ABSTRACT
This study focused on the effect of Supply chain management (SCM) on organizational performance, a study of selected manufacturing firms in Abia State. However, the specific objectives of the study were to; examine the effect of integrated make-to-stock supply chain on organizational market share, determine the impact of continuous replenishment supply chain on organizational effectiveness, ascertain the effect of build-to-order supply chain on organizational growth and determine the factors militating against supply chain management in an organization. The study was guided by a descriptive survey design because it gives detailed information about issues, problems, events and describes events as they are. Both primary and secondary data were used. The population of the study was 444 employees and the sample size of 210 respondents was obtained using Taro Yamane techniques. The researcher used questionnaire for data collection. The data gathered for the study was analyzed using descriptive analysis. Pearson Correlation was used to test hypothesis one and three, hypotheses two and four was tested using ANOVA and hypothesis four was tested with Pearson Chi square with the aid of Statistical Packages for Social Sciences (SPSS) version 23. The study found that integrated make-to-stock supply chain has significant effect on organizational market share. There is significant impact of continuous replenishment supply chain on organizational effectiveness. Also, build-to-order supply chain has a significant effect on organizational growth. Ineffective leadership and inadequate logistics planning are among the factors militating against supply chain management in an organization. The study recommended that management of selected manufacturing firms in Abia State should make and implement policies that will enhance their supply chain network in order to boost their market share.
TABLE OF CONTENTS
Title page i
Declaration ii
Certification iii
Dedication iv
Acknowledgments
v
Table of
Contents vi
List of Table viii
Abstract ix
CHAPTER 1: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 4
1.5 Research Hypotheses 5
1.6
Significance of the Study 5
1.7
Scope of the Study 5
1.8 Limitations of the Study 6
1.9 Brief History of
Organization under Study 7
1.10 Operational Definition of
Terms 9
CHAPTER 2: REVIEW
OF RELATED LITERATURE
2.1 Conceptual Framework 11
2.1.1 Supply chain 11
2.1.2 Supply chain management 13
2.1.3 Supply chain management practices 13
2.1.4 Integrated make-to-stock supply chain model 16
2.1.5 Continuous replenishment supply chain model 17
2.1.6 Build-To-Order supply chain model 18
2.1.7 Supply
chain management and customer relationship 19
2.1.8 Key elements of supply chain management 20
2.1.9 Relationship between supply chain management
and organizational performance 21
2.1.10 Benefits of supply chain management 23
2.1.11 Supply chain complexity 24
2.1.12 Challenges of supply chain management on organizational performance 24
2.1.13 Organizational performance 25
2.2 Theoretical Framework 28
2.2.1 Queuing theory 28
2.2.2 Agency theory 29
2.2.3 Game theory 30
2.2.4 Resource-based view theory (RBV) (Ray, Barney and Muhanna,
2004) 31
2.3 Empirical Review 32
2.4 Gap in Literature 35
2.5 Summary of Reviewed Related Literature 35
CHAPTER 3
METHODOLOGY
3.1 Research Design 37
3.2 Sources of Data 37
3.3 Population of the Study 37
3.4 Sample Size Determination 38
3.5 Sampling Technique 38
3.6 Description of the Research Instrument 38
3.7 Validity of the Research Instrument 38
3.8 Reliability
of the Research Instrument 39
3.9 Method of Data Analyses 39
CHAPTER 4
DATA PRESENTATION
AND ANALYSES
4.1 Return Rate of Questionnaire 40
4.2 Data Presentation 43
4.3 Test of Hypotheses 47
4.4 Discussion of Results 51
CHAPTER 5: SUMMARY OF FINDINGS,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary of
Findings 53
5.2 Conclusion 53
5.3 Recommendations 53
5.4 Area for Further Studies 54
REFERENCES
APPENDICES
LIST OF TABLES
3.1: Population Table 37
4.1 Distributed and Return of
the Questionnaire 40
4.2 Distribution of respondents
according to Gender 40
4.3: Distribution of
Respondents According to Age 40
4.4: Distribution of respondents according to
Years of Experience 41
4.5: Distribution of respondents according to
Academic Qualification 42
4.6: Distribution of respondents according to
Marital Status 42
4.7: To examine the effect of
integrated make-to-stock supply chain on
organizational market share. 43
4.8: To determine the impact of
continuous replenishment supply chain on
organizational effectiveness 44
4.9: To ascertain the effect of
build-to-order supply chain on organizational growth
45
4.10 To determine
the factors militating against supply chain management in an organization 46
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Supply chain management (SCM) is the broad range of
activities required to plan, control and execute a product's flow, from
acquiring raw materials and production through distribution to the final
customer, in the most streamlined and cost-effective way possible. SCM
encompasses the integrated planning and execution of processes required to
optimize the flow of materials, information and financial capital in the areas
that broadly include demand planning, sourcing, production, inventory management
and storage, transportation or logistics and return for excess or defective
products. Both business strategy and specialized software are used in these
endeavors to create a competitive advantage. Supply chain management is an
expansive, complex undertaking that relies on each partner from suppliers to
manufacturers and beyond to run well. Because of this, effective supply chain
management also requires change management, collaboration and risk management
to create alignment and communication between all the entities (Bahri-Ammari,
2013).
