Abstract

Increasing competition and globalization has brought forth the need for effectively supply chain management, and organisations are now required to pay keen attention to their supply chain. This study had as main aim to evaluate the supply chain management of SONARA. The study is based on a survey of 70 employees of SONARA oil refinery. 70 questionnaires were administered from which 36 were successfully retrieved. Data were analysed using descriptive analysis method. The study employed multiple least square regression analysis at 5% significance level to test the hypothesis and findings were presented in terms of frequencies and percentages. The results of multiple linear regression model showed that there was a positive causal relationship between supply chain management and the productivity of organizations (SONARA). The results showed that some variables were significant since their corresponding predictor values were below 5%, reject the null hypothesis that says that supply chain management has no statistical significant effect on the productivity of or SONARA. Based on the findings of this study, it was concluded that SONARA oil refinery has been able to maintain a good level of supply chain management performance, ranging from quality management, inventory manage, customer service management, information sharing and technology, environment and safety controls and warehousing management. It is well understood that supply chain disturbance is inevitable. Thus it was recommended that SONARA should work to implement adequate mitigation and contingency policies which involves taking actions which mitigate disturbance effects, as well as actions in the event of an occurring disturbance in their supply chain like the fire incidents that happened recently.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

A Supply chain is a set of organizations that maintain relations with each other from the beginning to the end of the logistic chain, creating value in the form of products and services from the suppliers to the final consumer (The Supply Chain Council, 2002). It consists of all activities and information associated with the transformation flow of goods and services from the raw material stage till the final product reaches the consumer (Djoda, 2016). A significant change in the paradigm of modern business management is that businesses do not compete as solely autonomous entities but as supply chains (Douglas, Marther and Janus, 1998). A traditional supply chain involves the procurement of raw materials and items at one or more factories, they are shipped to warehouses or a warehouse, and then finally shipped to customers. The end result of this process is to ensure that the product leaves the supplier through to the final consumer. Therefore, to reduce cost and improve service levels, effective supply chain strategies must take into account the interactions at various level in the supply chain (Djoda, 2016). Each participant in the supply chain is considered a customer of the preceding entity.

Supply Chain Management (SCM) is the integration of all activities associated with the flow and transformation of goods from the raw materials stage through to the end-user, as well as the associated information flows that add value to customers and other stakeholders (Douglas et al., 1998).

SCM aims to deliver goods/service to its customers as the least cost at the right time and with the right quality (Djoda, 2016), and also enhance competitive performance by closely integrating the internal cross-functions within a company and effectively linking them with the external operations of suppliers, customers, and other channel members to be successful (Kim, 2009).

SCM represents the management of upstream and downstream relationships with suppliers and customers in order to deliver superior customer value at less cost to the supply chain as a whole (Christopher, 2005)

A significant change in the modern business management model is that corporations do not operate as purely independent organizations but as supply chains (Douglas et al., 1998). Competition in global business, and the need for organisations to gain international influence or operate on an international scale, has brought about the need for effective supply chains and supply chain management. Competitiveness is a critical factor in the success of a supply chain. Globalization and changes demanded by stakeholders have influenced the attitudes of supply chain entities. These entities are becoming more professional, showing ever-increasing levels of complexity, and adopting philosophies and management practices with the objective of increasing their levels of competitiveness.

In recent years, the supply chain has recorded several forms of disturbances. With some being caused by natural phenomenon, and others caused by political, economic or socio-economic factors. Recent literature has recorded an increase in the likelihood of occurrence of disturbance. These disturbances affect the supply chain while reducing its performance and competitiveness. An example of such disturbance is the socio-political disturbance which has caused supply chains and supplies chain entities to be ineffective. Such disturbance has an adverse impact on supply chain management. A good example is that which is happening in Cameroon. Socio-economic disturbance, have destabilized many supply chain entities, from agriculture, industrial, and services. The most affected are the petroleum industry which is a significant contributor to the economy in Cameroon. All around the world business organization have suffered and some still suffering from disturbances in their supply chain, causing serious adverse effects on their supply chain management.

To curb this, the need for resilience is paramount for supply chain entities to survive in the supply chain. Resilience is the capacity to recover from difficulties, toughness, challenging situations. Resilience in supply chain entity is the ability for the entity to be able to react to or overcome disturbance, such that, it is able to recover and return to its original position or to a better one. In order to achieve such, it is vital that supply chain entities have effective supply chain management (Christopher and Peck, 2005).

