INTEGRATED SUPPLY CHAIN ​​MANAGEMENT: ANALYSIS OF CULTURAL, TECHNOLOGICAL AND OPERATIONAL ASPECTS IN BRAZIL

As global trade has intensified in recent decades, shifting sources of input and production, the need to effectively manage information and product flows with suppliers and customers has become increasingly critical to the success of companies. This increase in global trade, international cooperation and vertical disintegration, with companies specializing in their core functions, has led to the notion that companies are links in a networked supply chain.

This new perspective created the challenge of designing and managing a network of interdependent relationships, developed and promoted through strategic collaboration. Thus, Supply Chain Management (SCM) represents one of the most important paradigm shifts in modern business management, recognizing that individual companies no longer compete solely as autonomous entities, but rather as supply chains.

This article will briefly review the main barriers to the use of collaborative practices and also how cultural, technological and operational aspects in Brazil can deepen or reduce these barriers, improving or worsening our country's competitiveness on the international scene.

BARRIERS TO INTEGRATED SUPPLY CHAIN ​​MANAGEMENT

Despite the numerous benefits intended with the integrated management of the supply chain, such as cost reduction, improvement in demand planning, obtaining operational synergies, sharing risks, increasing the chain's response speed, improving the level of customer service and adaptability to change, managers need to be aware of the challenges associated with implementing collaborative practices with business partners. We can, for the sake of simplification, organize the difficulties reported by executives in the SCM area into cultural, technological and operational barriers.

• Cultural Barriers

We can understand cultural barriers as all barriers resulting from the habits and behaviors of people involved in collaborative processes between companies. Despite being extremely complex to define all the mechanisms that “shape” a person's habits and behavior within the business environment, one can highlight the country's own culture, which encompasses peculiar aspects of the formation of a nation, its values, traditions and customs, organizational culture and evaluation and reward metrics, which act as a mechanism to reinforce habits and behaviors considered “appropriate” by a society, since they derive from them.

The influence of culture on the success or failure of geographic expansion initiatives, partnerships or the adoption of new processes and technologies is widely discussed in academic and business circles. To exemplify, one can remember the difficulty found by Toyota to implement “lean manufacturing” mechanisms in its factories outside Japan or the Walt Disney Company to reproduce its receptive and good-humored service with French employees at Disneyland Paris.

In Supply Chain Management initiatives, where collaborative practices must replace old competitive structures, assuming open information and joint decision-making, the culture of a country can be an important facilitator or a major challenge in this endeavor. Despite the extreme difficulty of objectively measuring its impact, studies suggest that societies that value collective and long-term gains tend to find it easier to implement integrated supply chain management mechanisms than those oriented to short-term individual gains.

• Technological Barriers

The whole process of collaboration and integration with commercial partners is intensive in the exchange and treatment of data, therefore, information technology has a prominent role in the viability of Supply Chain Management initiatives. Technological barriers can have three different origins: incompatibility of systems, complexity of information flows and problems in the technological infrastructure.

Inadequate or incompatible information systems are a fundamental barrier to collaboration as they make it difficult for chain partners to exchange information. Incompatibility problems begin with the lack of standardization of the information contained in the bar codes, which carry diverse information that is not always useful for improving planning and operationally integrating partners.

In addition, the use of proprietary systems, designed to deal with the companies' information internally and, therefore, autonomous, heterogeneous and not integrated, present an enormous challenge for the collaboration between partners in the supply chain, since the necessary information is found elsewhere. dispersed in these systems, a fact cited in all surveys of executives on the subject as one of the greatest obstacles to chain integration.

Despite the difficulty in exchanging data between companies, these only become valuable when transformed into relevant information and made available to decision makers. A great challenge therefore arises: dealing with the enormous complexity of information flows, which requires the analysis and interpretation of an enormous amount of information (volume), originating from different sources and in different formats (variety) and the availability practically in time real for a number of decision makers (velocity). This forces companies to select the most relevant data, use new and sophisticated analysis tools and be able to exchange information faster and faster, huge challenges for most organizations.

• Operational Barriers

Operational barriers to supply chain integration are understood as all obstacles related to the physical flow of products between companies, such as lack of qualified human resources at operational and executive levels, infrastructure and restricted resources, and inadequate legislation.

With regard to the qualification of professionals for the integrated management of the supply chain, an important factor must be considered: the management tools developed and taught to executives seek to improve the performance of the parts of the organization independently, that is, they were not conceived within the new collaborative paradigm proposed by the SCM, meaning that the professionals involved in the coordination of product flows do not have the artifacts to properly manage intra and inter company relationships.

Another frequently cited operational barrier to supply chain integration refers to the limitation of available resources, which are not always the most adequate to enable a broad integration of physical flows along trading partners. This can be the result of incompatible operational structures, such as different fleet profiles, or the lack of infrastructure, which can, for example, force a company to relate to several carriers, with an increase in the volume of data transacted and also the complexity of its operations. operations, due to the lack of rail transport.

