00:00:08 Introducing Sheri Hinish and discussing trust in supply chains.
00:01:46 The origin of Sheri’s nickname, “The Supply Chain Queen.”
00:04:30 Trust as an outcome of delivering promises in successful companies.
00:05:52 Factors that lead to distrust, such as penalties and poor incentives.
00:07:55 Consequences of misplaced incentives and lack of trust in buying teams.
00:09:31 Cooperation between competitors and potential benefits and drawbacks.
00:12:15 Users’ relationship with supply chain tools and trust in software.
00:13:35 Transitioning toward modern approaches and trusting algorithms.
00:15:11 Difficulty of practitioners fully understanding their tools and complexity of enterprise software.
00:17:01 The challenge of building trust across large multinational networks.
00:18:00 The importance of inclusive leadership and embracing failure.
00:19:01 Change as a continuous process and technology as an enabler.
00:20:12 The importance of creating the right environment for digital transformation.


In this episode, host Kieran Chandler interviews supply chain thought leader Sheri Hinish and Lokad founder Joannes Vermorel on trust in supply chain networks. Hinish emphasizes the importance of inclusive leadership and a learning culture to build trust, while Vermorel discusses the challenges of outdated enterprise software. They agree that fostering trust is crucial for positive relationships, innovation, and growth in supply chain management. The conversation also explores the role of technology, the complexities of trust in supply chain relationships, and the need for organizations to create a supportive environment for digital transformation.

Extended Summary

In this episode of Lokad TV, host Kieran Chandler interviews Sheri Hinish, a supply chain thought leader known as the Supply Chain Queen, and Joannes Vermorel, the founder of Lokad, a software company specializing in supply chain optimization. The topic of discussion revolves around the concept of trust in supply chain networks.

Sheri Hinish begins by sharing her background, stating that she believes supply chains have the power to change the world. With a career focused on advocating, sharing, and rethinking supply chain strategy, she helps executives and professionals reimagine their approach to supply chain management through technology, sustainability, and leadership. Her work currently focuses on strategy and providing insights on emerging trends such as social media with a purpose. Hinish also advocates for women in STEAM (Science, Technology, Engineering, Arts, and Mathematics) and is completing her degree at Harvard University.

Hinish explains that the nickname “Supply Chain Queen” was given to her for two reasons. Firstly, she has the ability to simplify complex concepts in supply chain management. Secondly, she can bridge gaps between different workforce generations and bring people together in mega-transformations through common purpose.

Joannes Vermorel shares his thoughts on trust in supply chains, noting that it is often misrepresented by media. Trust is not something tangible, but rather an ambient and subtle factor in relationships. It usually becomes noticeable when there is distrust, tension, or a trust issue. Vermorel points out that people in supply chains often have counterintuitive instincts that do not contribute to building trust.

Discussing how successful companies like Apple and Microsoft have managed to build trust, Hinish suggests that it boils down to not doing anything that generates distrust. Trust is a complex emotion and an important factor in business, affecting aspects such as the speed of innovation and the perceived wealth of an entire nation.

Trust is a crucial element in supply chain management and can have significant impacts on the overall success of a business. Both Sheri Hinish and Joannes Vermorel emphasize the importance of understanding and fostering trust within supply chains to promote positive relationships, innovation, and growth.

The conversation explores the complexities of trust in supply chain relationships, the impact of penalties and incentives, the challenges of modern supply chain networks, and the relationship between supply chain practitioners and their tools.

Trust in supply chains is often associated with feelings as well as demonstrated ability, and can be influenced by factors such as resistance to change, fear, situational power, reliance, and risk. Hinish believes that successful supply chain relationships focus on transparency and delivering on promises. Trust is not the goal but rather an outcome of keeping those promises.

Vermorel points out that certain practices, such as applying penalties to suppliers who do not meet performance standards, can lead to distrust. Penalties may appear rational but can generate conflict, making the supplier an adversary. Similarly, financial incentives can lead to unintended consequences, like buyers focusing on the lowest price and sacrificing other aspects of the supply chain, which can result in distrust.

Modern supply chains consist of complex networks that may not be cooperative by design, leading to ambiguity. The acceleration of digitalization and technology further complicates these relationships. Hinish suggests that global standards and effective collaboration are necessary to improve cooperation and reduce defections. This can benefit not only the individual organizations but also the industry as a whole.

One interesting example of cooperation between competitors is the sharing of spare parts among airlines. Vermorel notes that cooperation can be very rewarding but can also lead to ambiguous situations, such as cartels, which can generate distrust from the rest of the world. However, cooperation can be beneficial, as evidenced by airlines working together to minimize delays and improve the overall experience for passengers.

