Key Challenges in Supply Chain Management
Abstract
This research paper shed more light on the key challenges and obstacles of supply chain management that are faced by companies in the developing countries using Ghana as a case study. The research was conducted using descriptive survey methodology while interview and questionnaire as the primary tools of data collection. The result of the study indicated that there are three main perspectives of supply chain management that have become problematic in the developing country – they include managerial perspective, technical perspective, as well as relationship perspective.
Key Words: Logistics, Supply Chain Management, Customer Satisfaction, Key Challenges.
CHAPTER 1: INTRODUCTION
1.1 Background of the Study
Prem (2014) defined supply chain management as the process of managing the flow of goods and services from one point to another. This process involves storage and movement of raw materials, finished goods, as well as work in progress inventory. As explained by Stadtler (2005), supply chain management strive to balance the activities of the company such as sales, promotion, production, as well as distribution among others. Supply chain management is all about profit maximization for the company. The vulnerability of supply chain management has become a serious issue in today’s competitive and uncertain market. As explained by Srivastava (2007), many organizations are affected by the vulnerability of the supply chain management as the market becomes more uncertain.
The global supply chain management is steadily gaining significant importance in the business field as the industry becomes more and more competitive. Researchers such as Lambert, Cooper, and Pagh (1998) stressed on the dire need of effective supply chain design to benefit the global business operations. Shah (2009) argued that supply chain management needs to be considered deeply because it directly affect the performance and competitiveness of an organization. This helps companies to make quick and wise decisions concerning the movement and storage of their gods in order to enhance their strategic operation levels. A study conducted by Kotzab et al (2005) revealed that improved supply chain management is positively related to the business performance, competitiveness, and customer satisfaction.
Spekman, Kamauff, and Myhr (1998) suggested that a number of challenges are associated with the implementation of global supply chain management. Such challenges directly affect the performance of companies in the developing nations such as Ghana. Goods move from various global suppliers through entry ports in Ghana such as airport and harbour to customs department, bonded warehouses, local transport companies, and lastly to the final tier 2 customers such as passengers and consumers. There are a number of challenges associated with the physical movement of goods from suppliers to consumers and provision of services, flow of information and cash.
1.2 Statement of the Problem
In today’s business, the supply chain management is becoming more and more complex as many challenges and issues crop in. The global sourcing of goods and services is one of the primary factors which has significantly contributed to the challenges and issues of supply chain management. As explained by Kotzab et al (2005), the continuous trend of leaning down is another factor that is contributing to the challenges of the supply chain management in the developing nations. The challenge that most business organization are facing is the ability to mitigate the risks associated with issues of supply chain management. It is evident that most businesses are creating more resilient supply chains thus directly contributing to the challenge.
Shah (2009) asserted that most global organizations are steadily turning towards risk management approaches in order to increase their competitiveness. This tendency of the businesses together with changes in technology is also adding to the challenges and issues of global supply chain management especially in the developing countries such as Ghana. The advancement in technology and globalization in industries are increasing the uncertainties in both supply and demands thus contributing to the disruption of supply chain management. This paper investigates the key challenges and issues of global supply chain management in the developing nations. Ghana is one of the developing countries that are affected by the challenges of global supply chain management and its choice will help the study achieve its goals and objectives.
1.3 Research Objectives
The research study was guided by three primary objectives namely:
1) To investigate the key challenges of global Supply Chain Management in the developing countries
2) To investigate the key issues which are responsible for effective supply chain management
3) To identify the relationship between effective supply chain management and customer satisfaction
1.4 Research Questions
The study was guided by the following three research questions:
1) What are the key challenges of global Supply Chain Management in the developing countries?
2) What are the key issues that are responsible for effective supply chain management?
3) What is the relationship between effective supply chain management and customer satisfaction?
1.5 Significance of the Study
This research study played significant roles because it shed more lights on the key challenges and obstacles in supply chain management being faced by companies in the developing nations. In addition, it established a positive relationship between improved supply chain management and company performance. Lastly, it helped recognize how companies can use improved supply chain management to maximize their level of customer satisfaction.
