Lessons Learned and the Importance of Trust

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Previous research suggests that one key barrier to successful e- commerce adoption is the lack of trading partner trust, mainly derived from uncertainties, lack of open communications and information sharing (Cummings & Bromiley, 1996; Doney & Cannon, 1997; Ganesan, 1994; Gulati, 1995). Despite the assurances of technological security mechanisms, trading partners do not seem to trust the “people side” of the transactions.

Mayer, Davis and Schoorman (1995:712) defined trust as:

“...the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of their ability to monitor or control that other party.”

The findings of this study indicated that trust is important in the automotive industry as business partners need to cooperate, collaborate and communicate timely and relevant information, in order to facilitate EDI that entails not only technological proficiencies, but also trust between trading parties, so that business transactions are sent and received in an orderly fashion. In the Japanese automotive system, the suppliers share an integral part of the development process, and they are involved early, assume significant responsibility, communicate extensively and directly with the production and process engineers (Dyer & Ouchi, 1993). Japanese suppliers are more cooperative and are willing to take risks. Hence, trust leads to cooperative relationships derived from commitment, frequent planned communications, and reduced transaction costs that eliminate inter-firm inefficiencies.

The findings of an exploratory study in three EDI organizations in the automotive industry identified two types of trust. The first type of trust (Soft Trust) is trust in their trading partner relationship (that is between a manufacturer and a supplier), experienced as follows:

Increased Communication During Initial EDI Adoption

“Although EDI was established in mid 1980s, to reflect back on our initial implementing procedures, we would still print off the order, and fax the same order again. Furthermore, after sending the order via EDI, we would call our suppliers to check if they had received it.

Hence, in the early stages of EDI adoption and implementation, we relied heavily on the daily audit trail, and other feedback mechanisms such as fax and telephone.” — Ford Accounting Manager

Sharing and Understanding

“We met once bi-monthly to discuss business issues relating to EDI use within the automotive industry. We operate as a family unit (Closed User Group) and cooperate for the smooth flow of EDI operations, as we represented the automotive industry.” — Ford Project Leader.

“Trust is related to security. Our trading partners respect the privacy and confidentiality of EDI messages, clearly outlined in the trading partner agreement. Our customers require the components on time with the right quantity, quality, and [it] has to be cost effective. Hence, we trust our trading partners (customers) to use procedures that to reduce uncertainties.” — PBR, EDI Coordinator

“We do not only communicate via EDI, but other means such as telephone, fax and e-mail when there is a discrepancy. This related to communication openness, information sharing and concern. We do not check the delivery of goods, due to consistency in the quality service provided by our suppliers. Prior history of trading partner relationships enables us to make predictions about our suppliers’ performance.” — Ford Supply Chain Management Materials Planning and Logistics Core Group Manager

Belief in Your Trading Partners That They Will Perform the Required Task

The history of the trading partner relationship has shown that EDI trading partners do maintain a stable relationship.

“We believe that our trading partners’ are competent enough to perform the task as required by them. This is based on our long-term trading partner relationship, as we have been trading with them for more than twenty years. Past experience has provided us knowledge that enabled us to predict their present and future business relationships. Initially we used to obtain wrong messages. Our trading partners have since shown competence in correctly and effectively performing the tasks.” — Ford IT Manager.

The second type of trust (Hard Trust) focuses on the transmission medium (the technology). It is more specific and relates to integrity issues in the IT infrastructure in EDI/VANs and Internet-based EDI applications. Technology compatibility and organizational readiness to adopt EDI was seen to be important. The Federal Chambers of Automotive Industry committee manages the industry with members including nominees of the four Australian care manufacturers–Ford, Holden, Mitsubishi and Toyota. The Federation of Automotive Product Manufacturers (FAPM), importers and suppliers were also involved in this project. The mission of the committee is to establish and govern a reliable and secure communication network and building trustworthy trading partner relationships capable of hosting applications of e-commerce and business-to-business transactions for the Australian automotive industry. Hence, beyond the apparent need to develop cooperative relationships, trading partners formed governance and structural mechanisms that brought about repeated encounters, and used the passage of time to their advantage to build trust. Although, these trust-developing mechanisms come from EDI, they had a lot to do with trading partner interactions in the form of open communications and information sharing.

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E-Commerce Security. Advice from Experts
E-Commerce Security: Advice from Experts (IT Solutions series)
ISBN: 1591402417
EAN: 2147483647
Year: 2003
Pages: 106

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