Trust

Supply chain has frequently been demonstrated in the literature with frameworks including different participants, in which they need to work together with one or more accomplices. This cooperation gets to be more viable when operators can pick their accomplices focused around the trust factor of the participants. Trust is characterized as the conviction a participant has that the other partner will satisfy its guarantees; it is giving the likelihood that the accomplice may desert to get higher profits (Chetty &

Wilson 2003). There have been a few proposed methodologies for including trust models into SCM.

This factor was added to the framework to determine the company’s characteristics for the choice of the supplier and initial willingness to cooperate with the company.

Reputation of the firm within the market serves as a good indicator of the trustworthiness for the partner. In connection with the following factor that is going to be discussed next, the factor of trust can be viewed as a signal for bigger or lesser intentions to act opportunistically in the relationships. Expertise of the company shows that the experience the supplier had during the projects could be effectively used for fulfilling client's needs and offering customized decisions. (Doney & Cannon 1997: 37-38)

Centeno et al. (2009) propose a notoriety component focused around hierarchical ideas and individual standards, with which executors characterize their inclination about potential collaborations. On the other hand, this data is not sufficient for adaptively learning trust models, since operators don't show their trust in the data they get from different executors.

Lin et al. (2005) form a trust model focused around encounters with suppliers; trust is measured regarding item quality, request process duration and cost. They sum up these elements to the dynamic ideas of benevolence, honesty, and capability. Other SCM trust

components have been examined too, though a considerable amount of them are centered on particular SCM businesses.

Paterson et al. (2008) considered twelve trust components, recognizing three variables that are discriminating to the inventory network: imparted qualities, purpose of offer data, and trustworthiness and honesty. The above mentioned points arrange a few parts of trust model; however, numerous trust structures don't utilize probabilistic routines, inclining towards valuation plans (Sabater & Sierra 2001).

Smith and Jardins (2009) proposed a probabilistic trust model based on decision making. This model permits an operator to choose whether or not to communicate with an alternate executor by anticipating the reliability of the executor. Framework based on trust independently demonstrates trustworthiness and can handle situations where result differs. Capability is displayed as the likelihood that a given participant can execute an activity in a specific circumstance. Trustworthiness is a participant’s feeling towards its responsibilities and is influenced by the apparent possibility that cooperation will be continued.

Laeequddin et al. (2012) in the conceptual framework of trust factor in SCM suggest evaluation of risk-worthiness in relationship with possible partners. Researchers suggest in this model, that company should take into consideration level of risk before making any commitment. Lower risk level is increasing the credibility of the partner company.

In this model company use mostly predictive way of choosing the suppliers, such as financial risk calculations, environmental analysis and SWOT-analysis.

The recent researches on trust models in supply chain concentrates mostly on meeting certain criterions for building trust. The weight of each criterion is defined by accurate mathematical calculations individually by a company. (Hossain et al. 2013) The main criteria for analysis were as follow:

 Honesty,

 Credibility,

 Predictability,

 Transparency,

 Commitment.

Comparing the Trust models in supply chain through recent years, the trend of strong statistical and mathematical methods of assessment could be seen. In order to show the changes through years, Table 1 shows the key factors of each model.

Table 1. Comparison of trust models.

Author Trust model factors

Centeno et al. (2009) Hierarchical ideas, individual standards. Trust is based on sufficient information flow

Lin et al. (2005) Trust model is based on encounters with suppliers, product quality, lead time and cost

Paterson et al. (2008) Imparted qualities, purpose of offer data, and trustworthiness and honesty

Smith and Jardins (2009) Probabilistic trust model based on decision making.

Perception of capability to operate in unexpected circumstances

Laeequddin et al. (2012) Evaluation of risk level as a base for the trust model.

Company is relying on correct financial calculations along with risk planning for building trust.

Hossain et al. (2013) Analytical and mathematical assessment of different criterions. Trust is considered in the model on the base of commitment, predictability and transparency in operation Company should have efficient level of trust towards other parties in the case of not performing actions that might lead to a negative process for the other parties in the supply chain (Fynes et al. 2005). In order to succeed in creating a strong trust between the parties, it is equally important that the people involved know each other well on a personal level. Partners learn how the different companies operate individually and in cooperation (Gadde & Hakansson 2001).

A company that wants to develop relationships based on trust should be thinking about this already in the choice of partners and choose those with similar values as the company itself. A trust relationship works best if it is informal and flexible. This means that trust relationships often work best without lengthy and detailed contracts. There are many examples of business conditions with no contract. For example, the majority of wholesale distributors in Japan appear without a contract. Following conditions hold together distributors without a contract: mutual obligations and opportunities (Kumar 1996).