RISK IN SUPPLY CHAIN LOGISTICS CONSTRAINTS ON OPPORTUNITY IN NORTHERN EASTERN NIGERIA

1.1 Introduction

Supply chain management in any organization seeks to ensure that the goods materials are of the right quality, quantity, though at the right price and from the right source and made available for the organization in use at the right time. Current business trends are leading to complex, dynamic supply networks. One consequence is that risk is increasing, and shifting around supply networks. Managers need to identify and manage risks from a more diverse range of sources and contexts. In the past, when firms manufactured in-house, sourced locally and sold direct to the customer, risk was less diffused and was easier to manage. Supply networks are becoming more complex, dynamically changing webs of relationships.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.

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1.2 Background of Study

In recent years, materials management in many organizations has been given specialized departmental status together with clearly defined responsibilities and authorities. What is observed however that is its (materials management), role in increasingly complex and mass production economy is not fixed. Every organization develops the need for supply chain. This has be made available on timely basis i.e. as and when required by the organization especially to meet up with production schedule. The function responsible for this is termed supply chain management in several organizations. The nature of the product and the complexity of the organization effect the number of product produced and the amount of money available and spent and sizes of products.

The supply chain network consists of trade-offs interrelated by monetary, information, and material flows (Fugate et al. 2006). Many disruptions in supply chains have been seen since the year 2000. These disruptions include the fear of weapons of mass destruction, terrorist attacks, fuel protests, and disease outbreaks (Jüttner 2005). The risk is the prob- ability of differences in expected outcomes (Spekman and Davis 2004). One can assign probabilities to various outcomes and calculate risk (Khan and Burnes 2007). Hence, uncertainty refers to a risk that may not be eliminated. However, these uncertainties can be minimized with proper assessment and planning (Slack and Lewis 2002).

The supply chain encompasses all of those activities associated with moving goods from the raw-materials stage through to the end user. Advocates for this business process realized that significant productivity increases could only come from managing relationships, information, and material flow across enterprise borders. The best companies around the world are discovering a powerful new source of competitive advantage. It’s called supply-chain management and it encompasses all of those integrated activities that bring product to market and create satisfied customers.

The Supply Chain Management Program integrates topics from manufacturing operations, purchasing, transportation, and physical distribution into a unified program. Successful supply chain management, then, coordinates and integrates all of these activities into a seamless process. It embraces and links all of the partners in the chain. In addition to the departments within the organization, these partners include vendors, carriers, third party companies, and information systems providers.

The supply function continues to evolve as technology and the worldwide competitive environment require innovative approaches. The traditionally held view that multiple sourcing increases supply security has been challenged by a trend toward single sourcing. Results from closer supplier relations and cooperation with suppliers question the wisdom of the traditional arm’s-length dealings between purchaser and supplier. Negotiation is receiving increasing emphasis as opposed to competitive bidding, and longer-term contracts are replacing short-term buying techniques. Organizations are continually evaluating the risks and opportunities of global sourcing. All of these trends are a logical outcome of increased managerial concern with value and increasing procurement aggressiveness in developing suppliers to meet specific supply objectives of quality, quantity, delivery, price, service, and continuous improvement (Evans, 2011).

Therefore, in Limbot Express Logistics where the research was carried out, the activities that was conducted is to know the Risk in Supply Chain Logistics Constraints on Opportunity in Northern Eastern Nigeria.

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1.3 Statement of Problems

Investigation revealed that most suppliers lack the technical expertise to dispense their duties. This may lead to situations where the supplier selected cannot meet the capacity and logistics requirement of the company. Another problem is inadequate supplier selection and this is one of the most important decisions in the purchasing process. There is also the problem of lack of good contractual arrangement and a clear description of the product or supplier requirements may not be available. Also, there are delivery problems.

Suppliers deliver too late, deliveries are not complete, products are damaged or may not meet quality requirements, packaging of the product is not sound and information labels in most cases cannot be read. The reason for this can be traced back to unclear specifications or careless supplier specification. The purchasing and supply department of many business organizations lack clear rules and guidelines with regard to procurement and supply governance. It is in view of these problems that this research study is carried out.

One of the major problems facing most manufacturing firms concerns in recent time is the soaring cost of supplying. An attempt to cut down on such costs has sometimes led to the supply of poor quality the recent trend however towards cutting down costs and minimizing poor quality is an integrated supply chain management approach through the use of effective communication.

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1.4 Aim and Objectives of Study

The aim of the study is to examine the Risk in Supply Chain Logistics Constraints on Opportunity in Northern Eastern Nigeria using Limbot Express Logistics as a case study. In achieving this aim, the following specific objectives were laid out as follows:

1. To evaluate the risk in supply chain logistics constraints on opportunity in the area under study;
2. To determine the relationship between the risk management and supply chain logistics in the area under study;
3. To assess the supply chain management functions in the area under study; and
4. To investigate the risk factors inhibiting supply chain logistics in Northern Eastern Nigeria.

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1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Are there risk factors inhibiting supply chain logistics in Northern Eastern Nigeria?
• What is the risk in supply chain logistics constraints on opportunity in the area under study?
• What are the supply chain management functions in the area under study?
• What is the relationship between the risk management and supply chain logistics in the area under study?

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1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: There is no significant risk factor inhibiting supply chain logistics in Limbot Express Logistics.
• H1: There is a significant risk factor inhibiting supply chain logistics in Limbot Express Logistics.

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1.7 Significance of Study

The significance of the study is that it will provide a better means of managing the supply function of an organization. It will enable the organization to maintain adequate record of supply records and to easily update, retrieve and get reports when needed. It will facilitate the maximization of profit by enabling the organization to determine the priority of supply.

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

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1.8 Scope of Study

The scope of the research is focused on the Risk in Supply Chain Logistics Constraints on Opportunity in Northern Eastern Nigeria using Limbot Express Logistics as a case study.

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1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research material: availability of research material is a major setback to the scope of the study.
3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

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1.10 Definition of Terms

Supply: To provide, give, sell, or make available something that is wanted or needed by somebody or something.