Impacts of Politics on the Supply Chain Case Study: Societe Anonyme Des Brasseries Du Cameroun (SABC)
Department: Tourism and Hospitality Management
No of Pages: 87
Project Code: THM2
References: Yes
Cost: 5,000XAF Cameroonian
: $15 for International students
ABSTRACT
This
study aimed at examining the impact of politics on the supply chain of SABC
Ndokoti. Specifically, to determine the effect of government regulation on the
supply chain of SABC, examine the effect of socio-political crisis on the
supply chain of SABC, and to investigate the challenges faced by SABC in
practicing effective supply chain management.
The
methodology used to conduct this study was Descriptive research design and
involved the use of various data collection methods and tools such as
questionnaires and interviews. Purposive and Convenient sampling techniques was
employed to sample 40 personnel’s at SABC.
The
study findings revealed that close partnership with suppliers and customer,
supply chain flexible, determines future customer expectations, internal lean
practices and information sharing among supplier are used as dimensions of
supply chain management in SABC Ndokoti.
The
result further indicated that government regulation through price control and
tax has an effect on the supply chain which was seen in areas of customer’s
satisfaction, transportation cost, delivery performance, supply chain response
time and order to delivery lead time On the effect of socio-political crisis,
disruptions in material flow to end customers, safety and security, damage of
infrastructure, and loss of income were identified.
The
study therefore recommend that the government should work in close
collaboration with CAPA (Cameroon Alcohol Producers Association) in the
implementation of tax duties given the fact it is a win- win situation.
SABC
should provide frequent training to staff members on the best practices of
supply chain disruptions in form of seminars and workshops to better manage
disruptions in the supply chain.
CHAPTER ONE
INTRODUCTION
1.1 Background of the
Study
Supply
Chains are a critical part of world trade. Current business trends show growing
reliance on supply chain to meet consumer demand (Natarajarathinam et al.,
2009). However, a Supply chain in itself is insufficient.
Only
those that are efficient will succeed. In consideration of a Supply chain to be
efficient, it is crucial to understand its principal functions as well as the
role played by each function in the Supply Chain’s overall efficiency.
While
supply chains reduce lead-time and inventory costs, they also open
organizations to risk, as direct control is lost over product manufacturing and
outcomes (Campi, 2013). Reliance on supply chains makes businesses more
vulnerable to crises and loss of revenue (Masullo, 2017; Powell, 2011).
A recent survey conducted with senior supply
chain professionals found that over half of the business crises were directly
linked to supply chain disruptions and were predicted to continually increase
(Masullo, 2017).
Powell
(2011) found supply chain disruptions to be the most dangerous risk to an
organization’s revenue drivers. The fragility of a supply chain is due to the
already thin margin and schedule suppliers face - any delay or disruption has
serious ramifications for organizations several steps down the chain, as well
as the end users (Fisher, 2011; Manuj and Mentzer, 2008).
Mentzer
et al., (2001) defined supply chain as a set of three or more entities
(organizations or individuals) directly involved in the upstream and downstream
flows of products, services, finances, and information from a source to a
customer.
They
further identified three types of supply chain based on the degree of
complexity: a direct supply chain; extended supply chain and ultimate supply
chain. The ultimate supply chain included all the organizations that were
involved in all flows of products, services, finance and information from the
ultimate suppliers to the ultimate customers.
Supply
chain experts have started to focus on supply chain strategy, planning, and
operation to improve service and flexibility (Ganesh and Nambirajan, 2013).
Supply chain managers are reducing the cost of the supply chain process to be
competitive and deliver the best value (Ganesh and Nambirajan, 2013).
However,
managing supply chains in a competitive and unsettled market is challenging
because of unforeseen circumstances (Clark, 2012). The frequent occurrences of
natural disasters, labor disputes, and political changes within the areas of
operation of the supply chain are risks that supply chain managers must
minimize (Clark, 2012).
Every
components of the Supply Chain communicate to meet the needs of the sellers and
the buyers of the goods transiting through the chain. Those components are
interconnected and have a cause-and-effect link with one another.
Thus
for all component to achieve its maximum value and simultaneously contribute to
the increase of the value of co-components in the Supply Chain there should be
a high level of integration between the components (Qukula., 2000).
A
poor connection in the Supply Chain has a negative impact on the performance of
all the components over the Supply Chain.