The legislation also deserves attention when analyzing the barriers to the SCM. Conceived to mediate the relationships of independently managed companies, both the tax and civil structures can be impediments to the integration of material flows.

SPECIAL ASPECTS OF THE CULTURAL, TECHNOLOGICAL AND OPERATIONAL BARRIERS TO SCM IN BRAZIL

We are now going to analyze how some peculiar aspects of our country can deepen the previously mentioned barriers or serve as bridges to the SCM.

• Aspects of Brazilian culture for integrated supply chain management

Some characteristics of our culture seem to be extremely obstructive to collaborative practices, such as the fact that we value independence as a superior human value (“Independence or death!”) or, as stated by Sérgio Buarque de Hollanda: “the index of the value of a man is inferred, first of all, from the extent to which he does not need to depend on others, in which he does not need anyone, in which he is sufficient”, which is an aspect that does not favor associations and joint efforts of any kind.

Figure 1- Phrase that portrays the Brazilian characteristic of valuing independence

Another aspect that can represent an important barrier is the tendency towards excessive centralization of power in our institutions, seen as the only way to maintain cohesion and social order. To illustrate this trend, we can remember that in the history of our republic only three civilian presidents managed to finish their mandates: Juscelino Kubitschek, Fernando Henrique Cardoso and Luís Inácio Lula da Silva.

In addition, the predominance of the “adventurous” character, which on the one hand can favor facing the great challenges inherent to the new management paradigms proposed by SCM practices, can also become an obstacle insofar as one of its characteristics is give little value to slow efforts, with small short-term and persistent gains, fundamental to consolidate collaboration mechanisms.

Finally, our great versatility, which allows us to quickly adapt to new situations, discourages us from following recipes and manuals. Activities that require a sense of order, constancy and precision, so well performed by the people of the north, here tend to be overlooked, suffering from adaptations, “little ways” and shortcuts.

• Aspects of IT in Brazil for SCM

With regard to IT, three extremely relevant aspects must be considered by Brazilian executives: lack of standardization in the information contained in bar codes, use of proprietary systems and poor telecommunications infrastructure.

Studies indicate that, in Brazil, most companies define individually the information contained in the bar codes used to move products along the supply chain, which greatly hinders the flow of information between commercial partners. Coding is defined by the company's immediate information needs, without considering those that could be useful for suppliers and customers and, thus, would allow greater product traceability and contribute to improved inventory management. Although simpler and cheaper than the adoption of a single standard, the consequences of this lack of uniformity are the need to maintain multiple IT systems, the cost of re-labelling, greater difficulty in organizing internal IT and production.

With regard to system compatibility, it should be noted that there is ample documentation on the use of proprietary systems in Brazil, which are characterized by autonomy and restricted functionality. These systems, developed internally by the companies themselves or adapted from IT suppliers, are designed to solve specific issues, with little or no opening for information transaction between business areas or between companies. Recent surveys indicate that spreadsheets are still the most used analysis tools in the day-to-day activities of corporations in Brazil. Even ERP systems, in most cases, have their data structures adapted to the specifics of a company, which requires a considerable effort to exchange information.

When we analyze the infrastructure that supports the integration of information, the literature reports a close relationship between the use of Internet tools and the level of integration of companies with their customers and suppliers. Annual report released by Akamai Technologies, which shows how internet connections around the world behave, places Brazil in the 84th position globally, with an average speed of 2,7 Mpbs, an average connection speed even lower than the world average , which is 3,6 Mpbs. Other survey data can be seen in Figure 2.

Figure 2 – Average speed of internet connections in some of the main countries in the world
Source: Akamai Technologies – The State of the Internet 2013[/av_image]

When we look at telecommunication services in Brazil as a whole, the scenario does not change much. Considering the result of the study “Measuring the Information Society” of 2013, developed by the International Telecommunications Union (ITU) and which evaluates access to the internet, mobile and fixed telephony in 157 countries, Brazil occupies the 62nd position in the ranking, having down more than 20 places since the previous report. It is clear, therefore, that Brazil still has a long way to go in this regard, which may represent a short-term barrier to greater integration between companies.

• Operational Aspects
  • Labor

ManpowerGroup's 2013 annual survey, which included responses from nearly 40.000 employers in 42 countries, points out for the second consecutive year that the most severe talent shortage is found in Japan (85%) and Brazil (68%). Among the sectors most affected by the shortage of talent is logistics and supply chain, which require multifaceted professionals who combine knowledge in the areas of management, optimization and operations.

In addition to the lack of people to fill existing vacancies, what we see today in Brazil are professionals with little experience. According to the result of the survey “Profile of the Logistics Executive”, carried out by ILOS during the 2012 International Supply Chain Forum, the Brazilian logistics professional has, on average, just under 11 years of experience in the area, against about 20 years of experience from their American peers. This can be explained by the recent development of the logistics area in Brazil.

But to what extent can this lack of qualification and experience of logistics professionals affect the implementation of SCM initiatives? Without proper qualifications and a more comprehensive knowledge of the company's processes and the supply chain as a whole, professionals are less able to question the status quo and commercial relationships, measure their consequences and understand their contribution to greater efficiency in the organization and the chain. Without the right expertise, it's harder to see the benefits that come from intercompany collaboration.

