Expanding the understanding of trust for suppliers - Insights from the supplier selection process in the automotive industry

Abstract: Background: Volvo Cars, an original equipment manufacturer (OEM) in the automotive industry expressed an interest in potentially expand the criteria used when selecting suppliers. This in an industry with a complex supply where suppliers are getting increased power. Additionally, intangible criteria are getting more attention than before in the supplier selection process. One criterion addressing these and other aspect is trust, a subject of increased interest in academics but still not fully explored. Purpose: This study aims to expand the knowledge of what trust in a supplier is, how it is used when selecting suppliers in the automotive industry, and how these insights should be applied in the supplier selection process. Research Questions: 1. How is trust regarding a supplier understood in the automotive industry? 2. What are the effects of being able to trust a supplier? 3. Which qualities should a supplier possess to be considered trustworthy and how are they prioritized against each other? Theoretical framework: The theoretical framework is based on the literature review and consists of theory regarding the questions this thesis aims to answer. The literature review included a comprehensive study of previously conducted research on subject, and the findings of the review was then categorized according to the research questions. Method: This thesis used a case study strategy with Volvo Cars as the subject. The main steps of the methodology were: 1. Reviewing literature 2. Collecting qualitative data 3. Processing qualitative data 4. Collecting quantitative data 5. Processing quantitative data The primary use of a qualitative approach was believed to contribute to the purpose by adding a dimension of novelty and thereby expand the knowledge of trust. By quantitatively gathering and processing data, the analysis of the qualitative data reached a greater depth. Finally, based on both the qualitative and quantitative data, a framework was created. Conclusions: This study show that it exists two mindsets regarding trust in a supplier, and practically a single view regarding the characteristics of trustworthiness. Further is trust understood as being entirely placed in the company of the supplier – not in the people representing it. The representatives only influence the trust placed in their company. The study also implies that trust is an important aspect to consider when selecting suppliers in the automotive industry, however not more important than e.g. price. Finally was it concluded that it exists nine qualities a supplier should possess in order be considered trustworthy. These qualities have also been given an individual weight in order illustrate its respective importance.