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Supply Chain Security & Risk Mgmt.

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Practicing Conflict Resolution in Supply-Chain Management

A conversation with Stewart L. Levine, founder of ResolutionWorks.

The supply chain is a natural breeding ground for conflict. Start with all of the individuals within an organization who are responsible for some aspect of getting product to market. Then add in all those external partners, from providers of raw materials and components to contract manufacturers, product designers, logistics-management providers, distributors and resellers. Each has its own perspective and opinion about how goods and information should flow through the chain. In such an environment, strife and misunderstanding are almost inevitable - unless the parties are versed in the art of conflict resolution. In this interview, conducted in San Francisco at the "Best Practices" Conference of the Institute of Business Forecasting and Planning, Stewart L. Levine, founder of ResolutionWorks and author of Getting to Resolution: Turning Conflict Into Collaboration, offers guidance on how individuals and companies can minimize the conflicts that arise in any multi-party initiative. It's human nature, to be sure - but there are ways to get around the tendency of individuals to become "entrenched about the rightness of what they're advocating," Levine says. He also shares some tips on how to set up a formal process for conflict resolution.

Q: Why is a formal process for conflict resolution required in the context of supply chain?

A: Levine: For a couple of reasons. If you think about it, the whole supply chain process is in place to raise conflict. The differences between the various vectors - supply/demand, marketing/sales - actually surface those conflicts. Bob Stahl, one of the expert gurus in this field, has been doing it in an intuitive way. He calls it "making sure the ugly moose is on the table." When he discovered my book and my work, he recognized that there is a conversational process whereby you can teach people how to move through conflict.

One of the critical pieces that we often don't take into account is that people get pretty entrenched and positional about the rightness of what they're advocating for. This often will lead to strong emotions. If you resolve the surface differences of opinion about what demand and supply should be, but not the ongoing and underlying conflict that happens on a relationship level, it's going to come back to bite you in the process. So that's reason number one.

Reason number two would be that we are working virtually now. And when you're working virtually, one of the key [ways] to do it more effectively is to have a bit more formality in the communication process. A consistent, formal, previously agreed-upon process to move through differences is a very powerful tool for people to use.

Q: Is that contained in up-front contracts with supply-chain partners? Is it all spelled out in black and white?

A: Levine: If I were doing it, it would be very, very explicit. One of the reasons that you end up in situations of conflict is that people have certain levels of implicit understanding of what the details of the collaboration are, but they haven't made them all explicit. If I were operating the process and facilitating for an organization, I would make sure that it's a detailed process. I'm not talking about a legal agreement - I mean an operational agreement. How will we deal with conflict when it inevitably surfaces, anytime humans are trying to work and collaborate together?

Q: As you point out, supply chain is by definition multi-partner and multi-company. Doesn't it raise issues of conflict, where you have different partners, countries, cultures, languages and long distances?

A: Levine: You've got a choice. You can put your head in the sand, cross your fingers and pray that nothing huge will happen. Or you can be very realistic, and recognize that because of all the factors you just mentioned, inherent in the process, you're going to have conflict. Why don't we realize that on the front end, and plan for it? So that when it happens, as opposed to levels of panic and anxiety, and the rising of emotions, we have an agreed-upon process that we go to, to move through it.

Q: What are some of the elements involved in increasing collaborative capacity?

A: Levine: It's critical for individuals participating in the process to become more emotionally intelligent, conscious communicators. You just raised the point of working across geographical boundaries in a global environment. In today's universe, we have high-context cultures and low-context cultures. Those differences alone are going to raise situations of conflict. So people need to become more emotionally intelligent, conscious communicators, realizing that when they say something to a culture, speak into a context that is different from theirs, perhaps very innocently, they could create havoc on the other side.

Raising that awareness is a key [effort], in terms of [shaping] the kind of communicators that people participating in the process become.

Q: What are some keys to truly resolving conflict?

A: Levine: Number one is the mindset of something that I call resolutionary thinking - that it's not you or me, it's you and me. We need to use our creativity to come up with a solution that takes care of your needs and mine. It's not a zero-sum game. Winning and losing are great for games, but in situations of conflict where we need to unpack, winning and losing is not what it's about. It's about teaching and learning from each other, so that we're not attached to the position that we carry. We're open to the influence of what we hear.

Often people think that negotiation is about winning or being right. The most powerful form of negotiating is when I'm trying to meet your needs, and you're trying to meet mine. Then we can create something that works for the larger goal and the larger enterprise.

Q: I see you avoided the cliche of "win-win," but that's really what you're talking about, isn't it?

A: Levine: Absolutely. It's interesting that you mentioned win-win, because one of the endorsers of my book is Stephen Covey, who talks a lot about having win-win agreements, although he doesn't tell you how to get them. One of the things that I have is in my book is a very specific formula for how to create win-win agreements.

Q: I keep coming back to this issue of cultural differences - the idea that you can say something, and the other side will hear something completely different. Do you recommend that we educate ourselves culturally about each other, so that we understand those the different signals that are being given?

A: Levine: Absolutely essential. We must educate each other. There's lots of information that we can look to. When you're dealing with a particular culture, it's incumbent upon one to study and be aware of what (people are) speaking into. There are little techniques, like freeway communication: "Would you please repeat back to me what you heard me say, so that I can validate it?" It's important to make sure that we have effective communication, which is establishing shared meaning and common understanding.

Q: Can you show measurable benefits that come out of this effort?

A: Levine: Absolutely. Most people stay away from some of this "soft" stuff. It's easier to deal with hard numbers, technology. And yet to create an effective supply-chain process, about 60 percent of change-management [must involve] the human element. You asked for a statistic. Here's a very simple one. According to a recent report in a Harvard Business School newsletter, an organization introduced three words into their culture, and they had a 31-percent productivity improvement in nine months. What were the three words? "Please" and "thank you." The human element becomes very critical in this area. Organizations today are hiring for emotional intelligence. They can teach people the technical skills, but emotional intelligence is something that some folks are lucky enough to have more of.

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Keywords: Supply chain management, conflict resolution, supply chain collaboration, supply chain communication, supply chain best practices, contract negotiation, sourcing solutions, supply chain risk management

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