Trust and contract effects on the efficiency of the supplier-manufacturer relationships : A dyadic perspective

Abstract: Business Administration, Business Process & Supply Chain Management, Degree Project (master), 15 higher education credits, 4FE06E, Spring 2011 Authors: Marjorie Laporte and Jérôme Le Duff Tutor: Fredrik Karlsson Title: Trust and contract effects on the efficiency of the supplier-manufacturer relationships – A dyadic perspective Background: The current global situation leads to a tightening of the supply chains. Since supply chain management is primarily about managing relationships, developing an efficient relationship appears to be the best way to stay competitive. Trust and contracts are elements that influence the efficiency of the relationships, but there is a debate concerning the way they impact efficiency. The focus has been made on the supplier-manufacturer relationships. Purpose: The purpose of this paper is to investigate the supplier-manufacturer relationships of Ferrero France, in order to increase the understanding of trust in relation to different types of contracts, while providing a managerial contribution by describing their impact on efficiency. Method: Interviews have been run among Ferrero France, manufacturer of confectionery products, and two of its suppliers. The empirical findings have been analyzed and compared to the existing theory in order to draw relevant conclusions. The results and conclusions also give rise to a broader strategic reflection about the impact of trust and contract on the whole supply chain, and not only on the supplier-manufacturer relationship. Results, conclusions: The results of this research point out some similarities and differences compared to the existing theory. The dyadic perspective provides a broader point of view, and results in stating that trust is the most important factor leading to efficiency. Moreover, several types of contracts exist. Formal contracts and trust are substitutes and can work together to improve the efficiency, even if the legal framework may limit the increase of efficiency. Informal contracts and trust have a much moreTrust and contract effects on the efficiency of the supplier-manufacturerrelationshipsMaster Thesis – Spring 20123important relationship, and are key elements to achieve greater efficiency and long-term success of the supplier-manufacturer relationship, as well as the whole supply chain. This study provides managers with a better understanding of the role of trust and contract to improve the competitiveness of the whole supply chain, while contributing to enrich the existing theory with new perspectives.