 points), France (29 points) and Brazil (26 points) exhibiting the largest disparities. There are also diminished future expectations among the mass population. In more than two-thirds of the nations surveyed, less than half of the respondents believe they will be better off in five years' time.

“We must get beyond ‘The Grand Illusion' that the mass will continue to follow the elites,” says Edelman. “This ‘Illusion' was predicated on the belief that the informed publics have access to superior information, their interests are interconnected and that becoming ‘an elite' was open to all who work hard. But the democratization of information, high-profile revelations of greed and misbehavior, coupled with rising income inequality, have squashed those beliefs. The trust of the mass population can no longer be taken for granted.”

Supply Chain Chasm
But do faulty supply chains also contribute to this disquieting trend? Katherine Peavy, head of program management for the Center for Responsible Enterprise and Trade, thinks so. She works for a non-governmental organization dedicated to helping companies around the globe prevent piracy, counterfeiting, trade secret theft and corruption.

“China's recent downturn has not only prompted vast swings in the financial markets, but as previous downturns have shown, also is likely to send Chinese companies and factories — if they aren't well run — to ruin,” she says. “In the early part of this century, every industry in China was so hot that you could just start a business and it would likely do well. Today is a different story.”

To survive, maintains Peavey, forward-thinking executives are working to improve productivity and efficiency by leveraging management systems, human resource development and process optimization. This approach can and should also be applied to compliance efforts, which are often still only implemented at corporate headquarters.

Reversal of Fortune
And it seems that global supply chain managers in China and the world over still have a chance to correct this reversal of fortune.

Despite the general population’s skepticism of business, it has the best opportunity to bridge the trust chasm. Overall, respondents view business (61 percent) as the institution most trusted to keep pace with rapid change, far more than they do government (41 percent) and NGOs (55 percent). Business is also significantly more trusted than government in 21 of 28 countries, with large gaps in countries such as South Africa (44 points), Mexico (44 points) and the U.S. (12 points). And a decisive 80 percent believe business can both increase its profits while improving the economic and social conditions in the communities in which it operates.

Globally, business also received the largest uptick in trust (5 points to 53 percent) among the four institutions, while continuing to close the gap on NGOs (55 percent) as most trusted. This was aided by the continued recovery of the financial services sector (51 percent), which has seen an eight-point increase over the last five years, larger than any other sector. And for the sixteenth consecutive year, technology (74 percent) remains the most trusted industry.

The public is also responding positively to CEOs trying to realize the dual mandate of profit and societal benefit, as CEO trust has risen substantially in the past five years to 48 percent. But they will need the help of their employees, whose trust levels (52 percent) are on the rise. Respondents are more likely to trust an employee compared to a CEO for information on treatment of employees (48 percent versus 19 percent) and information on business practices and crises (30 percent versus 27 percent).

“Business can be a big part of the solution because it is apolitical, fast, and tracks its progress,” says Kathryn Beiser, global practice chair of Edelman's Corporate practice. “Now is the time to lead from the front with the support of their employees and passionate customers. No longer can business leaders focus on short-term goals. The new model CEOs are taking action by addressing the issues of our time, and taking a personal interest in the success of society. Stakeholders expect business to have a solid and steady focus on financial returns, but also on actions around key issues such as education, healthcare and the environment.”

Other key findings from the 2016 Edelman Trust Barometer include:

• Respondents want to see a shift in CEO focus from short-term results and lobbying to job creation (49 percent) and positive long-term impact (57 percent). They want business leaders more visible in discussions of income inequality and public policy (80 percent).
• Despite an increase of one point to 42 percent globally, government remains the least trusted institution for the fifth year running.
• Trust in NGOs went up in 81 percent of the countries surveyed with the most dramatic jumps occurring in China (17 points) and Mexico (11 points).
• Globally, family-owned companies (66 percent) remain most trusted, trailed by public (52 percent) and state-owned (46 percent) businesses.
• Companies headquartered in developed markets are still more trusted than those based in developing markets. Canada, Sweden and Switzerland, all 66 percent, are most trusted, followed by Germany (64 percent).

And finally, some good news for SCMR readers. It appears that
traditional media – including trade journals like ours – remain among the most trusted sources for general news and information.

Meanwhile, the Edelman survey indicates that online media jumped 8 points to 53 percent and is now the third most trusted source, followed by owned media, which is up 3 points to 46 percent and social media (44 percent).

Today's supply chain manager, who is wired into all these networks and resources, must now do his/her part to ensure trust remains part of the mission.

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