Global Supply Chain Practices and Problems Facing Developing Countries: A Study in Tanzania


Author

Kabossa A.B. Msimangira
Department of Higher Education – Business, Faculty of Business, Hospitality and Primary Industries, Melbourne Polytechnic, Australia

Clemence P. Tesha
Procurement and Supplies Professionals and Technicians Board, Tanzania


Content

Although global supply chain is widely discussed by practitioners and academics, and the widespread international recognition of global supply chain practices and problems, little is known in the literature concerning the global supply chain problems facing developing countries. This study aims to identify key problems affecting global sourcing processes in the global supply chain, with reference to the transport sector in Tanzania. We used a case-based research approach by conducting in-depth interviews with senior procurement and supplies managers. Secondary data were collected from the companies’ websites and annual reports. Also, direct observation on the companies’ operations helped to make the study empirically grounded. We used cross-case analysis to analyse the data. The findings reveal that the local end component of the global supply chain in Tanzania faces many problems compared to that of developed countries; for example, key problems facing Tanzania are: the use of outdated technology in the domestic market, lack of trust, documentation problems, procurement of counterfeit products (e.g., spare parts), and lack of integrated computerised systems to link with the overseas suppliers in the global supply chain, and so on. The insights on problems and practices provide valuable information to researchers and practitioners on the challenges and opportunities in the global supply chain sourcing processes in developing countries. We provide recommendations to solve some of the global supply chain problems

Keywords: global supply chain, public transport, developing countries, Tanzania

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The objective of this study is to explore the global supply chain problems and risks facing the developing countries, with reference to the transport sector in Tanzania. Since the study is exploratory, we used a qualitative data collection method, using a case study research approach, which is appropriate to the exploratory and the interpretive research approach (Yin, 2003; Eisenhardt, 1991). We interviewed senior supply chain managers in the field and obtained additional information from secondary data sources (the companies’ websites and annual reports). A case study approach helped us to understand social phenomena on the transport sector cases using multiple sources of evidence (Yin, 2003). Yin (2003) states that the case study approach is a good strategy when “how” or “why” questions are being asked; the investigator has little control over events; and the focus is on a contemporary phenomenon (in this case global supply chain practices and problems) within real life context. The case study shows why two large transport public companies (one company covers a distance of 1860 Kilometres and another one covers a distance of 2600 Kilometres (one way trip)), have different experiences regarding the global supply chain operations (see Table 1). The data collection was based on the process proposed by Eisenhardt (1989) and Miles and Huberman (1994). The case is defined by Miles and Huberman (1994) as “a phenomenon of some sort occurring in a bounded context. The case is ‘in effect, your unit of analysis’” (p. 25). Our study was concerned with the perceptions of the supply chain managers’ experiences on practices and problems, and how they can solve the existing global supply chain problems. We used the definition and context (Miles & Huberman, 1994) to set boundaries of a case study.

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What is the need of a spare part? What is the worth of a spare part? What considerations should guide the spares provisioning decision or rather investment in spare parts? These questions need intense deliberations, if we are working in a resource crunch environment

In this study we have drawn an analogy to the marketing concept of “Customer Life Time Value” which is the optimal allocation of resources and efforts across various profitable customers to ensure cost effectiveness. Customer lifetime value of a customer for a firm is the net profit or loss to the firm, considering the transactions made throughout its entire life of that customer with that firm. Hence, the lifetime value of a customer for a firm is the net of the revenues obtained from that customer over the lifetime of transactions with that customer minus the costs, taking into account the time value of money (Berger and Nasr, 1998). This Customer Life Time Value framework has been utilized as the basis for customer selection and resource allocation (Jain and Siddhartha, 2002). It is also used to generate customer level strategies and optimize firm‟s performance especially for customer selection, customer segmentation, optimal resource allocation, purchase sequence analysis and targeting profitable prospects (Venkatesan and Kumar, 2004).

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The purpose of this study was to explore global supply chain practices and problems facing developing countries, with reference to the public transport sector in Tanzania. The global supply chain of goods (e.g., spare parts, vehicle engines, etc.) from overseas suppliers to the local public transport companies (buyers or customers) has not been working effectively and efficiently (in the local part of the global supply chain) to meet the requirements of the customers. If low performance service levels continue at the same pace, the government may decide to privatise the companies or enter into a partnership with the private sector in order to alleviate some of the operational problems. Although both companies understudy gained some benefits from participation in the global supply chain, our findings indicate that all the respondents from the companies agree on the nature of the critical problems they are experiencing in the domestic part of the global supply chain. These problems must be solved first before the domestic part of the supply chain can be efficient, and meet the customers’ demand at the right time, with the right quality of transport service, at minimum cost. Efficient domestic supply chain will increase productivity, and improve service level to the customers. In order for the global supply chain to work efficiently, effectively, and add value, there is a need for management to alleviate some of the procurement/sourcing and supply chain problems identified by the procurement and supplies managers. In addition, the government can improve the operations of transport network in the country. Proactive and vision managers (Msimangira, 1994) who can build relationships are needed to make the global supply chain work efficiently and effectively in the domestic market. Although Tanzania has a structured procedure for importing goods from overseas, the global supply chain faces many problems, which need to be solved, before the global supply chain network can work well in Tanzania, and other similar developing countries. Support from top management of the transport companies and the government, and well trained supply chain management personnel to manage the domestic part of the global supply chain, can enhance the importance of global supply chain management in the public transport sector. The need for trained personnel in supply chain management supports the findings of Tracey & SmithDoerflein (2001), Msimangira (2003), and Gowen III & Tallon (2003).

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About Author

Kabossa A.B. Msimangirais is a Senior Lecturer and Discipline Leader of Business in the Department of Higher Education – Business, Faculty of Business, Hospitality and Primary Industries at the Melbourne Polytechnic, Australia. He received his B.A (Honours) (Production and Marketing Management) from the University of Dar es Salaam, Tanzania, an MBA (Operations Management) from the University of Arizona, U.S.A and a PhD (Supply Chain Management) from the Auckland University of Technology, New Zealand. He is a certified Fellow member of the Chartered Institute of Purchasing and Supply (FCIPS), U.K./Australia, and a certified Fellow member of the Chartered Institute of Marketing (FCIM), U.K. He has 34 years of experience in training, consultancy and research in the areas of purchasing / procurement, logistics, management, marketing, operations management, supply chain management, and supply chain integration. Kabossa has published research papers in peer reviewed international journals, including Operations and Supply Chain Management: An International Journal, Supply Chain Management: An International Journal, International Journal of Purchasing and Materials Management, the International Journal of Public Sector Management, and the international Journal of Sustainability Policy and Practice. Before joining NMIT, he worked at various universities, polytechnics and the United Nations.

Clemence P. Tesha is Executive Director of Procurement and Supplies Professionals and Technicians Board (PSPTB) in Tanzania. He is a PhD candidate in operations and supply chain management, Mzumbe University, Tanzania. He obtained a Masters degree in procurement and logistics management from Mzumbe University.