Managing
supply chain risk is growing in importance as organizations recognize the interdependent
nature of supply chain operations and the domino effect of one disruption in
the supply chain (Faisal, 2009; Ritchie and Brindley, 2009).
Long
supply chains, including global supply chains, further increase supply chain
complexity and risk (Manuj and Mentzer, 2008a; Norrman and Jansson, 2004) and
can limit organization flexibility in a crisis (Natarajarathinam et al., 2009).
Identifying exactly where product failure occurred in a complicated supply
chain can be challenging and time consuming.
While
supply chains are developed to reduce business expenses and increase
efficiency, a disruption to that supply chain or a failure in one of the links
can expose organizations to crises that can severely impact short-term bottom
line and long-term corporate reputation.
Supply
chains are comprised of suppliers, producers, and customers who have different
interests, which can result in negative effects on the supply chain. Although
improving the supply chain can give partners a greater competitive advantage, partners
often refuse change to avoid cost (Frohlich, 2002).
Managing
supply chains comes with a cost and before engaging in its practices, there is
a demanding need to know about expected barriers and their possible influences
on the effectiveness of supply chains (Wagner and Bode, 2008). It is
specifically important to act when challenges create barriers to the overall
performance of the supply chain as a whole.
A
significant number of studies have explored relationships and influences of
supply chain practices and effectiveness (Wittstruck and Teuteberg, 2012; Aksoy
et al., 2014; Govindan et al., 2014; Choi and Hwang, 2015; Sillanpaa, 2015).
Little
(1999) denoted that Supply Chains in various sectors of industry have distinct
features that vary within those sectors. Thus, Supply Chain design should
acutely be accommodated both to the particular manufacturing and to the
individual situations of each corporate.
It
is also crucial that each service provider in a Supply Chain should use
identical method for assessing efficiency in consideration of providing
significant analyzing of the efficiency of the connections.
According
to Simchi-Levi et al (2003), Supply Chain management(SCM)refers to “a set of
methods used to effectively coordinate suppliers, producers, depots, and
stores, so that commodity is produced and distributed at the correct
quantities, to the correct locations, and at the correct time, in order to
reduce system costs while satisfying service level requirements.
The
fundamental notion of these definitions is that a Supply Chain must be
controlled in order to be fast and trustworthy, cost-effective, and flexible
enough to meet customers’ requirements. However, given the vulnerability of the
supply chain it has become a problem for its effective management.
Notably,
political risk has emerged recently as an important concern for business
executives (Erdmann et al., 2016) and international business scholars
(Darendeli and Hill 2016; Giambona et al., 2017; Stevens and Newenham-Kahindi,
2017), but it has received little attention in the Supply chain and supply
chain management literature.
Politics
in Cameroon are constant threat to the supply chain of most companies.
Political strikes, political violence, corruption, lockdowns, kidnaps and
assassinations are commonplace. Despite the significant, the impact of
political disruptions is inadequately examined in supply chain risk management
literature.
Politics
within or outside the Societe Anonyme des Brasseries du Cameroun (SABC) which
is a leader of the country’s brewing industry, its production system has not
only affected the production of the company’s products but also the
distribution of goods to the end consumers.
For
firms it is relatively easy to control the production systems, but it is
challenging to manage disruptions that emanates from external stimuli. Previous
research in the field of supply chain has mainly focused on the impact of
supply chain disruptions on supply chain performance (Behdani 2013;
Brenner
2015; Gurnani 2012), but few linked political disruptions, supply chains and
economic growth. As such, the current study is out to examine the impact of
politics on the supply chain in SABC, Cameroon.
History of SABC
The
Société Anonyme des Brasseries du Cameroun (SABC) was created on the 3rdof
February, 1948 in Douala (Koumassi), Cameroon with an initial capital of
60,000,000 FCFA or 60,000 shares of nominal 1,000 FCFA, all of the French
Society of International Breweries and Ice-cream parlors.
The Société Anonyme des Brasseries du Cameroun
is the first company to produce beers and soft drinks in Cameroon. It decides
to equip itself with all the means necessary for its national expansion from
1948 to 1950 she made market studies that led to the sale on March 3rd, 1950 of
the "BULL BEER", first beer made by her and sold at 35 FCFA bottle 65
cl.
Later,
in response to a growing demand, the company evolved enormously;
- In 1955, two soft drink factories, one in Yaoundé in the Center and the other in Garoua in the North.
