MBA PROGRAMME

STUDENT NAME : MOSES SAKALA

COURSE TITLE : SUPPLY CHAINS AND LOGISTICS

ASSIGNMENT : CRITICALLY ANALYZE THE CHALLENGES OF

BUSINESS MANAGERS TOWARDS THE
ESTABLISHMENT OF OPERATIONS IN
DIFFERENT COUNTRIES BASED ON
LOGISTICS AND SUPPLY CHAIN OF PRODUCTS

DATE : 31 MARCH 2019

COURSE TUTOR : DR. Elenica Pjero

Contents
Introduction...............................................................................................................3
Conceptual Framework.............................................................................................3
Supply Chains............................................................................................................4
Modern Definitions of SCM......................................................................................5
Modern Definition of Logistics.................................................................................5
Military Background of Logistics.............................................................................6
Globalisation..............................................................................................................6
a. Primary Global Supply Chain Drivers..........................................................6
b. Five Secondary Global Supply Chain Drivers..............................................7
i. Production..................................................................................................8
ii. Inventory....................................................................................................9
iii. Location.....................................................................................................9
iv. Transportation............................................................................................9
v. Information..............................................................................................10
Application of Theory and Practice for ZAMBEEF PLC.......................................10
Objectives for Establishing a Foreign Operation................................................10
ZAMBEEF Strategies Regarding SCM for Foreign Operations.........................11
Costs....................................................................................................................12
Laws....................................................................................................................12
Currency..............................................................................................................13
Lead time.............................................................................................................13
Language and culture..........................................................................................13
Approaches to Addressing Key SCM Challenges...................................................14
1. Globalization Related Challenges...............................................................14
2. Quality & Compliance Challenges.............................................................15
3. Fast Changing Technology Cyber Security Challenges.............................15
Conclusion...............................................................................................................16
2
References...............................................................................................................16

Introduction
In this paper, an examination will be made of the challenges that managers face in establishing
operations in different countries. Possible solutions for the problems identified will be presented
firstly from a theoretical and academic perspective as well as from a practical or experimental
perspective. An evaluation of the modern developments in the field of Supply Chain
Management will also be presented alongside the practical solutions. The main focus, of the
study will be the Zambian Business Environment and more specifically, the case of ZAMBEEF
PLC an agricultural enterprise seeking to expand it beef business from its Zambian base into
Nigeria and other West African countries.

The selection of ZAMBEEF Plc for examination is motivated by a desire to apply the theories to
a familiar Zambian/African setup rather than examine a distant detached scenario in the
developed world. It is hoped that this would also possible help present solutions to the
Zambian/African problems identified.

This study will among other things, seek to answer the following questions:

 How is Supply Chain organised?

 What is the role of ICT and ERP software and related systems in the Supply Chain
Management?
 How does ZAMBEEF Plc manage its Supplier Relations?
 What challenges has ZAMBEEF Plc faced in Supply Chain Management and how have
these been addressed?
 How will this improve business efficiency, customer satisfaction and value addition?

Conceptual Framework
The demand by customers for higher product quality at lower prices and higher value for money
has pushed the barriers of product innovation and advancement. The advent of the information
age has virtually erased borders between countries and presented the advantages for global value
chains. Demand for higher returns by investors is motivating companies to seek higher revenues
in the global market.

3
The conceptual framework will be guided by the works of:

i. Michael Quayle from his book “Purchasing and Supply Chain Management:
Strategies and Realities”
ii. Walsham Grace from his book “Globalization and ICT: Working Across Culture”.
iii. Cooper MC and Lambert DM and their book “Towards the field of Supply Chain
Management”.
iv. James B. Ayers from his book “Supply Chain Project Management – A structured
Collaboration Measurable Approach “

Supply Chains
In 1982, Keith Oliver, a consultant at Booz Allen Hamilton introduced the term "supply chain
management" to the public domain in an interview for the Financial Times. Since then, the
concept of Supply Chain Management and consequently its definition has been evolving over the
last fifty years. The evolution of the concepts has of course accelerated with the onset of
information technology.

