Integrated Supply Chain Management - Cultural Barriers

After the two posts on the benefits of integrated supply chain management, it is necessary to highlight the challenges associated with the implementation of collaborative practices with commercial partners (FROHLICH and WESTBROOK, 2001). In this post, we will begin to address the cultural barriers to collaboration between companies in a production chain.

Initiatives of Supply Chain Management involve, most of the time, profound cultural changes that allow establishing trust between buying and selling companies, remodeling adversarial behaviors in collaborative relationships between the various partners in the chain (BRAUNSCHEIDEL et al., 2010). In addition, the integration between business areas and commercial partners, transacting products and services across national borders, requires openness to the “different” in a multicultural approach, often overlooked by the executives involved in these processes (CANEN and CANEN, 2005) .

Cultural or relational barriers are understood as all obstacles resulting from the habits, behaviors and prejudices of people involved in collaborative processes between companies (BRAUNSCHEIDEL et al., 2010; CANEN and CANEN, 2005). Although it is complex to define all the mechanisms that “form” a person's habits and behaviors within the business environment, the country's own culture can be highlighted (CANEN and CANEN, 2005), which covers peculiar aspects of the formation of a nation , its values, traditions and customs, the organizational culture (BRAUNSCHEIDEL et al., 2010) and the evaluation and reward metrics (AKYUZ and ERKAN, 2010), which function as mechanisms to reinforce habits and behaviors considered “appropriate” by a society, since they derive from it.

national culture

The influence of culture on the success or failure of geographic expansion initiatives, partnerships, mergers and acquisitions or the adoption of new processes and technologies is widely discussed in academic and business circles (CANEN and CANEN, 2005; MOTTA, 1996). CANEN and CANEN (2005) point out that a considerable portion of failures in partnerships, mergers and acquisitions is due to a lack of understanding of the importance of a multicultural training of managers, which allows accepting and dealing with diversity.

HOFSTEDE (2001), based on work begun in the 1960s with more than one hundred and fifteen thousand executives in seventy countries, notes the importance of national culture in labor relations, surpassing even factors considered more relevant such as position, profession, age and gender, and the consistency of this influence over time.

Despite the numerous criticisms that his work has received over time, enumerated, summarized and in part admitted by HOFSTEDE (2001) himself, such as the use of a questionnaire to measure cultural aspects, the use of nations as units of measurement for culture, the use of subsidiaries of the same company to extrapolate the findings, old data, few and summarized dimensions to address complex aspects and little attention to the individuality of people, some authors (DÖRING and FEIX, 2004; HORNIBROOK and YEOW, 2004) have used their dimensions to estimate to what extent certain cultural characteristics can act as barriers to supply chain integration, highlighting power distance, high level of aversion to uncertainty and short-term orientation as the main obstacles to the adoption of SCM practices.

Other authors present different cultural dimensions (TROMPENAARS, 1994; SCHWARTZ and BOEHNKE, 2004), but it should be remembered that all are simplifications of complex structures (LACERDA, 2011). CANEN and CANEN (2005) warn against the risk of building stereotypes and caricatures based on these generalizations of national culture, which do not recognize individuality as a fundamental driver of attitudes and behaviour.

Organizational culture

Despite the importance of understanding the peculiarities of the national culture for the success of supply chain integration, the barriers and difficulties resulting from differences between nations are usually more predictable than those arising from differences between organizational cultures (WEBER et al., 1996), which need to be considered and studied (CADDEN et al., 2010). Despite this, BRAUNSCHEIDEL et al. (2010) highlight the existence of little literature available on the impacts of organizational culture on supply chain integration, which has only recently become the object of studies (CADDEN et al., 2010; CADDEN et al., 2013; FAWCETT et al..

Within the same country, and within the same sector of the economy, companies with very different values ​​and ways of acting can be found (HOFSTEDE, 1986; SCHEIN, 1992). In integrated supply chain management, where collaborative practices must replace old competitive structures, assuming open information and joint decision-making, organizational culture can be an important facilitator or a major challenge in this endeavor (CADDEN et al., 2013). Despite the difficulty of objectively measuring this relationship, two approaches stand out in the literature on the subject: cultural fit (CADDEN et al., 2010; CADDEN et al., 2013) e competing values ​​framework (CVF) (BRAUNSCHEIDEL et al..

CADDEN et al. (2010) state that the term cultural fit (“cultural fit”) has been widely used in the literature, also appearing as “cultural compatibility” and “acculturation”. It treats, according to CADDEN et al. (2010, p.43), “the sharing of values, beliefs and behavior patterns that permeate inter and intra supply chain partner organizations”, emerging as a growing concern for organizations involved in relationships with suppliers and customers (PHILLIPS et al., 2006). CANEN and CANEN (2008) highlight the need to form a multicultural leadership, capable of recognizing and promoting multiculturalism as a mechanism for integration and improvement of competitiveness.

BARRINGER and HARRISON (2000), analyzing different types of relationships between commercial partners, conclude that most of them are very difficult to be managed without an alignment of organizational cultures, adding that the inability to do this alignment results in integration failures, which is corroborated by FAWCETT et al. (2008), who consider the misalignment between organizational cultures as one of the main barriers to the effective practice of SCM. CARTWRIGHT and COOPER (1993) present several evidences that the cultural incongruity between two companies that seek integration results in low productivity, financial losses, low level of satisfaction in the relationship and high levels of conflict.

