Omar is an executive, with a lot experience in Supply Chain. He was the president of a consulting company and today is a partner of Vista Consulting. Mauricio spoke with him about his experience with Political Games in Supply Chain.
Mauricio: I would like you to tell me a little about Supply Chain, since you have a lot of experience in this industry, specifically what type of Supply Chain games you have seen, and where they come from.
Omar: The own nature of the Supply Chain function executive is to manage conflicting objectives. The executive of Supply Chain is the mediator in the chain of value of the operation. This means he is in the middle, between the production director, the industrial manager who needs to increase his productivity to the limit with an item. (In other words, the ideal for him would be to produce just one item, without stopping the production line; then he would achieve his best productivity goals).
Mauricio: Where does the Game begin and end?
Omar: The game begins when the functional, commercial or industrial executive wants to follow his personal agenda over the company’s objective: “Look, the most important is to keep the low costs of production. My performance goal is associated with productivity and I am not going to change and do the variety of products what the commercial manager wants”. So then a power struggle starts, whoever screams louder, gets more. This is one of the strongest games.
Another game I see is often is related to the inventories management. At a food company, I saw a manager from the South say: “I need pizza here...” (pizza is a generic example, I won’t comment on the name of the company...) “I need pizza here because I am going to sell a lot.” And he fills up his inventory with pizza and pushes prices with discounts because he is overstocked, and pushes it on the market. And in the meantime, a manager from the Northeast, who didn’t scream so loudly, could have sold it without a discount, and he didn’t because he was understocked...
So a game of power begins, of being the boss’s friend, of following his agenda: “No, but I have already spoken with the president, and he said to send it here...” So again, the Supply Chain function ends up on the ropes in these games.
Mauricio: This is interesting because there are several games being played. You have to talk to the boss, at the same time as you have a secret reserve of “pizzas”. Very interesting. Do you have any ideas for solutions to reduce these games?
Omar: Maurício, what most catalyzes this game is not having appropriate system of performance indicators. You have an indicator that favors the individual and the function but not the process; so the executive in the Supply Chain has to be a hero to equalize things, he has to use a lot of persuasion.
If you create a process indicator, you can reduce this game in a tangible manner. Besides, the hierarchical position of the Supply Chain executive should be in the minimum at equal with their teammates in the functional segment, and preferably, report directly to the Company's CEO.
Mauricio: Excellent! Very good! Thank you!