CHAPTER 2: LITERATURE REVIEW
2.1 Theoretical Background
Prem (2014) assessed the current developments in the theory and practice of supply chain management and identified a number of factors such as barriers, possibilities, and key trends to have significant influence on the outcome. He identified a wide range of barriers and enablers to SCM to include technology change, trend of leaning, globalization, and marketing uncertainties among others. On the other hand, Cousins, Lawson, and Squire (2006) developed a research agenda that investigated the use of risk assessment in supply chain management. The paper showed that there are a number of key debates that need to be recognized when applying risk theory and risk management approaches to supply chain management.
Sengottuvelu (2013) provided a classification scheme for the review of emerging issues in the global SCM to include performance metrics, globalizations, as well as the ability of the model to integrate decision processes. He pointed out that most supply chain management models do not sufficiently resolve the difficult features associated with globalization as well as the practical global design of supply chain modelling.Tseng, Lim and Wong (2015) asserted that problems of supply chain management in the modern business environment comprise of decision regarding the location of production facilities, the number of production facilities, assignment of each market region, capacity of the production facility, as well as supplier selection and material components.
An empirical study by Joseph (2012) indicated that it is more difficult to manage global supply chains than domestic supply. They identified substantial geographical distances as the main cause of increased transportation, which eventually complicates the decision-making due to the involvement of inventory cost trade-offs. In addition, Tseng, Lim, and Wong (2015) explained that globalization is a serious challenge because it increases the lead-time in the supply chain management. Some firms integrate production decisions in the supply chain in order to avert challenges. They do this by including capacity constraints and supplier inventory in their scheduling functions.
2.2 Conceptual Framework
The result of the literature study can be used to build a conceptual framework for the study of key challenges in supply chain management. The literature review identified a wide range of barriers and enablers to SCM to include technology change, trend of leaning, globalization, and market uncertainties among others, which will be used to develop a conceptual framework for the study of key challenges in supply chain management. These factors contribute to the key challenges, which are manifested in the company through poor performance, time wastage, and high lead times among others. The figure below illustrates the conceptual framework showing the interrelationships between these factors and their outcomes.
Figure 1: Conceptual Framework
CHAPTER 3: METHODOLOGY
3.1 Research Design
The study adopted a descriptive study design to investigate the key challenges of supply chain management. The research deign was chosen because of its ability to provide rich information about the phenomena being explored and describes it in real life situation. The study employed quantitative and qualitative research techniques in conjunction with the descriptive survey design. The descriptive survey was more applicable in this study because it explored measurable and quantifiable real life phenomenon. The descriptive survey was used in the preliminary research to gather information, summarize, present, and interpret for the purpose of clarification.
3.2 Sampling Techniques
The study used purposeful sampling technique to collect relevant data from the population. Through purposeful sampling technique, the researcher invited 10 supply managers and 10 senior procurement managers from 10 major logistic and transport companies in Ghana to participate in the research study. The research only selected the largest transport and logistics companies in Ghana to participate in the study because they have deeper experience dealing with challenges of supply chain management. Only manager who had engaged in global supply chain processes for a period of less than two years were selected to participate in the study. They were required to answer items in the questionnaire or participate in a group interview with the researcher.
3.3 Research Instruments
The study employed two basic research instruments for the purposes of data collection namely the questionnaire and interview. The questionnaire was used as the main tool of data collection because it offers considerable advantages in the administration. It also presents an even stimulus potential to large numbers of people simultaneously and provides the investigation with an easy accumulation of data. The researcher used a self-administered questionnaire to collect primary data from the sampled respondents. Items in the questionnaire were adopted and modified appropriately to suit the objectives of the study. Group interview technique was used to collect data where clarification was needed.
3.4 Methods of Data Analysis
The data collected was cleaned to remove incomplete and inaccurate responses then entered in the computer for storage and analysis. Data analysis was conducted using a computer program known as Statistical Package for Social Sciences (SPSS) version 17. The research yielded both qualitative and quantitative data. The qualitative data was analysed using content analysis – this was based on the analysis of meanings and implications that emanated from respondents information. The quantitative data was analysed using a combination of using statistics including measures of central tendency and dispersion – the statistics that were used include frequency counts, means, and percentages.
