Goals should be translated into specific performance measures that can be continually tracked. The performance measurements used and the measurement frequency should be jointly determined. Also, the measures should be two-way. Oftentimes. Performance measures between manufacturers and material suppliers focus specifically on the suppliers’ performance attributes, such as on-time delivery and quality. One of the alliances studied developed a joint measure of success total systems inventory. The manufacturer acknowledged that it was important for both partners to reduce inventory, not just the manufacturer. The measure of total systems inventory includes consideration of both partners to ensure that reductions are real and benefit both parties.
Feedback on performance can be provided through formal and informal methods. Annual reviews are formal assessments of alliance performance. These reviews typically involve top managers and focus primarily on examining and updating strategic goals. Quarterly or monthly reviews are not as formal as annual assessments and usually do not include top managers. They focus on tracking and reviewing strategic goals and operational performance. When used, the reviews enable changes in operating practice to be made to achieve strategic goals and create an avenue for continuous improvement projects to be identified.
Weekly/daily reviews may also occur on an informal basis. These reviews are managed by the key contacts and are intended to solve specific problems and identify potential opportunities for improvement. They are critical to resolving or avoiding conflicts and allow key contacts to develop close working relationships. These informal relationships ultimately result in ever-increasing collaborative behavior.
Developing trust
It is clear that no real collaboration can exist in supply chain relationships without meaningful trust. While a powerful firm may be able to influence the behavior of a less powerful organization, the change in behavior may be temporary and certainly entered into unwillingly. In fact, while research shows that issues such as technology compatibility, information exchange, and appropriate measurement systems are all key issues to be resolved in collaborative alliances, the human behavior issues related to culture and trust are much more difficult issues to solve. To do so, the complexities of different forms of trust must be understood.
Reliability and Character-Based Trust
It is clear that trust has more than one dimension. While several typologies of trust exist, the most meaningful way to understand trust in supply chain collaboration is to distinguish between reliability-based trust and character-based trust.