Supply chain management practices are increasingly
becoming an imperative main item in the attainment of competitive advantage in
many service organization and in the world today. Supply chain (SC) surrounds
all movement associated with the flow of goods and services from raw material
stage to the final products. In supply chain the number of competitors is
expanding and increasing both locally and globally. Organizations not only have
to restore their operations to produce goods and services of high quality which will greatly distinguish them
from others and make them respond to the changing market dynamics through the
efficient and effective management of the supply chain (Stock and Boyer, 2009).
A supply chain is made up of several business entities
which include suppliers, manufacturers, wholesalers, distributors, retailers
and customers and they make sure that the flow of raw materials, component
parts or finished goods from the source extend or reach to the final
destination. Companies cannot run away from being part and parcel of Supply
Chain Management (SCM) in either operational or strategic level (Mohanty and
Deshmukh, 2005).
Herland (2012) postulated that Supply Chain Management
(SCM) involves managing a network of interconnected business involved in the
ultimate provision of products and services or service packages required by the
end users. Effective Supply Chain Management (SCM) has enhance valuable way of
securing competitive advantage and improving organizational performance in any
manufacturing firms. Supply chain management (SCM) is one of the important
functions that need to be performed efficiently in every business.
Organizations have now realized that their success depends on their capacity to
design and manage their Supply chain management (SCM) system effectively
(Lelin, 2014).
Over the years the nature of Supply chain management
has changed to the range that organizations no longer compete against companies
on the basis of quality as it was practiced in the 90s, notwithstanding, the
new source of business competition lies outside the walls of the firm but it is
determined by how effectively these organization link their operations with the
Supply Chain Partners. As global competitions increases, manufacturing
companies should be more involved on how their customers and suppliers conduct
their business (Harland, 2012).
Supply chain management execute various function which
includes; receiving and processing of goods and services from user department,
coordinating the preparation of annual procurement plans as submitted by the
relevant departments, advertisement of tenders, preparation of tender documents
in consultation with the user department, preparation of the letter awards,
processing of goods, delivery schedules to user departments, execution of
market research and price survey on goods and services required by financial
institutions; maintenance of the updated suppliers register and files for the
purpose of rating and preparation of annual reports ((Mohanty and Deshmukh,
2005).
Supply Chain is influenced by various factors and one
of the most important factors influencing the execution of Supply Chain is
strategic supplier alliances and the other factor is having good
connection/relationship with customers which are needed for successful
implementation of Supply chain management (SCM). Supply Chain partners that
exchange information regularly are able to work together as a team because they
understand the needs of the final consumers and are able to respond to changing
market, but supply chain fails when there is delay in information and supply
chain management depends on the extent of quality of information shared
(Narasimhan and Jayaram, 2013).
The short term objectives of Supply chain management
(SCM) are primarily to enhance production performance while long-term
objectives are to increase market share and profits for all members of the
organization or supply chain. It is only by embracing Supply chain management
(SCM) practices that manufacturing firms will be recognized by their customers (Mohanty and
Deshmukh, 2005).
1.2 STATEMENT OF THE PROBLEM
Many studies have emphasized on Supply chain
management practices but most have failed in their attempt to provide
sufficient information on effect of Supply chain management in organizational
performance. This brings about the existence of Supply Chain flaws and problems
in the manufacturing firm thereby preventing the achievement of a competitive
advantages and the set goals. The critical challenge mostly encountered by
various manufacturing firm in Abia State include the use of ineffective Supply
chain management practices, poor integration of information and communication
technology among others. The increased attention given to Supply chain
management has not been able to offer much by way of guidance to help the
practice of Supply chain management in an organization. There is an increasing
conceptual confusion and environmental differences in organization using Supply
Chain and it is an evidence that cultural, social and economic aspects of each
country do influence the link between Supply chain management practices and
performance.