Despite evidence of a positive relationship between cultural fit and result, CADDEN et al. (2013) point out, from the comparison of the performance of different supply chains and the degree of congruence between the organizational cultures of the companies that compose them, to a dissonant result, since the chain with the best performance was precisely that formed by companies with less alignment between their organizational cultures. CADDEN et al. (2013) assume that this result may indicate that when it comes to a relationship between only two companies, or a merger and acquisition process, the need for cultural alignment is more relevant than in a scenario with multiple participants, where each one maintains its independence, as in the case of a supply chain.

In addition, as organizational culture is composed of multiple aspects, the supply chain that presented the greatest general congruence among its members, and the worst result, may have had a significant misalignment in just a few cultural aspects, causing what CARTWRIGHT and COOPER ( 1993) called cultural clash (“culture shock”), deteriorating overall performance (CADDEN et al., 2013). Therefore, it is suggested the need to analyze not only the congruence of organizational cultures, but above all the compatibility between culture profiles.

Study by BRAUNSCHEIDEL et al. (2010) also analyzes how the different types of organizational culture are related to the adoption, promotion and reinforcement of integration initiatives in the supply chain, intra and inter companies. For this, BRAUNSCHEIDEL et al. (2010) use the different organizational culture profiles of the model competitive value network (CVN), developed by QUINN and ROHRBAUGH (1983).

BRAUNSCHEIDEL et al. (2010) examined whether a given organizational culture profile positively or negatively influences integration with supply chain partners and whether this actually results in better performance. Their analyzes offer evidence that the organizational culture and the organization's performance are directly related to the adopted integration practices. They also conclude that the types of organizational culture proposed by the CVF are directly related to the adoption of internal and external integration practices.

Thus, there seems to be enough evidence that organizational culture plays a relevant role in the success, or failure, of SCM initiatives, making the incongruity between the values ​​and beliefs of business partners and the inability to deal with existing differences to be considered an important barrier to SCM (FAWCETT et al..

Performance indicators

Going down one more level in the analysis of how issues related to certain patterns of behavior can be obstacles to the integration of the supply chain, one can take the performance indicators and reward mechanisms, always listed as barriers to the SCM (AKYUZ and ERKMAN , 2010; FAWCETT et al., 2008), as a reflection of the organizational and national culture, reinforcing them, which may partly explain the great difficulty in modifying them in the short term.

There is abundant literature (AKYUZ and ERKAN, 2010; DESHPANDE, 2012; GUNASEKARAN et al., 2004; ZHANG et al., 2011) about the problems faced to effectively measure the performance of SCM practices. to GUNASEKARAN et al. (2004), although performance measures play an important role in determining objectives, evaluating results, behaviors and defining future actions, they have not received enough attention from executives and researchers.

SHEPHERD and GUNTER (2006) highlight the need to develop a new system of performance measures to Supply Chain Management, since traditional measures present application problems in this new management paradigm. The main problems pointed out in the performance indicators applied to SCM are:

• Inability to deal with complexity ð there is great difficulty in developing measurement mechanisms to assess the performance of the supply chain, considering that it can present enormous complexity, resulting from the use of different IT systems, geographical dispersion of companies, cultures different, constantly changing environments, which requires adaptive metrics (GUNASEKARAN et al., 2004; LAMBERT and POHLEN, 2001);
• Use of internal and isolated metrics ð traditional performance measurement systems were designed within the “resource-based” management paradigm and not the “relational view”, which makes it difficult to assess the supply chain as a whole and leads to inconsistencies in the analysis of the results (AKYUZ and ERKAN, 2010; DESHPANDE, 2012; SIMAPUTANG and SRIDHARAN, 2002);
• Predominance of financial indicators ð despite the fact that managers have perceived the inadequacy of exclusively using financial indicators to evaluate the results of supply chain integration, since they encourage actions that lead to short-term gains and are unable to assess the value created for end customers, there is still a strong bias in the use of cost indicators (AKYUZ and ERKAN, 2010; KAPLAN, 2005)
• Lack of connection with the chain strategy ð First, the strategy of each member of the supply chain can be considerably different, which already creates a challenge to define the indicators that serve the purposes of the different strategies. In addition, the indicators used to measure the chain's performance often conflict with the company's strategy, leading to the failure of the initiative (AKYUZ and ERKAN, 2010; LAMBERT and POHLEN, 2001; SIMAPUTANG and SRIDHARAN, 2002);
• Excess of indicators ð in an attempt to correct some of the limitations presented above, a large number of indicators are created, which makes it difficult to identify those critical within the unnecessary majority (AKYUZ and ERKAN, 2010).

The difficulty of measuring performance and, therefore, ascertaining benefits is a major barrier to supply chain integration (FAWCETT et al., 2008), as managers need to justify decisions and investments. It is also important to remember that inappropriate measures lead to inappropriate behavior, reinforcing some of the aspects discussed in cultural barriers.

Table 1 summarizes the main issues associated with cultural barriers to supply chain integration.

Table 1 - Summary table of cultural barriers

Figure 1 presents the intricate network of relationships between supply chain integration problems associated with cultural issues, creating a complex image for Table 9. It can be seen that problems can arise from several unwanted characteristics of national, organizational or cultural culture. of performance metrics, with the identification of their causes obscured and, consequently, making their treatment difficult.

Figure 1 – Network Design of cultural barriers to supply chain integration
Source: AUTHOR using Atlas.TI tool

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