Northfield, Ill.—Supply chain specialist Robert Nadeau knows an endless loop when he sees one.

"If I don't trust you, and you don't trust me, can we help each other? I'm going to cover myself first and ignore your problem beyond the point that I can help," said Nadeau.

He poses that scenario as the dilemma in the ongoing battle of trust between distributors and manufacturers.

That, he said, is the situation in which 87 percent of distributors and manufacturers who answered a survey about trust in relationships find themselves. Nadeau is principal of the Industrial Performance Group in Northfield, Ill.

After a four-year study by IPG that produced some negative results about manufacturer/distributor relationships, Nadeau did a follow-up survey asking why those relationships had deteriorated so badly. The results, released last November, show that both sides agree there is a lack of commitment and trust, but each finds it difficult to make breakthroughs, he said.

"We found lack of trust to be by far the biggest issue," he said. "There is an attitude, a belief, that has become dogma. They each think the other is more to blame for poor performance, lack of communication and increased distrust."

The news is good and bad, Nadeau said.

"Actually, I hate to say it but the recession is sharpening this issue and making more people take notice. For decades, as the economy went down but then improved, everyone settled for the status quo and the idea that, 'We aren't doing great, but we're making enough money to be comfortable.' The sides want to change and become more communicative and cooperative, but they are ingrained with the idea that they should not trust each other. It's called 'cognitive dissonance,' meaning they can't believe one way but act in another," he said.

"We've outlined then detailed the problem, so now we need to convince them to find ways to remedy the situation," Nadeau added.

According to Nadeau, manufacturers view the business/profit cycle as so short that "long-term" has come to mean 90 days. By becoming increasingly impatient about quarterly profit deadlines, manufacturers tend to take on more distributors or sell direct. A direct sale, in theory, means a better profit margin for that sale.

But the strategy backfires, he said. Distributors, seeking retribution and sales protection, add competitive lines and the cycle of mistrust continues.

What's the next step toward addressing the problem? In December, Nadeau planned to post a new survey on www.indusperfgrp.com "that looks at the relationship between redundancies and inefficiencies in the channel vs. the costs in real dollars the two sides incur," he said. He expects the survey results to be available later this winter.

"When we can show in dollars the huge costs associated with mistrust, I think we can convince distributors and manufacturers to change," he said.