This evolution of SCM as a concept is illustrated by the following chart:

4
Source: https://transportgeography.org/?page_id=4438

Modern Definitions of SCM

“Supply chain management (SCM) is the management, across and within a network of
upstream and downstream organisations, of both relationships and flows of material,
information and resources. The purposes of SCM are to create value, enhance efficiency,
and satisfy customers.” (Mangan et. al 2012 p10)

“SCM is the management of a network of relationships within a firm and between

interdependent organisations and business units consisting of material suppliers,
purchasing, production facilities, logistics, marketing, and related systems that facilitate
the forward and reverse flow of materials, services, finances and information from the
original producer to final customer with the benefits of adding value, maximising
profitability through efficiencies and achieving customer satisfaction.” (Stock & Boyer
2009)

As can be seen, the evolving definition retains the three key components of value addition,
efficiency and customer satisfaction while adding new elements of “network of relationships”
and “from original producer to final customer”.

Modern Definition of Logistics

Logistics management is the process of strategically managing the procurement, movement and
storage of materials, parts and finished inventory (and the related information flows) through the
organization and its marketing channels in such as way that current and future profitability are
maximized through the cost-effective fulfilment of orders. (Christopher, 1998)

“Logistics is the process of planning and executing the efficient transportation and storage of
goods from the point of origin to the point of consumption. The goal of logistics is to meet
customer requirements in a timely, cost-effective manner.” (Mangan et. al 2012 p405)

Logistics involves inbound and outbound transportation, fleet management, warehousing,

materials and inventory management, order management, demand planning and finally
optimising the foregoing. (The Logistics Handbook)

5
Military Background of Logistics
The need for logistics in the military has been around for as long as there have been armies.
Whether in peace in war times, the army needs to feed and be equipped and transported.

Military logistics is critical in the execution and support of military exercises. The objective is to
supply, feed, equip and transport soldiers and materials, in the safest, most effective and efficient
way possible to ensure the success of the expedition. This requires a thorough capability to for
mobilization, development, finance, administration, procurement, distribution, recruiting,
training, testing and removal of unnecessary, making it the assurance of operational capacity.
Military logistics mainly aim to supply a mobile demand (military units) from relatively fixed or
static supply base. (Foxton 1994)

It is out of this military historical background that the three elements of logistics were born:
procurement, movement and storage of materials or inventory.

Globalisation
Globalization refers to the movement of products, services, technology, information, finances
and even jobs across geographical territories or national borders. It also refers to the
interdependence and interconnection of nations around the world brought about by ever reducing
restrictions on international trade.

Globalisation has several obvious advantages. It has raised the standard of living in poor and less
developed countries by providing job and trade opportunities, modernization, and improved
infrastructure and access to goods and services. Globalisation also has several obvious
disadvantages. It has led to loss of jobs and trade opportunities in developed and high-wage
countries as factories and production plants moved to lower cost countries.

The reality of globalisation has compelled companies to come up with supply chains that should
thrive and excel on the global stage by identifying those factors that influence SCM.

a. Primary Global Supply Chain Drivers

6
 Many companies have been engaging in cross-border supply because of the attraction of
lower material, manufacturing and labour costs as well as the existence of new and
advanced markets. This has resulted in two dimensions of globalization: the geographic
dimension i.e. the increased geographic location, dispersion and spread of activities
across the world and the qualitative dimension i.e. the increased integrated, international,
interconnected and interdependent nature of companies (Delfmann, 1998).

While both dimensions are of major importance for logistics, the qualitative dimension is
becoming the driving force of global SCM. Globalisation drivers can further be grouped
into four clusters: market, cost, government and competition (Yip 1992).

Successful deployment of an effective global SCM calls first for an understanding of

each driver and the way it operates. Each driver can and does influence the supply chain
and how the company handles it will have a direct impact of the success of the strategy.

b. Five Secondary Global Supply Chain Drivers

The effectiveness of the SCM system is influenced by the decisions which managers
make regarding the five key supply chain drivers. These drivers can be designed and
managed so to focus on responsiveness or efficiency depending on which element
delivers the optimal mix of the desired end results and the immediate and evolving
business environment. As a company investigates how its supply chain works, it can
learn about the demands it faces and the capabilities it needs to be successful and will
adjust the supply chain drivers accordingly.

The five drivers provide a useful framework for thinking about supply chain capabilities.
Decisions made about how each driver operates will determine the blend of
responsiveness and efficiency a supply chain is capable of achieving. The five drivers are
illustrated in the diagram below:

7
Source: https://www.scmglobe.com/five-supply-chain-drivers/

i. Production
This driver is critical because can be the key to successful operation in a foreign
territory. Decisions must be made about how responsive production would be –
this may be achieved by
 building factories with excess capacity
 using flexible manufacturing techniques
 building many small plants that are close to major groups of customers so
delivery times would be shorter.
 Building production facilities with very little excess capacity but
optimized for producing a limited range of items.
 Building centralizing production facilities to achieve economies of scale,
even though delivery times might be longer.