Regarding the relationship between supply chain practitioners and the tools they use, Hinish points out that many people suffer from “shiny object fatigue” and prefer using familiar tools like Excel. However, Excel’s limitations can be a hindrance in the future of work, as it cannot pull in large amounts of data and externalities to form causal relationships. To gain deeper insights, practitioners need to transition to using more advanced tools that can handle the complexities of modern supply chains.

The discussion revolves around the role of technology in supply chain management, the challenges of building trust in algorithms, and the importance of organizational leadership in fostering a culture that embraces change.

Hinish emphasizes the need for a new workforce that trusts algorithms without fully understanding how they work. She gives the example of a Google search, where users rely on machine learning algorithms to provide relevant results without fully understanding the underlying process. To build trust in technology, organizations must connect the individual level with the larger organizational level and trading partners, understanding the value of technology as an enabler and recognizing the benefits of cooperation.

The conversation shifts to whether practitioners fully understand the tools they are using. Vermorel acknowledges that the track record of enterprise software has been poor over the last few decades. Many large companies have applicative landscapes filled with accidental complexity that does not reflect the actual complexity of the business. This complexity can be attributed to outdated software architectures, decisions made by vendors for reasons that are no longer relevant, and overly broad software that tries to cater to diverse industries but ends up being bloated and impractical. Vermorel notes that there seems to be no natural process to clean up and get rid of this accidental complexity.

As the discussion moves towards building trust in large-scale networks, Hinish highlights the difficulty of fostering trust without inclusive leadership and a culture that embraces learning, failure, and curiosity. Organizations must take the time to understand the trade-offs and manage change effectively. Hinish shares her own experiences as a practitioner and consultant, emphasizing that creating space for transformation is key, as change is a continuous process.

Hinish uses an analogy to explain the process of digital transformation: planting a flower requires ripe soil, and one cannot simply drop a seed and expect it to bloom. Similarly, organizations must ensure that they create the right environment before implementing new tools, as automating bad processes and behaviors will not yield positive results.

The interview highlights the importance of building trust in technology, understanding the limitations of current enterprise software, and fostering a culture that embraces change and learning. While the conversation does not reach a definitive conclusion, it provides valuable insights into the challenges and opportunities facing supply chain management in the age of digital transformation.

Full Transcript

Kieran Chandler: Today on Lokad TV, we’re delighted to be joined by Sheri Hinish, a supply chain thought leader who’s also been affectionately known as the Supply Chain Queen. Today, we’re going to get her views on this idea of trust and how we can build it in our networks. So Sheri, thanks very much for joining us today.

Sheri Hinish: Thank you for having me.

Kieran Chandler: Perhaps as a first start off, you could just tell us a little bit more about yourself and your background.

Sheri Hinish: Sure. So, I believe that supply chains have the power to change the world, and I’ve made a career advocating, sharing, and rethinking supply chain strategy around SNOP and talent management. I help executives and professionals reimagine their approach to supply chain through the lens of technology, sustainability, and leadership. Right now, my work focuses mainly on strategy and providing insights on emerging trends such as social media with a purpose. I’m also a huge advocate for women in STEAM. I’m super excited to join you guys. I’ve been following you on YouTube for a while now, and I’m currently in my last year at Harvard. I have about 15 years of formal education in the supply chain sustainability domain, but I have promised my husband that this will be my last degree.

Kieran Chandler: I’ve got to ask you, can you tell us a little bit about the story behind the name, the Supply Chain Queen? Where did that come from?

Sheri Hinish: Sure. So, it actually started out as a nickname when I was in industry. I was named the Supply Chain Queen for two reasons: the first was my ability to simplify the complex, and the second was being a bridge not only for workforce generations but also sitting in a room full of PhDs, where everyone thinks they have it figured out, and being able to really get people to mobilize and work together through common purpose in mega transformations. Then I trademarked it.

Kieran Chandler: The idea of simplifying the complex is something we definitely try and do here on Lokad TV. It’s a bit of a challenge sometimes. Joannes, our topic today is all about building trust. What’s your initial overview on this concept of trust, particularly in supply chains?

Joannes Vermorel: My overview is that trust is something that is typically misrepresented by media. For example, people represent business relationships as something very formal with lots of contracts, lawyers, and people shaking hands. The reality is something much messier and mundane, where mostly things just happen. Trust is not something that you see or touch; it’s not obvious. It’s kind of ambient, and actually, the funny thing is that you usually don’t see trust, but you can notice when there is distrust in the air. It’s when there is tension, and so trust is something that is quite counterintuitive, I would say, in popular representations. The funny thing is, in supply chains, probably out of good intent, many people tend to have bad reflexes in these areas, and they don’t necessarily do things intuitively that are going to positively contribute to the degree of ambient trust.

Kieran Chandler: When we look at the most successful companies in the world, like Apple and Microsoft, fundamentally, we trust them. I mean, I don’t know the last time I read the terms and conditions. But Sheri, how have these companies managed to build that level of trust? What have they done?