3.5 Ethical Considerations
The research study took cognizance of the ethical factors for the fact that it was investigating sensitive issues that might elicit concealment of the real data required from the participants. The researcher assured the respondents of the privacy and that the data collected will be used only for the purpose of answering the research question and analysis. Permission to conduct the research was given by the relevant university authority, and the company managers. In light with this, verbal permission was obtained from every respondent selected to participate in the research study. The researcher also obtained the subject’s consent to complete the questionnaires. Lastly, the proposed research was taken through formal research ethics review at the university before the actual action.
CHAPTER 4: DISCUSSION, RECOMMENDATIONS, AND CONCLUSION
4.1 Discussion
The research study was conducted with the primary objective of identifying key challenges of supply chain management. The study was designed to suit the developing country whereby Ghana was used as a case study. The respondents were asked several questions that were designed to allow them provide information on the practices and challenges of supply chain based on their experiences. Data was collected through interview and questionnaire then analysed using selected statistical techniques.
The result of the data analysis indicated several key challenges of global supply chain management. The research study identified ten key challenges to include (1) lack of trust, (2) use of out-dated technology, (3) procurement of counterfeit products, (4) use of non-computerised integrated system, (5) cultural differences, (6) difficulty to assess suppliers, (7) lack of to link with suppliers, (8) unacceptable international commerce terms, (9)currency for payments and fluctuation, and (10)documentation problems. The study also identified the existence of internal problems between local buyers that must be addressed first in order to enhance the supply chain management process in the global arena. Some of these domestic are unique to the company.
The study indicated that there is a serious challenge with transportation because more than 25% of purchases are not delivered or shipped to their destination as planned. This presented a real problem of time wastage, which should be addressed in order to enhance the process of global supply chain management in the developing countries. The research identified supplier lead times and supplier performance as the most important areas of time wastage in supply chain management. In addition, the distribution network is suffering from the use of out-dated technology and systems. For instance, most companies in Ghana are using the technologies that do not offer different products and customer configurations.
The result of the study clearly indicates that there is a positive relationship between supply chain management, company performance, and customer satisfaction. Companies that use effective supply chain management processes recorded improvement in performance. In addition, the level of customer satisfaction also increased substantially when companies employ effective supply chain management.
4.2 Recommendations
Although respondents did not cite training as a challenge in supply chain management, this paper recommends that it be fully incorporated in the company. In essence, the company should provide enough training of all personal dealing with supply chain management in order to improve their skills and ability to enhance efficacy of the process. The top management should be well equipped and trained in all aspects of supply chain management as a safeguard to its key challenges cited by this research study. This will help the company in minimizing operational costs associated with the process of supply chain management.
Apart from training, there is a need to upgrade the transport network in order to enhance the economic growth of the country and business development. Supply chain management relies on the efficiency of the transport system. Poor transport system is a major problem of developing countries such as Ghana thus companies incur a lot of challenges moving their goods from one place to another. The government should be encouraged to improve the transport network in the country in order to enhance the supply chain management. Lastly, companies are recommended to upgrade their technology in order to overcome some challenges of supply chain management associated with out-dated technologies. The use of advanced technology will eliminate some key challenges and lead to high level of business efficiency.
4.3 Conclusion
Assessing key challenges of supply chain management led to the identification of numerous problems and opportunities as discussed in the sections above. The research study was designed to identify key challenges and issues of supply chain management, especially focusing on the developing countries such as Ghana. The study used a descriptive survey research design. The result of the study indicated that there are many issues associated with the global supply chain management. Majority of the issues were not presented in this study because the research only focused on the key issues that had great impact on the organization and business system.
A number of key issues were identified including (1) lack of trust, (2) use of out-dated technology, (3) procurement of counterfeit products, (4) use of non-computerised integrated system, (5) cultural differences, (6) difficulty to assess suppliers, (7) lack of to link with suppliers, (8) unacceptable international commerce terms, (9) currency for payments and fluctuation, and (10) documentation problems. These issues can be controlled and minimized if the company takes initiate to implement new advanced technology, offer proper turning among other useful recommendations. In conclusion, it is essential to note that the findings of the study matched the result of what has been documented in the available literature.
References
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