8
ii. Inventory
Strategies regarding inventory play a crucial role in the success of a SCM system.
These strategies attempt to build responsiveness into the inventory system such as
 stocking high levels of inventory for a wide range of products.
 stocking products at many locations so as to have the inventory close to
customers and readily available.
 Creating efficiency in inventory management so that inventory levels are
held at optimal levels and even eliminating slow moving items altogether.
 stocking inventory in a few central locations which would serve as
regional distribution centres.
 Establishing virtual warehouses with a system of “just-in-time” ordering
and delivery.

iii. Location
A location decision that emphasizes responsiveness would be one where a
company establishes many locations that are close to its customer base. For
example, fast-food chains use location to be very responsive to their customers by
opening up lots of stores in high volume markets. Efficiency can be achieved by
operating from only a few locations and centralizing activities in common
locations. An example of this is the way e-commerce retailers serve large
geographical markets from only a few central locations that perform a wide range
of activities. (Chandrasekaran, 2010)

iv. Transportation
Responsiveness can be achieved by a transportation mode that is fast and flexible
such as trucks and airplanes. Many companies that sell products through
catalogues or on the Internet are able to provide high levels of responsiveness by
using transportation to deliver their products often within 48 hours or less. FedEx
and UPS are two companies that can provide very responsive transportation
services. And now Amazon is expanding and operating its own transportation
services in high volume markets to be more responsive to customer desires.

9
 Efficiency can be emphasized by transporting products in larger batches and
doing it less often. The use of transportation modes such as ship, railroad, and
pipelines can be very efficient. Transportation can also be made more efficient if
it is originated out of a central hub facility or distribution centre.

v. Information
The power of this driver grows stronger every year as the technology for
collecting and sharing information becomes more wide spread, easier to use, and
less expensive. Information, much like money, is a very useful commodity
because it can be applied directly to enhance the performance of the other four
supply chain drivers. High levels of responsiveness can be achieved when
companies collect and share accurate and timely data generated by the operations
of the other four drivers. An example of this is the supply chains that serve the
electronics market; they are some of the most responsive in the world.
Companies in these supply chains, the manufacturers, distributors, and the big
retailers all collect and share data about customer demand, production schedules,
and inventory levels. This enables companies in these supply chains to respond
quickly to situations and new market demands in the high-change and
unpredictable world of electronic devices

Application of Theory and Practice for ZAMBEEF PLC

Objectives for Establishing a Foreign Operation

The primary motives were to drive growth in share price and earnings per share. This could be
achieved through revenue growth. Revenue in the local Zambian market was reaching a plateau
given the population of 15 million. Any significant revenue growth would have to be in a high
population density market with very similar market dynamics.

Thus ZAMBEEF Plc decided to set up operations in Nigeria so as to benefit from higher
revenues arising from in that larger market for its meat and agricultural products as well as
attractive tariffs and trade concessions, lower labour costs, capital subsidies, and reduced

10
logistics costs in that market. Moreover, the Nigeria operation was going to benefit from easy
access to the markets in neighbouring countries as well as the sources of products and services.

ZAMBEEF Strategies Regarding SCM for Foreign Operations

In developing the SCM system for Nigeria, the strategy was to

a. Recognise that in Nigeria, just like in the rest of Africa, the economic potential for
growth in evident, but the challenge of poor infrastructure and a difficult business
environment were real. It would therefore be necessary to develop creative, flexible
approaches to supply chain design and execution which would thrive in the face on these
challenges. Some of these approaches would be
 To create a means of providing easy access to products. This would focus on
establishing outlets in both high-end markets and in densely populated areas
regardless of the costs.
 To create a system of ensuring reliability of high quality products and service as
a priority. This would also require a system of managing product and service
failures. A detailed protocol for handling
 To create a system for conveying products from Zambian, Nigerian and regional
production centres to the Nigerian market as the right quantities, right quality,
right cost and at the right time.
b. Recognise that there would be numerous sub-supply chains operating within Nigeria
alongside the main corporate one. Managing these sub- supply chains would be
potentially a costly and time consuming exercise. The way to handle this challenge would
be to build partnerships with the players in these sub-supply chains and finding synergies
and opportunities that would allow the costs and benefits of particular sub-supply chain
channels to be shared with non-competing organizations.
c. Recognise that in order to succeed, the company needed to become a local corporate
citizen. The challenge here would be how to deal with the obvious “foreign company”
tag. In the initial stages, the company would have no choice but to import products,
materials and other inputs from Zambia and overseas. For the long term, however, a
skilled local management, workforce and supply base would be developed which would
be essential for sustainability. This would also involve significant investment in training.

