Interpreting Supply Chain Relationships

In my last post, I wrote about interpreting contracts. However, contracts, laws, rules, regulations, or instructions are really only a backstop for undesirable behaviour and at best a statement of desired behaviour. People can and do deviate (rightly or wrongly) from these by calculation, by emotion, and by mistake. In order to drive desired behaviour, we have to appeal to core human motivations.

The Most Respectful Interpretation model involves focusing on the positive intentions of others. A good article that explains this concept in more detail can be found at: Farnum Street: The Most Respectful Interpretation. Their articles on confirmation bias and fundamental attribution error help explain our tendencies to make negative interpretations that result in sub-optimal scenarios.

Circling back to my usual discussions about the importance of relationships and communication in supply chain management, this principle, when applied, can lead to improved collaboration, reduced conflict, and stronger partnerships among all stakeholders in the supply chain.

1. Fostering Positive Relationships with Suppliers:

• Trust and Collaboration: When you assume suppliers are acting in good faith, it fosters a foundation of trust. This trust can lead to more open communication and stronger partnerships. A collaborative mentality will help identify more opportunities and increase the parties' ability to capitalize on them.

• Conflict Resolution: When a conflict occurs due to delays, quality, or other issues, approaching the situation with a Most Respectful Interpretation can help de-escalate tensions. By assuming that the supplier's actions were not intentional or malicious, you can focus on finding constructive solutions rather than assigning blame.

  
  

2. Enhancing Internal Communication:

• Cross-Functional Teams: Supply chain management involves working with multiple departments, such as procurement, logistics, finance, and production. Functional silos tend to form as organizations become bigger and more complex. Most Respectful Interpretation can build stronger internal collaboration, and ensure everyone works towards common goals.

• Decision-Making: By avoiding negative assumptions about motives when interpreting bad news, concerns, or feedback from different teams, you can see this as an effort to prevent issues rather than as an excuse or attack. Ultimately, decision-making becomes more efficient but also more robust by considering multiple perspectives at the same time.

  
  

3. Dealing with Customers:

• Customers and Distributors: If a customer raises concerns about long delivery times or that prices are too high, assume the problem is legitimate and motivated by their need to meet their business requirements. This perspective helps maintain a customer-centric approach and encourages proactive problem-solving.

• Negotiations: Most Respectful Interpretations can help maintain a positive tone during negotiations. By interpreting the other party’s proposals and requests as reasonable and made in good faith, you can keep negotiations focused on finding mutually beneficial solutions rather than becoming adversarial.

  
  

As a society, we are increasingly prone to making negative assumptions about people we disagree with. This inclination is damaging to relationships and the general social fabric. The resulting tribalism and polarization are preventing us from solving important problems.

When we antagonize a counterparty, they will react defensively whether it is true or not. Even if a negative situation is resolved, the time and resources dedicated to reaching this conclusion are likely much more than if a collaborative approach is taken. Additionally, it diminishes future opportunities by damaging the relationship. Focusing on the issue's root causes rather than only the counterparty's attributes is a superior approach over the long term. It will be easier to positively impact both the counterparty and the bad situation with that mindset. People advocate and work for themselves regardless of how you judge them, and there are rarely situations where there is a complete lack of overlapping interests. Find these interests, and you could be surrounded by people working hard to prove you right rather than working to prove you wrong.

The best way to destroy an enemy is to make him a friend. - Abraham Lincoln