A traditional supply chain involves the procurement of raw materials and items at one or more factories, they are shipped to warehouses or a warehouse, and then finally shipped to customers. The end result of this process is to ensure that the product leaves the supplier through to the final consumer. Therefore, to reduce cost and improve service levels, effective supply chain strategies must take into account the interactions at various level in the supply chain (Djoda, 2016). Each participant in the supply chain is considered a customer of the preceding entity.

Traditionally, supply chain management (SCM) has been a melting pot of various disciplines, with influences from logistics and transportation, operations management and materials and distribution management, marketing, as well as purchasing and information technology (IT) (Giunipero et al., 2014). Nonetheless, despite his insightful conceptualization, the actual term supply chain management did not materialize until the early 1980s (Oliver and Webber, 1982), and only a handful of articles mentioned the phrase ‘‘supply chain’’ between 1985 and 1997 (Giunipero et al., 2014). In essence, the diffusion of the field did not take place until the late 1990s, with most of the theoretical and empirical investigation commencing in 1997 (Giunipero et al., 2014).

1.1.1    Brief Historical Background of SCM

The concept of SCM was mentioned in business literature as early as Forrester (1961), who suggested that the success of industrial companies hinged on the ‘‘interactions between flows of information, materials, manpower and capital equipment’’(Giunipero et al., 2014). The beginning of the supply chain evolution, as well as industrial engineering, started with “Logistics”. Frederick Taylor, the founder of industrial engineering, who wrote “The Principle of Scientific Management” in 1911, focused on the process of improving manual loading in his work. Then came World War 2 (WWII), which started Operations Research of analytics’ value, for logistical military operational solutions in the 1940s. At this level, the industry had earned a title as “Supply Chain Engineering”.

In 1940 and 1950, Pallet and Pallet lift mechanization was the research focus of logistics. Research at this time was focused on finding better warehousing space arrangements, racking and layouts. During this time, the unit loading concept and pallet use became popular, extending to transport management in 1950, through the use of intermodal containers together with ships, trains, and trucks to transport them. This set the stage for supply chain globalization (Seuring and Müller, 2008).

In the 1960s, the trend of freight transportation had been steered towards trucking rather than the railroad. Physical distribution became a join need in the industry (warehousing, material handling, and freight transportation). 1963 brought the institution of the National Council of Physical Distribution Management organization as a field leader and much research and training took place during this time. Between 1960 and 1970, there was a paradigm shift from the manual record of transactions to the introduction of computerization which introduced opportunities in logistics planning such as randomized warehouse storage, truck routing and optimization of inventory (Christopher and Peck, 2005).

In the late 1970s and early 1980s, the Georgia Tech of the Production and Distribution Research Center, the Material Handling Research Center, and the Computational Optimization Center was created, with each focusing on different aspects of what could be done with computing technologies.

During the 1980s, personal computing had transformed logistics with marked improvements in supply chain management. Access to computers surged planning to another level, with unprecedented graphical interfaces, and the advent of new technologies likes flexible spreadsheets and map-based interfaces. This significantly improved logistics planning and execution technology. This period in the supply chain movement stirred a reputation for being really costly to acquire and complicated to operate, but yet absolutely crucial to corporate profits (Christopher and Peck, 2005).

By 1985, the National Council of Physical Distribution Management became the Council of Logistic Management (CLM), which integrated inbound, outbound and reverse flows of products, services and related information. In the 1990s, Enterprise Resource Planning (ERP) systems were created. This brought about major data access and accuracy upgrade, as disconnected company databases were all interconnected with the ERP systems. ERP software identified planning and integration needs for logistics components, resulting in a new generation of “Advanced Planning and Scheduling (APS)” software.

In the mid-1990s, the term “supply chain” became popular, with the rise in China’s trade with the U.S. Between 1995 to 2006, this trade had increased substantially, with over 280 billion of dollars in trade.  The complexity of global networks spotlighted how critical logistics strategies were for corporate tactical and operational issues. Around this time in 2005, the Council of Logistics Management changed its name to the Council of Supply Chain Management Professionals and thus spotlighting Supply Chain Management as a discipline in itself.

Davis (1993) noted that SCM is a frequently encountered phrase these days, as managers strive to improve factory performance, While academic and corporate interest in SCM has risen in recent years (Seuring & Müller, 2008). Despite all these inference, debates in SCM  and logistics research in academic journals have been dominated by issues related to countries of North America, Europe and some emerging Asian countries (Soni and Kodali, 2012; Sachan and Datta, 2005) whereas issues regarding logistics and SCM research on Africa were largely overlooked (El-Baz, Laguir, and Stekelorum, 2018).  Consequently, this lack of evenly spread international representation of research data is likely to have adverse effects on current knowledge and understanding of various phenomena within logistics management (Svensson et al., 2008). El-Baz et al (2018) propose that analysis of studies carried out in Africa is needed to see how the SCM and logistics of African countries differ with regard to understanding and implementation. Doing so helps researchers to identify the trend in logistics development in regions such as Africa (El-Baz et al., 2018).

