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 the socio-political crisis on the supply chain of SABC, and 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 were employed to sample 40 personnel at SABC.

The study findings revealed that close partnership with suppliers and customers, supply chain flexibility, determine future customer expectations, internal lean practices, and information sharing among suppliers 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, recommends 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 a growing reliance on supply chains 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 a 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 component of the Supply Chain communicates 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 their 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 the short-term bottom lines and long-term corporate reputations.

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 a change to avoid the 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 an 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 a constant threat to the supply chain of most companies. Political strikes, political violence, corruption, lockdowns, kidnaps, and assassinations are commonplace. Despite the significance, 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 emanate from external stimuli.

Previous research in the field of the 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.

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, the 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 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 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 has made the smooth functioning of the supply chain almost impossible in addition that the SABC products have 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

1. What effect does government regulation have on the supply chain of SABC?
2. What are the effects of socio-political crises on the supply chain of SABC?
3. What challenges does SABC face in practicing effective supply chain management?
4. What supply chain management strategies can be proposed to better manage supply chain disruptions?