Role Play Scenario: Sourcing Components in Brazil
Norwegian Viking Engineering Team
As Director of Purchasing (DOP) and Global Engineering Manager (GEM) you two represent Viking Engineering AS, an Oslo-based company. Four months ago, after a careful assessment by your engineers you met with senior management of Metrobras, a large Brazilian manufacturer in Sao Paulo to negotiate a contract for 800 R2D2s. These are complex components needed for a major project you are managing in southern Brazil. Being extremely busy, you rushed through a three-day negotiating session with Director Caetano Pinheiro and Chief Engineer Paulo Veloso, which included a lunch and a dinner, and placed an order for delivery in 90 days.
For several weeks Metrobras sent the required detailed weekly progress reports, then the reports became less punctual and less detailed. When a phone call with the chief engineer yielded only vague production figures, you two quickly flew to Sao Paulo. A quick check of the R2D2 production line revealed that Metrobas is about one month behind the plan. This is a very big problem: It could delay completion of the whole project by at least 30 days, which means Viking will incur heavy penalties wiping out much of the project’s profits.
Now in the Metrobras conference room with Caetano Pinheiro and Paulo Veloso, you quickly get down to business over cafezeinho. Barely able to contain your anger, you (the GEM) get right to the point, asking bluntly why they have fallen behind on production and why they failed to report problems sooner. Before the Brazilians can respond the DOL chimes in to say that Metrobas will have to reimburse Viking for the amount of any forthcoming penalty.
You are irritated and surprised when your Brazilian counterparts reply loudly and with vigorous gestures that you are being unreasonable, that the two sides should instead discuss steps to improve production and reduce the delay. Jet-lagged and tired from the long flight, you two end the meeting and return to your hotel without discussing a time or place to meet again.
After a rest you two meet at the hotel bar for beers to figure out what happened and discuss the next step.
Metrobras Brazil Team
You are Commercial Director Caetano Pinheiro and Chief Engineer Paulo Veloso of Metrobas, a large manufacturer based in Sao Paulo. Four months ago engineers from Viking Engineering AS of Oslo came to carefully assess your factory as a potential producer of R2D2s, complex components Viking needs for a large project in southern Brazil. When the assessment proved to be positive two Viking executives came to Sao Paulo to negotiate a contract for 800 R2D2s.
The Viking Director of Purchasing (DOP) and Global Engineering Manager (GEM) seemed to be in a great hurry, rushing through the two days of meetings and agreeing to only one lunch and one dinner, which severely limited the chances to get to know each other. When Paulo Veloso tried to gently hint about some potential production issues, the Norwegians ignored the hint and pushed Metrobras to accept the very tight delivery schedule of 90 days. Four months would have been more realistic, allowing time for working out any production kinks.
For the first few weeks of the contract you sent Viking the required detailed weekly progress reports. But then a manufacturing glitch popped up, slowing production. Confident that your engineers and production people would as usual be able to solve the problem quickly, you began to report less often and with fewer details. Soon however the Norwegian GEM phoned to ask what was going on. Obviously unhappy, he and the DOP flew into Sao Paulo, where you are now meeting. The GEM spent two hours on the R2D2 production line and concluded that you are about one month behind the plan. The DOP said this is a very big problem since it would delay completion of the whole project by at least 30 days, meaning Viking will incur heavy penalties wiping out much of the project’s profits.
At Metrobras the two Viking executives get right down to business over cafezeinho. Barely able to contain his anger, the GEM gets to the point, asking bluntly why you have fallen behind on production and why you failed to report the problems sooner. Before you can respond, detailing the steps you are already taking to resolve the glitch and your decision to add a second shift which will double production, the DOL adds that Metrobas will have to reimburse Viking for the amount of any forthcoming penalty.
Irritated and surprised with the visitors’ lack of understanding, you reply loudly and with vigorous gestures that they are being unreasonable and that both sides should instead discuss steps for resolving the problem, increasing production and reducing the delay. You are further surprised and upset when the Norwegians, jet-lagged and tired from the long flight, abruptly end the meeting and return to their Sao Paulo hotel without discussing a time or place to meet again.
Over a second cafezeinho you sit together, discussing what to do next.