Sheri Hinish: Yes, so if I could go back to my earlier comment about simplifying the complex, it’s simple: don’t do anything that generates distrust. It’s that simple. But in all seriousness, the reality is that trust is complex because humans are complex, and when we think about trust, it’s often associated with feelings as much as demonstrated ability of being trustworthy through action. I think there are a few things that contribute to distrust in supply chains and in value networks: resistance to change, fear, situational power, reliance, and risk. All of these things come into play in system dynamics and influences when we think about our interactions with suppliers and with clients. I think the most successful people focus on transparency and delivering what they say they will. Trust isn’t necessarily the goal; it’s more an outcome after you deliver your promises.

Kieran Chandler: Joannes, we’re all very human, and the idea of losing trust can happen in a matter of moments. What have you observed that leads to this kind of inherent distrust?

Joannes Vermorel: I mean, there are a lot of things. For example, many of the things where it can be slightly counterintuitive is that there are simple things that are, like, literally engines to generate distrust. For example, penalties. You can be very rational and say, “Okay, we are going to apply penalties to our suppliers when they don’t hit nominal performance.” It looks very rational, but the second you do that, you’re going to make yourself an enemy of the supplier. The first time you try to apply a penalty in real life and you want some money back from your supplier because they didn’t deliver on time, it starts at the first dollar. It doesn’t even have to be large amounts. The minute you try to collect a stock-out penalty from a supplier, you’re going to enter a war room of egos, and it’s like a recipe for ongoing generation of problems. The same thing happens when you give financial incentives to people to do certain tasks. For example, when you give financial incentives to buyers to get the lowest price, they will get the lowest price, yes, but maybe they will also get insane MOQs in the process. Thus, you end up with a very messy situation where you just put the blame on purchasing, who did something very bad, such as negotiating super-high MOQs because they had this incentive. Then people lose trust in the ability of the buying team to actually do the right thing because they had this kind of pseudo-rational incentive in place. So, distrust frequently emerges from naive attempts at superficial rationalism or pseudo-rationalism.

Kieran Chandler: And from a supply chain perspective, when we look at the supply chain industry, particularly in the modern day, there are lots of different networks interacting with each other in a very particular way. What have you observed from how these networks work together?

Sheri Hinish: I think I would echo what was just said, and that networks in general as a whole can be inoperable and not cooperative by design. When you add this flavor of digitalization and the acceleration of technology, coupled with the nature of trading relationships inside and outside four walls, it gets highly ambiguous. I can provide examples from my own career when I was in specialty chemicals: suppliers were also competitors, and customers were also competitors in tolling agreements. There are other examples that we can use from fresh, where supermarkets’ private labels often compete against more well-known products on the shelf, who often have a hand in the production of

Kieran Chandler: So I think that we really need global standards, and it’s not just around networks but how might we collaborate more effectively. Not to bring in game theory or, you know, classic prisoner’s dilemma here, but we need to defect less and we need to be more cooperative and understand the power of that cooperation, not only in the world we share, how we interact with industrial systems, technological systems, and natural systems, but also how we react with each other in our own organization, with trading partners, and in networks.

Sheri Hinish: Yeah, I mean, it’s a really interesting example you have there between this difference between competitors and suppliers. I mean, that’s one we’ve experienced here in the aerospace industry, as some of the big airlines are actually working together to share their spare parts. Does this introduce a level of ambiguity, Joannes?

Joannes Vermorel: It’s interesting because you see cooperation is very rewarding. I mean, to a point where, you know, usually things work better when you heavily cooperate with competitors. It works so much better that there is even a term for it when you’re completely in sync with your competitor; it’s called a cartel. And then you end up with ambiguous situations where, yes, absolutely, for a cartel to work, you need a very high degree of trust between those organizations. But then you end up with another problem, which is that by doing that, you usually generate a large amount of distrust from the rest of the world, which suddenly looks at you and says, “You guys are cooperating so closely that I’m not sure that you’re actually acting in the global interests of the rest of the world.” But it’s difficult because, as a matter of fact, cooperation works a lot. And for example, those airlines, it’s about when you have a missing spare part for an aircraft, it can cause a huge problem – aircraft on ground. Airlines are cooperating enormously with each other to solve this problem, to minimize the problems for passengers. Because actually, when a passenger gets a massive delay at an airport, they just remember that airlines are sometimes a real pain and that you can end up with a two-day delay for a flight. So basically, it’s a net loss for almost the entire industry, not just for one airline.

Kieran Chandler: Let’s stick with that supply chain theme and maybe explore the relationship users have with some of the tools that they’re actually using. From your experience, would you say that supply chain practitioners actually trust the tools and the software they’re currently using?