• Legislation

Data released by the Brazilian Institute of Planning and Taxation (IBPT), in reference to the 25th anniversary of the enactment of the current Federal Constitution, are both impressive and frightening. From October 05, 1988 to August 31, 2013, 4.785.194 standards were edited. This represents, on average, 524 rules edited every day or 784 rules edited per business day. When one thinks that, on average, each rule has 3 words, one can have an idea of ​​the complexity of Brazilian legislation.

Figure 3- Numbers 25 years after the enactment of the current Federal Constitution
Source: Brazilian Institute of Planning and Taxation (IBPT)

Due to all this complexity, it is extremely difficult for a company to be absolutely sure that it is respecting all the legal norms in their entirety, including because some are contradictory. This fact creates a sense of legal vulnerability in the organization that can make an executive prefer not to open information about his company to his suppliers and customers, blocking any possibility of integration. In addition, these frequent changes in legislation make it difficult for organizations to think about long-term actions, which is one of the pillars of integrated supply chain management.

As previously mentioned, one of the main objectives of companies with SCM initiatives is cost reduction. In Brazil, however, due to the complex and archaic tax system, the integrated management of the supply chain ends up losing importance to the tax planning activity, which often makes collaboration between companies difficult. For example, the current tax war in the country, which strongly impacts the location of facilities, may force a company to operate far from its suppliers and customers in order to obtain a tax advantage. The cost for the whole chain can be higher, but for the beneficiary company it can mean a great advantage. In this way, companies end up prioritizing tax planning and not dedicating themselves to SCM initiatives.

On the other hand, if in Brazil we find so many elements that hinder the operational management of companies, some laws and restrictions end up working as incentives for greater collaboration between companies. An example of this is Law 12.619, the so-called “Lei dos Drivers”, which regulates the forms of remuneration and working hours for drivers. The new law brought important impacts on freight costs and, to mitigate such effects, companies are being forced to seek productivity gains in their operations. In this way, joint action between shippers and carriers emerges as one of the main ways to achieve this increase in efficiency.

• Infrastructure

In March of this year, the World Bank released the 4th edition of Connecting to Compete: Trade Logistics in the Global Economy, a report that evaluates the logistics of 160 countries and takes into account the perception of more than 1.000 businessmen around the world in relation to the efficiency of the nation's transport infrastructure. With regard to the last ranking, released in 2012, Brazil fell 20 positions, now occupying the 65th place and behind other Latin American countries, such as Chile, Mexico and Argentina. This is the country's worst ranking since the ranking was launched in 2007, as can be seen in Figure 4. Still on Brazil's performance, it should be noted that the country saw its performance drop in all six items assessed by the research: quality of transport infrastructure, services, efficiency of the customs clearance process, cargo tracking, compliance with delivery deadlines and ease of finding freight at competitive prices. The first three positions in the ranking are occupied by Germany, Holland and Belgium, respectively.

Figure 4- Evolution of Brazil in the world ranking of logistics
Source: World Bank – Connecting to Compete: Trade Logistics in the Global Economy 2014

When the PAC (Growth Acceleration Program) was launched, the expectation was that this situation would improve and Brazil would be able to see its logistical efficiency increase significantly, with the offer of varied modes, integration between highways, railways and waterways, elimination of congestion in ports and improving road quality. However, what you only see is the demand for transport increasing and the works not getting off the ground, with an average delay of 48 months in the PAC works, according to an ILOS survey.

The poor quality of the logistics infrastructure can also be an important barrier to the adoption of SCM initiatives, since it forces companies to relate to a much larger number of partners and logistics operators to make their operations viable, which can require an effort greater coordination and IT. In addition, making a parallel to what Maslow's Pyramid would be like for people, it is as if companies in Brazil had basic needs not yet fully met, which would make it difficult to discuss more structured issues of collaboration and integration in the supply chain.

CONCLUSIONS

Supply Chain Management presents itself as a new and important efficiency paradigm for companies, assuming a level of integration and collaboration that requires deep transformations in management models and tools. As with any change, it is essential that we understand the barriers that arise so that we can prepare accordingly.

Before bringing concrete answers about the existing barriers in Brazil, this article simply proposed to analyze some facts widely publicized and discussed in the media and raise some hypotheses, which we intend to deepen with a broader study and research with executives in the area, which can contribute decisively to have a broad overview of SCM in Brazil.

We can, however, perceive that we have enormous challenges ahead, since the peculiar aspects of our culture, IT and operations present themselves, in this first analysis, more as barriers than as facilitators of collaboration and integration initiatives, according to the table -summary below. If we consider that some of the aspects presented can still be combined, giving each other mutual feedback, we must dedicate ourselves to this discussion seriously at the risk of falling behind and losing even more competitiveness in the international scenario.

Table 1- Summary of the main Brazilian barriers and peculiarities that may influence the adoption of collaboration and integration initiatives between companies.

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