Currently, supply chains are growing in complexity due
to several factors, the customers, are demanding innovative products at the
right time and at a reasonable price. This creates challenges for companies
since creating both responsive and cost-effective supply chains is critically difficult.
However, one of the biggest challenges that manufacturing
companies in Abia state are facing is how to reduce their supply chain cost in
order to satisfy customers’ price expectations, companies have opted to
relocate manufacturing to low cost countries around the world in an effort to
reduce direct and indirect costs and to minimize taxes. But, having global
suppliers contributes significantly to complexity that comes from extended
delivery lead times. Customers not only want lower prices, but they also want
their products on time.
Global supply chains are complexity add to the product
features that are constantly changing, and the challenge is even greater. A
product is released and customers rapidly pressure companies to come up with
the next big thing. Innovation is important since it allows companies to stay
competitive in the market, but it’s also a challenge. To enhance a product, manufacturing
companies have to redesign their supply network and meet market demand in a way
that is transparent for customers.
Another factor that presents a challenge is the
pursuit of new customers. The cost of developing a product, from research and
development to product introduction, is significant. Therefore, companies are
trying to expand their distribution to emerging markets in order to grow
revenues and increase market share. Companies all around the world are expected
to expand in their home and foreign markets. The introduction of product to new
markets is difficult due to trading policies, fees, and government policies.
Thus, customers’ expectations nowadays are more
demanding than ever. As described here, companies have responded with global
networks, product innovation, and market expansions. This means that companies
now rely on supply chain managers to optimize their value chains in order to
stay competitive. As such, there is need to examine the effect of Supply chain
management (SCM) on organizational performance, with special interest on selected
manufacturing firms in Abia State.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine the
effect of Supply chain management (SCM) on organizational performance, a study
of selected manufacturing firms in Abia State. However, the specific objectives
of the study are to:
i.
examine the effect of integrated make-to-stock supply chain
on organizational market share.
ii.
determine the impact of continuous replenishment supply chain
on organizational effectiveness
iii.
ascertain the effect of build-to-order supply chain on
organizational growth
iv.
determine the factors militating against supply chain
management in an organization
1.4 RESEARCH QUESTIONS
i.
What are the effect of integrated make-to-stock supply chain on
organizational market share?
ii.
How does continuous replenishment supply chain impact on
organizational effectiveness?
iii.
What are the effect of build-to-order supply chain on
organizational growth?
iv.
What are the factors militating against supply chain
management in an organization?
1.5 RESEARCH
HYPOTHESES
Ho1 Integrated make-to-stock supply chain
has no significant effect on organizational market
share
Ho2 There is no significant impact of
continuous replenishment supply chain on organizational
effectiveness
Ho3 Build-to-order
supply chain has no significant effect on organizational growth
Ho4 Ineffective leadership and
inadequate logistics planning are not among the factors militating against
supply chain management in an organization
1.8 SIGNIFICANCE OF THE STUDY
The findings of the study will be of
immense importance to the following parties:
Manufacturing
firms in Abia State: The study will be of immense benefit to the selected manufacturing
firms in Abia State. The result of the study would help the management of selected manufacturing
firms in Abia State in knowing more on about the effect of Supply chain management
(SCM) on their performance. The findings of the study would help the
management in examining
the effect of integrated make-to-stock supply chain model on organizational
market share. The outcome of the study will help in exploring the impact of
continuous replenishment supply chain on organizational order fulfillment
management. The outcome of the study will aid the management in ascertaining
the effect of build-to-order supply chain on organizational product development.
Also, the result of the study will assist the management in determining the
factors militating supply chain management in an organization.
Policy makers:
The
result of the study will guide policy makers of industries in making and
implementing policies that will foster organizational performance through supply chain management
(SCM)
Academia:
Finally, the outcome of the study will add to existing
literature on the
effect of Supply chain management (SCM) on organizational performance.
1.9
SCOPE OF THE STUDY
The scope of this study is to
examine the
effect of Supply chain management (SCM) on organizational performance, a study
of selected manufacturing firms in Abia State.
Content scope:
However,
the content scope of the study is to; examine the effect of integrated
make-to-stock supply chain model on organizational market share, determine the
impact of continuous replenishment supply chain model on organizational order
fulfillment management, ascertain the effect of build-to-order supply chain
model on organizational product development and determine the factors
militating supply chain management in an organization. The
Unit scope: The questionnaire will be
distributed to the staff of P.Z Cussons Nigeria Plc, Aba, Starline
Nigeria Limited, Aba and Chellarams Plc Aba, Abia State only.
