Trust = Profit

trust_purplejavatrollGetting trust aligned and embedded in your commercial relationships takes you to that simple equation. Trust = Profit.


Trust is the essential ingredient for organizations to feel good about investing in value creation and innovation, which are needed for long-term success.

Trust of course is a common thread and theme in all of my Vested books, including my latest (and sixth!), Strategic Sourcing in the Economy, which challenges everyone in procurement to take a hard look at their current practices and opt for a long-term approach to work together and increase their business through true partnerships.

As we say in the Strategic Sourcing book, there’s no such thing as half-trust. Where is the trust in a “what’s-in-it-for-me” relationship?  The book says: “Trust simplifies the process of buying and selling goods and services, minimizing transaction costs. When you buy pickled herring, you don’t wonder if it is really something else. You trust the label, and this lowers costs. Otherwise, we would all have to verify what we buy, every time we buy.”

By working with a trusted supplier, you can dramatically lower your transaction costs and focus your energy in other, more productive areas.

Trust unleashes the power of human innovation and creativity. When you trust a friend implicitly you know they have your back; the same dynamic works in business, when you trust a supplier you know they are there for you.

How do you get there? Certainly trust is not easy. But actually it’s a fairly simple equation: Trust = Profit.

Can you quantify the value of a trusting supplier relationship? Well, yes! According to Nobel laureate economist Kenneth Arrow, “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time.” (“Gifts and Exchanges,” Philosophy and Public Affairs 1, no. 4 (1972): 343–362; 4).

Without some degree of trust, organizations can’t unlock the full potential of sophisticated relational and collaborative Sourcing Business Models.

But how do you find and assess trust? One great way is through Vested’s Compatibility and Trust (CaT) Assessment®. The CaT Assessment is an excellent tool to evaluate the compatibility and trust levels between a buyer and supplier. And it’s also ideal for new relationships. It’s a vital first step—and continuing process—to build cognitive awareness of compatibility and trust levels in buyer-supplier relationships.

Increase trust and you decrease your transaction costs and increase your profit.

Image: Trust by purplejavatroll via Flickr CC

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