- On June, 1966, the subsidiary SOCAVER (Société Camerounaise de Verrerie) in Douala specialized in the manufacture of glass bottles;
- In 1967, two soft drink factories, one in Bafoussam in the West and the other in Ombé in the Southwest.
- In 1970, the subsidiary SATC (Technical Application Company) producing crown caps in Douala.
- On January 26, 1979, the subsidiary SEMC (Company of Mineral Waters of Cameroon) which bottled the natural mineral water "SOURCE TANGUI".
- May, 1986, the subsidiary Canada Dry Cameroon, specializing in the manufacture of alcohol mix.
- In 1988, for the first time, a Cameroonian was appointed to the post of Director General. Two years later, in 1990, the BGI was bought by the CASTEL group, which became the new owner of the SABC. In the same year, SABC spinned the CAVINEX (wine company) which produces wines, and the Study and Advertising Company (SCOOP).
- In 1991, it bought and sold the International Brewery (IB) specializing in the manufacture of beer MUTZIG. In order to better control the market, the SABC decides to merge with the subsidiary IB, acquired two years earlier and its capital increases from 60,000,000 to 11,083,630,000 FCFA. In the same year SCOOP and SATC are put on the back burner.
- In July 1994, SNC Boissons Services was created and was in charge of the distribution of the products of the Brasseries of Cameroon and Cameroon Mineral Water Company(SEMC) until April 30th, 2005 date of its merger with the Brasseries of Cameroon.
- On October 28, 2008, the CASTEL Group bought and sold SIAC ISENBECK to minimize competition. In the same year, Canada Dry Cameroon(CDC) merges and absorbs CANIVEX.
- January 2010, merger and absorption of Canada Dry Cameroon (CDC)by Industrial Company of Central Africa (SIAC). In addition, SABC's hull and perform manufacturing activity will now be conducted by SIAC.
1.2 Statement of the Problem
The
exposure of companies to uncertainty in their supply chain results in supply
chain disruption. A well implemented supply chain strategy results in value
creation for any organization.
A
supply chain is seen as a network of supplier, manufacturing, assembly,
distribution and logistics facilities that perform the functions of procurement
of materials, transformation of these materials into intermediate and finished
products, and the distribution of these products to customers.
As
any disruption of the supply chain is detrimental to business. SABC which is
one of the Cameroon’s brewing industry leaders has been confronted with serious
issues in its supply chain. The adverse effects that politics has had on SABC
and its supply chain operations have presented a serious problem for not only
the company but the Cameroon as a whole.
As
a consequence of this unstable political environment, characterized by an
unstable government system, political unrest, socio-political crisis in the two
English speaking regions, and incessant lockdowns the company has considerably
drop in sales volumes as a result of disruption in the supply chain.
Given
the complexity of the SABC supply chain structure due to separate production
units and sequences of complicated processes required to complete value
additions and supply chain operations the political environment of Cameroon has
further added to this complexness.
One
factor that contributes to these disruptions is security risk due to the
socio-political crisis facing Cameroon. Security risk has direct and indirect
effects on supply chain operations. These include a decline in production,
unpredictable interruptions in value and supply chain operations, difficulty in
maintaining labour supply, and transportation delays.
Security
risk has also reduced the confidence of consumers and investors. Added to the
fact that the supply chain involves acquiring products from different
environment/suppliers of which most of these suppliers are located in areas
which has been hardest hit by the socio-political crisis which has hit the
English speaking regions of Cameroon.
Due
to the security risk the supply chain has been disrupted which have made the
smooth functioning of the supply chain almost impossible in addition to that
the SABC products has been contraband in most affected regions.
1.3 Research Question
1.3.1 Main Research
Question
What impact does politics have on the supply
chain of SABC?
1.3.2 Specific Research
Questions
- What effect does government regulation have on the supply chain of SABC?
- What are the effects of socio-political crises on the supply chain of SABC?
- What challenges does SABC face in practicing effective supply chain management?
- What supply chain management strategies can be proposed to better manage supply chain disruptions?
1.4 Research Objectives
The
following research objectives have been postulated to guide the study;
1.4.1 Main Objective
- To examine the impact of politics on the supply chain of SABC
1.4.2 Specific Objectives
- To determine the effect of government regulation on the supply chain of SABC
- To determine the effect of socio-political crisis on the supply chain of SABC
- To investigate the challenges faced by SABC in practicing effective supply chain management
- To propose strategies of handling supply chain disruptions
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