Geographical
scope: geographical
scope of the study is Abia State.
Time Scope: The study covered a
period of 14 years (2005 to 2019).
1.8 LIMITATIONS OF THE STUDY
In an attempt to carryout
meaningful research, certain factors seems to affect the researcher’s efforts
and among these factors were:
Busy work schedules: Due to busy routine work schedules by
the respondents, the researcher was made to come several times in order to
retrieve the shared questionnaire. It was observed also that some staff in the
production and security department work on shift.
Difficulty in getting permission: The researcher was made to call
several times at the offices of personnel managers and company secretaries for
the necessary permission. It was not an easy task for the researcher to get
what was really needed for the work. But with the help of some staff of the
company, the researcher was able to obtain the necessary information. The
researcher was able to overcome the limitations by persistent visit to the
firm.
Secrecy of respondents: The high rate of secrecy maintained
by respondents in releasing of information as concerns the operation of the
organisation contributed to be limitation of this study.
Methodological
constraints: The methodological constraints posit that several work or researches
have adopted panel study and parametric measures to achieve their result but
this study is limited to adaptable methods accountable to the researcher.
Geographical
constraints: The geographical constraints of the study posit that the work was only
limited to manufacturing companies in Abia State.
1.9 BRIEF HISTORY OF ORGANIZATION UNDER STUDY
1.9.1 P.Z Cussons Nigeria Plc,
Aba
PZ
Cussons Plc. Aba is located along Margaret Avenue, Eziama Aba, Aba North LGA in
Abia State. It is engaged in the manufacturing and distribution of soaps,
detergents, toiletries, pharmaceuticals, electrical goods, edible oils and
nutritional products. The segments of the Company are toiletries and household;
food and nutrition, and electrical goods. The geographical segments of the
Company are Africa, Asia and Europe. On January29, 2008, the Company completed
the acquisition of The Sanctuary Spa Holdings Limited and its wholly owned
subsidiaries.
The
Company’s Headquarters is at PZ Cussons Nigeria Plc. 45/47 Town Planning Way
Ilupeju Industrial Estate PMB 21132 Ikeja Lagos Nigeria; Lagos; Lagos PZ
Cussons Plc. is a leading manufacturer and distributor of a variety of products,
especially soaps and other personal care items, including shampoo, baby power, and
the like. These are marketed under PZ Cussons flagship imperial Leather brand
and others, including Ordinary Source and Cares. The company also manufactures
refrigerators and other white goods, including freezers and air conditioners;
detergents and cleaners; feminine hygiene products; olive oil; packaging
materials; and even pharmaceuticals. In 2003, PZ Cussons formed a joint venture
with Ireland’s Glanbia to supply evaporated milk and milk powder in Nigeria.
The company also acquired U.K. hair brand Charles Worthington in Listed on the
London Stock Exchange, the Zochonis family, which includes Chairman A. J. Green
controls as much as 80 percent of the company’s stock. 2005.
Although
based in Manchester, PZ Cussons has long been controlled by the founding Zochonis
family, from Greece, and has carved a niche for itself by focusing on various markets
in Africa, especially Nigeria, Ghana, Cameroon, and East Africa. Known as
Paterson Zochonis until its name change in 2002, the company’s history reached
all the way back to the late 19th century. When it was founded as a trading
post, called West African Merchants, in Sierra Leone by two partners, George
Paterson, originally from England, and George Zochonis, from Greece, Paterson
and Zochonis started out by shipping palm oil and other produce, such as palm
kernels, cocoa, groundnuts, and seed cottons, as well as animal hides and
skins, to the United Kingdom, and bringing back goods from England, such as
cloth from Manchester. The business proved strong, and in 1884 Paterson and
Zochonis incorporated the company as Paterson Zochon is (PZ). PZ gradually
expanded its range of goods, establishing a degree of expertise in what was
considered a difficult trading market. This expertise enabled the company to
being expanding into other African markets and, most important, into
Nigeria.
PZ
set up its Nigeria subsidiary in Lagos in 1899. Like its Sierra Leone brand,
the Nigeria subsidiary at first operated as a trading merchant. George Paterson
died in 1934, leaving George Zochonis in control of the company. The Zochonis
family was by then already highly involved in the company’s expansion, and
company traditions become the placing of members of the extended Zochonis
family in key management positions. Indeed, by the beginning of the 21st
century, the Zochonis family was said to represent about half ofthe group’s
total payroll.
