Effective Supply Chain Management: A Strategic Tool for Profitability Enhancement in the Competitive Marketing Environment (An Empirical Evidence in the Nigerian Food and Beverage Industry 2005 - 2014)

Abstract

To compete successfully in today’s fierce and challenging business environment, companies need to focus on supply chain management components that have impact in enhancing profitability. The study examined Effective Supply Chain Management: A Strategic tool for Profitability Enhancement in the Competitive Marketing Environment ( An Empirical Evidence in the Nigerian Food and Beverage Industry 2005-2013). The problem x-rayed here stems from the huge cost burden and poor performance of industries in Nigeria which was made manifest by its low Profit After Tax and poor contribution of 6% to the Gross Domestic product (GDP) and also holding the fact that many firms have gone extinct from the marketing environment and only four companies (Honeywell flour mills Plc, Flour mills of Nigeria Plc, Northern Nigeria Flour Mill Plc and Lafarage Dangote Flour Mill Plc) control 50% of the entire flour mills market share among the 22 surviving firms. The major objective of this study is examining the relationship between Supply Chain Management cost components and Profitability of Food and  Beverage industry in Nigeria and their impact on firm’s survival as measured by the Profit After Tax (PAT) and other source document. Specifically, the objectives were to; examine the nature of relationship existing between supply chain management and profitability of the flour mills, ascertain if the volume of Goods in Transit affects the profitability of the flour mills and ascertain the supply chain management strategy/model adopted by the selected flour mills. Data collected from Annual reports of various issues were analyzed using inferential statistics such as Pearson correlation model and simple regression analysis. The results of the findings showed firms after investing heavily in their supply chain component does not  reflect significantly in their profitability. The study concludes that there is a significant relationship between Effective SCM and Profitability growth, that to ensure sustainable supply chain management operation which will ensure increased profitability in the industrial sector, Supply Chain operational inefficiencies ultimately will have adverse effects upon profits. Turning the situation round, difference in the efficiency of the inventory control for a given level of flexibility affects the level of investment required in inventory. The less efficient is the inventory control, the greater is the investment required. Excessive investment in inventories increase cost and reduce profits, thus, the effects of inventory control of flexibility and on level of investment required in inventories represent two sides of the same coin. This will also help in reducing the high cost burden which lies on the ability to reduce production cost Various recommendations were made which includes that production firms should adopt the SCM integration model that was specified in the study, to become competitive strategic weapon in such a way that it enhances their sales and profitability and also should adopt the Supply chain strategy/models that was developed in this study as it will best align with their operations and target customers, supply chain operations must abandon fragmented approaches.