Sheri Hinish: I think that people, in general, have shiny object fatigue, and many folks are happier using Excel. Excel works for some organizations where they have control and they feel a higher degree of confidence in a high-touch environment. I think the root cause is that there’s distrust from having disparate IT systems and data silos. I remember, in my career as a demand planner, I was surrounded by data. There was no shortage. I had piles of canned reports on my desk, but what I needed most were insights. The reality is, in the future of work, Excel is only going to get you so far because it just can’t simply pull in tons of data and externalities to form those causal relationships that you really need, which happens outside of your four walls of your company. To get those deeper insights, you really have to transition more toward using the tools, using digital supply chain, although I think it’s overused. That transformation is necessary, and it includes just as much technology advances in AI and ML as it does mobilizing a new workforce and a new way of working. More modern approaches require people to

Kieran Chandler: They require people to trust in algorithms without fully understanding how they work, and it’s difficult. Can you share an example around this?

Sheri Hinish: Certainly. Let’s take something like a Google search. We typically rely on machine learning when we type in a phrase and scroll through maybe the top five to ten recommendations. How often do people really scroll past page two or page three? So, I think there’s a bridge that we can learn to trust, but it really is going to take connecting the “why” at the individual level and then cascading that across your organization, your supply chains, and your trading partners. Like you mentioned before, people need to understand the value in relying on technology as an enabler and that cooperation really provides the speed to value that’s needed in today’s modern business world.

Kieran Chandler: This is a topic we’ve touched upon so many times before: do the practitioners fully understand the tools they’re using? It’s difficult, right?

Joannes Vermorel: Yes, it’s difficult. Unfortunately, the track record of enterprise software has been quite poor for the last couple of decades. My casual observation is that when I look at the applicative landscape of any fairly large company, let’s say half a billion dollars and above, it’s a mountain of accidental complexity. This complexity does not even come close to reflecting the actual complexity of the business; it reflects things that are completely irrelevant to them. It can be old software architecture decisions made by the vendor decades ago for reasons that have been long gone, but they’re still at the core of the software for whatever reason. It might be because the software is serving a large diverse set of industries, so they end up with plenty of options that are just completely irrelevant to their specific case. This is called bloatware: over-broad software that can do everything but is way too much for the specific needs.

When you look at the track record decade after decade, it doesn’t naturally seem to go in the direction where no matter how good the technology can be, it will actually converge to something that is super practical and useful. This is because there isn’t naturally an active process to clean up and get rid of this accidental complexity. These systems tend to be strictly additive, where every layer comes on top of the previous one, and you end up with many layers. The older the company, the more ancient the company, the more layers you’ll find.

Kieran Chandler: “Know layers there is around and it’s only keep growing forever. Yeah, and we start wrapping things up a little bit now and funnel sort of question, and we’re in a very worldwide economy. You’ve got multinational corporations that have got silos across nations, different departments, and we’re talking about networks of huge scale. Is it very difficult to build trust across all of these networks and build those lines of communication?”

Sheri Hinish: “Yeah, I think it is difficult. That’s the elephant in the room. It’s, in my point of view, just through the lens of organizational leadership and change management. It’s hard to build trust without inclusive leadership and a culture that really embraces learning, embraces failure, curiosity, and the organization has to take time to truly understand those trade-offs and the management of change. You know, I was a practitioner. I was a demand planner. I accelerated through the ranks in my career, and I think when you feel like you’re just a cog in a machine or an exception alert or an override, it can be demoralizing.”

Joannes Vermorel: “I’ve consulted organizations who have been wildly successful in building networks at scale, but I’ve also seen it fail miserably. And I think that most people just never get over that hump of change. The key ingredient though is taking time to create space for that transformation, making sure that you’re ready, and recognizing that change is continuous. It isn’t something that you just come in on a Monday morning, you go live, and we have a digital transformation; we’re transformed, right? It doesn’t work like that. Technology is a tool. It’s an enabler, and you have to make it make an environment where individuals, all through an organization, all through a value network, they understand that this sort of advancement is tied to their effectiveness in their jobs and delighting the customer because that’s why we’re all in business. So the analogy that I use in my engagements is when you think about planting a flower, you have to make sure that the soil is ripe, okay? You can’t just go in, drop the seed, every now and-”

Sheri Hinish: “You just water the soil and you hope that the flower blooms. It’s much more complicated than that. And if we think about that analogy, there’s parallels to digital transformation. You have to make sure that the soil is ripe, that the roots are intact before you expect a pretty flower in two, two weeks, two years, two decades. So really focus on the soil, focus on making sure that you’re creating the right environment before you implement a tool that just gets you there even faster when you’re automating bad process and bad behaviors.”

Kieran Chandler: “Okay, we’re gonna have to wrap it up, but thanks for your time. So, that’s everything for this week. Thanks very much for tuning in, and we’ll see you again in the next episode. Bye for now.