1.9.2 Starline Nigeria Limited,
Aba
The
company Starline Nigeria Limited started as a sole proprietorship in the mid
fifties, marketing pharmaceutical products under the name Owunna and Sons
Company, founded by Chief (Dr) Peter .S. Owunna. It metamorphosed into Starline
Chemists and Company in 1962 under the leadership of the founder. Starline just
before the outbreak of the civil war in 1967, became a leader in the
importation and marketing of pharmaceutical products in Nigeria. However,
activities resumed after the civil war in 1970 with everything lost.
The
founder’s guiding principle of perseverance, hard work, honesty and integrity
helped to set SNL on the footpath to resumption of business once again. From
his humble beginning and strong belief in the Almighty, he nurtured Starline
through these most demanding times. Courage, foresight and patriotism brought
him into industry.
In
1973, Starline Nigeria Limited was in corporated. With her enormous trading
experience and distributive network she made great impact in marketing and
distributive trade. In the same year, she started candle manufacturing.
Determination led to the establishment of pilot cosmetics factory in 1975, and
the plastic factory in 1978. It is interesting to note that a vertical system
exists between the cosmetics and plastic factories whereby all needed plastic
packaging materials are supplied by the plastic factory.
The
company’s factories and corporate head quarters are located at Aba, Abia State,
widely regarded as the Japan of Nigeria. This city prides itself with the
promotion of wholly indigenous business activities ranging from diverse trading
activities to manufacturing. It is easily the third most important business
center in Nigeria. SNL’s dedicated Staff which number over 500 are continually
in tune with the latest “GMP” techniques.
SNL’s
senior management team is structured in such a way as to give defined functions
and levels of accountability for each person giving them adequate responsibility,
influence and power to cope with it. The thrust is to position the company and
ensure that it moves through the years from a positive of strength, innovation,
growth and diversification. This will be an integral part of our corporate
policy and SNL is well poised to meet the challenges of the future.
Presently,
SNL is the greatest producer of Body Spray and Bottled perfumes in Nigeria. In
creams, Lotions, powders and toiletries SNL, has made appreciable impact. SNl’s
high quality products are highly in demand in West African Sub-region.
1.9.3 Chellarams Plc Aba
Chellarams
Plc is a well known and trusted provider for both the consumer and industrial goods
markets in Nigeria. Established in 1923, Chellarams possesses immense
experience in manufacturing, distribution, sales and marketing in Nigeria. The
Chairman of the company isOtumba Solomom Kayode Onafowokan and the company is
located at no 10 Osisioma Road Aba North Abia State, Nigeria. The company’s
strong international reputation and professional infrastructure makes it a
preferred business partner and place of employment.
Chellarams
Plc is a leading Nigerian conglomerate with capabilities that span a diverse
array of industries including manufacturing, retail, distribution, marketing and
power generation.
Chellarams
has been successfully operating in Nigeria for almost 90 years. Chellarams
usesits in-depth market knowledge and extensive local connections to
effectively facilitate efficient, result-driven operations across the country.
Chellarams strives to not only to provide Nigeria with quality products but
also to create total solutions and services for the growth of their appeal and
market share. Well-staffed and capable departments ensure that all fiscal
transactions and procedures, from the supplier through to the end-user, are
professional, prompt and efficient. Their products includes; Air Compressor,
Chemical, Motocycles, Foam Machinery, Forklift.
1.10 OPERATIONAL DEFINITION OF TERMS
Supply chain is a network of
organisations that are involved, through upstream and downstream linkages in
the different processes and activities that produce value in the form of
products and services in the hand of the ultimate consumer
Supply chain management: involves the
movement and storage of raw materials, of work-in-process inventory, and of
finished goods from point of origin to point of consumption
Integrated Make-To-Stock: Make to stock (MTS) is a traditional production
strategy that is used by businesses to match the inventory with anticipated
consumer demand
Continuous replenishment supply chain:
Continuous replenishment supply chain model a supply chain
strategy in which frequent replenishment takes place from the supplier to the
retailer or distributor in order to maintain better flow in supply chain and
minimize bullwhip effect.
Build-To-Order supply chain: is a production approach
where products are not built until a confirmed order for products is received.
Organizational
effectiveness: Organizational effectiveness is the concept
of how effective an organization is in achieving the outcomes the organization
intends to produce. Organizational Effectiveness groups in organizations
directly concern themselves with several key areas.
Organisational performance: The
accomplishment of a given task measured against preset known standards of
accuracy, completeness, cost, and speed.
Organizational
growth: Organizational growth is a process through which the
structure of a multigent system organization increases the number of its roles
and links.
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