11
 d. Recognise that operating in Nigeria would have several implications: different culture,
language and political environment from Zambia. The company would need to be
prepared and flexible to adapt and adopt. ZAMBEEF deliberately chose to be polycentric
in establishment of the Nigeria operation, whereby the company adopts the host country
perspectives.

Costs
One of the main reasons for entry into the Nigeria market was to benefit from lower production
and related costs including labour, raw materials and overheads. However, other unforeseen
costs arose such as higher freight costs, warehousing costs, travel and accommodation costs for
expatriate staff, cost of doing business, broker fees, taxes, and insurances. These costs exerted so
much pressure on profitability that projections reduced from 36% to 23% for 2017, much to the
concern of the directors. To effectively counter these negative cost factors, innovative ways of
reducing these costs were implemented which included

 Implementing a JIT (Just In Time) inventory management system so that inventory is

only received when needed and is held for the shortest possible time in order to reduce
inventory carrying costs while avoiding stock out situations, safeguarding against
inventory write-off due to obsolescence.
 Delivering what the customers actually need, not what the company thinks they need.
This may involve elimination bottlenecks and establishing “get-it-right-the-first time”
approach to customer satisfaction.
 Implementing low cost transportation methods that included outsourcing contracts that
factored into the per truck rate the time it took to deliver.

Source: https://zambeefplc.com/downloads/

Laws
Applicable laws for contracts and compliance tended to be Nigerian laws and more often than
not, these disadvantaged the Zambian company and resulted in higher costs for the financial
exposure. Therefore, as a general principal, when designing a global SCM, attention should be
given to a clear definition of which laws will be applicable; law of the buyer’s country, the law
of the supplier’s country, or one applicable under an agreement accepted by both countries. In

12
the case of ZAMBEEF, there was very little that could be done to mitigate this other than
adapting.

Currency
Supply chain participants need to agree on currency to apply. If the buyer’s currency strengthens
relative to the supplier’s currency, careful decisions consider use of the supplier’s currency.
Otherwise careful hedging strategies are needed to protect the company. In the ZAMBEEF case,
the local operations were all conducted in the local currency – the Naira. Foreign transactions
between the Zambian sister companies and any other trade partners were in US Dollars. This
means that any currency related exposure could be at either end. In most cases, exchange gains
tended to be

Lead time
As mentioned before, large geographical distances in global context imply that lead-times would
be longer than for domestic supply chains. This is may be compounded by slow transportation
which usually means ships. The response of customers to product availability and any
disruptions experienced and the effect on subsequent demand will inform the strategy that
management would adopt regarding the SCM. Longer lead times require a longer time horizon
over which forecasts must be made. In the ZAMBEEF case, the SCM strategy adopted involved
controlling the land transportation element by introducing refrigerated container trucks for
transporting cold chain products. The sea element was handled by contracting reliable shipping
lines and executing contracts with heavy penalty clauses for delays. Efforts were also applied in
establishing bonded warehouses to minimise customs clearing formalities.

Language and culture

Much of communication is nuance and is made up of not just the spoken words but the
intonation and facial expressions as well as gestures. Even body language is part of
communication. A lot of what is communicated is “between the lines” and relationships
definitely take more than one conversation. In a foreign country, the local expressions may be
lost on the foreigner. Even where the official language is English, the language of business may
be a local dialect. This will present major difficulties for the foreign managers assigned to that
territory. This can be mitigated by

13
  Investing in equipping the SCM team with appropriate language skills. This will lead to
higher costs but it is essential for success.
 Developing a deliberate strategy of phased programme of indigenisation. Key expatriate
managers would be deployed in the initial phases to manage the operation but with an
mandate to train local staff with a view to handing over within a five year time frame.
 Invest in problem solving systems such as a robust ERP systems with an integrated
Customer Relationship Management System that will prepare the company to deal with
are known as “wicked problems”.
Rittel and Webber observed that, ‘with “wicked problems” . . . any solution, after
being implemented, will generate waves of consequences over an extended –
virtually an unbounded – period of time. The next day’s consequences of the
solution may yield utterly undesirable repercussions. If the problem is attacked on
too low a level, then successful resolution may result in making things worse,
because it may become difficult to deal with the higher problems.’
 This means that what may have presented itself as a solution to a problem may
actually generate undesirable repercussions and more problems. The SCM must
anticipate and prepare for this eventuality.

