SUPPLY CHAIN INTEGRATION AND SUPPLY CHAIN PERFORMANCE OF FAST FOOD CHAIN RESTAURANTS IN NIGERIA

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SUPPLY CHAIN INTEGRATION AND SUPPLY CHAIN PERFORMANCE OF FAST FOOD CHAIN RESTAURANTS IN NIGERIA

Chapter one

INTRODUCTION

Many organizations today are forced to increase their global market share in order to survive and sustain growth objectives. At the same time, these same organizations must defend their domestic market share from international competitors. The challenge is how to expand the global logistic and distribution network, in order to ship products to customers who demand them in a dynamic and rapidly changing set of channels. Strategic positioning of inventories is essential, so that the products are available when the customer wants them (Handfield, et al. 2002, p. 38).

Domenica (2002, p. 8) also claims that supply chain should actually be efficient and effective. In this case, efficient means to minimize resource use to accomplish specific outcomes; and effective, in terms of designing distribution channels. Efficiency is measured by delivery performance, product quality, backorders and inventory level, whereas effectiveness is measured by service quality and the service needs.

 

Long-term competitiveness therefore depends on how well the company meets customer preferences in terms of service, cost, quality, and flexibility, by designing the supply chain, which will be more effective and efficient than the competitors’. Optimisation of this equilibrium is a constant challenge for the companies which are part of the supply chain network, shown in Figure 2-1.

SUPPLY CHAIN INTEGRATION AND SUPPLY CHAIN PERFORMANCE OF FAST FOOD CHAIN RESTAURANTS IN NIGERIA

                          Source: Ernst, 2002, p. 120

To be able to optimise this equilibrium, many strategic decisions must be taken and many activities coordinated. This requires careful management and design of the supply chain. The design of supply chains represents a distinct means by which companies innovate, differentiate, and create value (Longitudes 04, 2004, p. 8). The challenge of supply chain design and management is in the capability to design and assemble assets, organizations, skills, and competences. It encompasses the team, partners, products, and processes.

To understand the term of supply chain management in depth, first the term of supply chain will be explained, than management and the role of management as a base for complete definition of supply chain management.

 

According to Mentzer, et al. (2001, p. 5) the definition of “supply chain” is more consolidated as definition of supply chain management. In his paper, he tried  to make a common definition of a supply chain, based on a comprehensive research study conducted by several co-authors. They came up with the following definition: “A supply chain is defined as a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer”.

 

The supply chain may include internal divisions of the company as well as external suppliers that provide input to a focal company. A supplier for this company has his own set of suppliers that provide input (also called second tier suppliers). Supply chains are essentially a series of linked suppliers and customers until products reach the ultimate customer (Handfield, 2002, p. 9).

 

Supply chain of a company consists of an upstream supplier network and its downstream distribution channel (see Figure 2-2). Organizations can be part of numerous supply chains. Danfoss for example, is part of a supply chain for district- heating components, district-heating stations, and HVAC components. On the other hand, Alfa Laval can find Danfoss to be a supplier in one supply chain, a partner in another (developing components for their substations), a competitor in the fourth supply chain of stations, and as a customer in the heat exchangers supply chain.

 

Depending on how complex the supply network is, Mentzer (2001, p. 22) has defined three types of supply chains:

  1. Direct supply chain, which consists of a company, a supplier, and a
  2. Extended supply chain, which includes suppliers of the immediate supplier, as well as customers of the immediate
  3. Ultimate supply chain, which includes all the organizations involved in all the upstream and downstream
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