Impact of formalism for Supply Chain Management in Brazil

In Brazil, there is a large number of laws, rules, norms and procedures that seek to reduce risks, ambiguities and uncertainties, increasing control over people's behavior and actions. This occurs due to the cultural characteristic of formalism, present in our country. Apparently contrary to personalism, another striking characteristic of our culture, these two seem to be compatible through the “jeitinho”, as proposed by Roberto DaMatta. The consequence of this is discrepancies between what is written and what is actually done, resulting in the creation of countless activities and control mechanisms in organizations.

There are many evidences that suggest the excessive formalization required in Brazil in the area of Supply Chain Management, such as the recurring example of the need to transport goods accompanied by a document for inspection on-site visit, which is emblematic for bringing together the characteristics of formalism: requirement for written documentation and redundant control mechanisms.

Countless other examples could be presented to illustrate the obstacles in the SCM area in Brazil caused by formalism, such as the excess and complexity of tax rules, absurd customs procedures... This type of bureaucratic formalization is extremely adverse to the integrated management of the supply chain. supplies, as it hinders the flow of resources between the links and makes the process slower and more expensive.

Another recurring complaint from executives in the area, the waste of time, is related, on the one hand, to formalism (its inefficiencies and double checks), and, on the other, to the Brazilians' own relationship with the passage of time and the low level of orientation towards compliance with plans. This is not a characteristic that affects SCM exclusively, but especially, since agility and productivity are benefits sought by its practices, being directly harmed by this characteristic.

It is also evident that the excess of formalities creates difficulties that end up opening space for corruption, which can generate inequality in competitive mechanisms, since not everyone would need to follow the same rules or start from the same cost base, which discourages productivity and integration. Obviously, corruption is not the exclusive result of bureaucracy, nor can its influence be ruled out.

For all this, as urgent as the infrastructure issues, the SCM area, in order to develop in our country, needs a reform that reduces the bureaucracy of the operation, simplifies taxation, eliminates “shortcuts”, avoids corruption and favors the association between business partners.