The petroleum industry in Cameroon can be considered as the backbone of the Cameroon economy. This is because it constitutes over 39% of Cameroons GDP. Oil resources represent one of the main state income with over 400 Billion CFA francs contribution in the budget. It is for this reason that a lot has been put in place to transform the crude oil into useable petroleum products. The transformation process is linked to each other and this makes the supply chain of the petroleum industry. This supply chain consists of the exploration of crude oil, refining it to the different petroleum products, transportation, distribution and marketing to the end-user. The supply chain for the supply of oil in Cameroon was organized between SONARA, Société Nationale d’Investissement (SCDP), Caisse de Stabilisation des Prix des Hydrocarbures (CSPH), and petroleum marketers (Toma, 2019). They form the full supply chain in the petroleum industry.

Cameroon is a modest oil producer and its production is around 80,000 to 85,000 barrels daily (Toma, 2019). Half of this production is exported to neighbouring Central African States and Chad. The other half, represent 80% of the national demand. The increase in demand for petroleum products both in the local markets and abroad has necessitated the increase in production. In order to meet the needs of the end-users, the state liberalized the distribution sector. State-owned companies in the upstream and downstream sector integrated private owned organization in the value chain of the petroleum industry especially in the transportation and distribution sector and this led to horizontal as well as vertical integration in the industry paving the way for outsourcing which increased the number of supply chain entities in the flow and thus warranting the need to proper Supply Chain Management.

The National Oil Refinery Company (Société Nationale de Raffinage – SONARA), was established with the mission to satisfy the domestic demand of all types of combustibles such as butane, gasoline, jet fuel, kerosene, fuel oil, and distillate. SONARA’s total refinery produce in 2018 was 221,286 m³ and is currently undergoing an upgrade in order to reach a capacity of 2,100,000 m3 per year by 2025 (Toma, 2019). SONARA refinery stands as the only refining company in the country. In order to meet up with growing demand, the country imports crude oil from Nigeria and neighbouring countries in order to supply the refinery. When the oil has been refined and separated to the various combustibles, it is distributed with the aid of heavy-duty tankers to depots and filling stations, that make it available to the final consumer. This forms the supply chain of SONARA refinery.

This study seeks to assess the impact of supply chain management on organizational productivity with the case study been Cameroon National Refinery Company (SONARA). It also seeks to understand the supply chain movement of the said organization, the various supply chain entities included in its supply chain, challenges faced by the chain and how resilient the supply chain to recover from this challenges of disturbances, and lastly, to make recommendations wherein, on how to implement effective supply chain management so as to boost productivity.

1.2 Problem Statement

The use of supply chain is a critical factor of success in the development and growth of enterprises across the country. Supply Chain Management is an integral part of most businesses and is essential for company success, and customer satisfaction.  Supply chain management is often taken for granted in the business world (Erik, 2007) Regardless of industry, the supply chain is the backbone of any company. It begins with procuring the materials or services needed to create the end product and continues until the finished goods are in the customer’s hands (Saltmarsh, 2019).

The business environment has changed; Globalization, more severe competition, heightened customer expectation, technological impact and geopolitical factors is the other of the day. Under such a renewed business environment, are organization-focused approach is no longer adequate to deliver the required competitiveness. In this regard, managers must, therefore, understand that their businesses are only part of the supply chains that they participated and it is the supply chain that wins or loses the competition.

Thus, the arena of competition is moving from ‘organization against organization’ to ‘supply chain against supply chain’. The survival of any business today is no longer solely dependent on its own ability to compete but rather on the ability to cooperate within the supply chain. The seemingly independent relationship between the organizations within the supply chain becomes even more interdependent.

With the petroleum industry being the main contributor of the economy of Cameroon, and contributing enormously to the GDP, it is important to evaluate the supply chain, how it is managed, and how supply chain management affects productivity.

1.3 Research Questions

1. What is the nature of the supply chain management practice of SONARA’s?
2. What is the impact of SCM on the productivity of SONARA?
3. What are the problems and disturbances experience in the supply chain of SONARA?
4. How resilient is SONARA in managing such challenges or disturbance in their supply chain?