The Effect of Strategic Supply Chain Management on the Profitability of Flour Mills in the Sub-Saharan Africa (2005 - 2013)

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 the effect of strategic supply chain management on the profitability of Flour Mills in the Sub-Saharan Africa (2005-2013). The problem x-rayed here stems from the huge cost burden on production firms in the sub-Saharan African region and their subsequent poor performance. The industry is marred by low profit margin as a result of high cost burden, as such the ability of the company to reduce production cost while increasing product output would largely determine profitability.  The major objective of this study is examining the effect of strategic Supply Chain Management on Profitability of Flour Mills in the Sub-Saharan African Region as measured by the Profit After Tax (PAT) and other source document. Specifically, the objectives were to; Determine the trend and level of profitability of the flour mills, Ascertain the Strategic supply chain management model adopted by the selected flour mills, Examine the effect of supply chain management cost components on the profit of the flour mills. Data collected from Annual reports of various issues were analyzed using inferential statistics such as Time trend model, Multiple and simple regression analysis. The results of the findings showed some firms in the region still see strategic supply chain management as a novel theory and as such does not reap its full benefits. Their huge investment in their supply chain component does not  reflect significantly in their profitability. The study concludes that all round development in the industrial sector (Flour mills) is possible with the integration of sound supply chain variables and exploitation of knowledgeable human resources and as well as adopting a sound supply chain management strategy/model. In Nigeria just like every other nation in the globe, when firms reaches the peak of their maturity stage in their life cycle, it starts experiencing stunted growth in terms of their profitability trend. Various recommendations were made which includes that Production firms should integrate their supply chain management operations efficiently in such a way that it enhances their sales and profitability and also should strive to create a Strategic Supply Chain system that will create value and manage risk for their numerous customers from origination and processing, to logistics and distribution, with the changing economic and political environment, emerging technology versus global competition and changing nature of supply chain management, to become competitive strategic weapon, supply chain operations must abandon fragmented approaches, the companies should shorten internal lead times and make them more predictable and repeatable and also reduce the volume of work-in-progress inventories from months of supply to days and that firms should strive to implement Just-in-time delivery strategies for their most costly component materials and also drastic reduction in the setup times, as this will substantially reduce indirect cost and improve the use of resources.