Approaches to Addressing Key SCM Challenges

1. Globalization Related Challenges
a. The quest for global markets may imply moving production facilities to territories
offering lower labour costs, taxes, and transportation for raw materials and even
for finished products or components. This may involve outsourcing. SCM
managers will face the following challenges:
i. Language and communication issues. In addressing this problem,
ZAMBEEF has a language/culture laboratory to equip managers with
necessary skills.
ii. Coordination and collaboration with counterparts in different countries
regarding manufacturing, storage, and logistics. ZAMBEEF has dealt with
this problem by investing in ICT’s custom made apps to facilitate
coordination.

14
 iii. Challenges in management of lead times to customers who demand to
receive their products on time despite the increased complexity in the
manufacturer’s supply chains. Real time tracking and real time perpetual
inventory systems have been deployed.
iv. Challenges in maintaining real-time visibility of their production cycle;
from raw materials to finished goods — to ensure the efficiency of their
manufacturing processes. This challenge is resolved by investing in ICTs
that present tracking capabilities and modelling functions so that
possibilities of problem areas are simulated and preparedness for
unforeseen outcomes is developed.
v. Challenges in adapting products to different cultures and preferences.
Adequate market research would minimise this challenge.

2. Quality & Compliance Challenges

A challenge that would be faced relates to maintaining quality and regulatory
compliance in foreign sources and markets. The challenges would arise out of the lost
ability to control the processes. These would in turn affect the pricing of the products
negatively in the event the products fail to meet the standards. Managing the challenges
would call for vigilance and forward planning. (Gattorna, 2003)

3. Fast Changing Technology Cyber Security Challenges

Technology and innovation are changing rapidly. For instance, in the transportation
element of SCM, Uber-like apps have over the last two years come in to challenge the
traditional haulage systems. This demands that SCM responds to the innovation and still
retain some kind on control over the process.
Another aspect that presents a challenge is the exposure to cyber attacks in the quest to
obtain system and product visibility. Malicious people may use that to acquire control or
even subvert the system for their personal gain. This calls for vigilance, proactive action
in cyber defence and adaptability.

15
Conclusion
The ever present global village will continue to be relentless in its aggressive presence. It is
therefore incumbent upon all SCM practitioners to acquire as much knowledge as possible on the
developments.

References
Ayers J.B. (2010) Supply Chain Project Management – A Structured Collaboration Measurable
Approach (2nd Ed), Florida, Auerbach Publications

Chandrasekaran N,(2010) Supply Chain Management, London, Oxford University

Press.

Christopher, M. (1998). Logistics and Supply Chain Management: Strategies for reducing cost
and improving service, (2nd Ed.). New York: Prentice Hall.

David L. Anderson, Frank F. Britt, and Donavon J. Favre, “The Seven Principles of Supply
Chain Management,” Supply Chain Management Review (April 2007): 41–6.

Foxton, P D. (1994) Powering War: Modern Land Force Logistics, London, Brassey's,

16
Gattorna, J. (Ed.). (2003). Gower handbook of supply chain management. Retrieved from
https://ebookcentral.proquest.com

James B. Ayers, Handbook of Supply Chain Management, 2nd ed. Boca Raton: Auerbach
Publications

Quayle M. (2006) Purchasing and Supply Chain Management: Strategies and Realities” London,
IRM Press

Mangan J., Lalwani C., Butcher T. & Javadpour R., (2012), Chichester WS, John Wiley & Sons
– ebook

Handfield R.B., Nichols E.L., (1999). Introduction to Supply Chain Management. New York:
Prentice-Hall. 

Kouvelis, P., Dong, L., & Boyabatli, O. (2011). Handbook of integrated risk management in
global supply chains. Retrieved from https://ebookcentral.proquest.com

Porter M.E. (1980): Competitive Strategy Techniques for Analyzing Industries and Competitors
New York: The Free Press.

Porter M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance New
York: The Free Press.

Stock, J. & Boyer, S. (2009) Developing a consensus definition of supply chain management: a
qualitative study, International Journal of Physical Distribution and Logistics
Management, 39(8), 690–711.

Wittenkamp C. (2014) Building Bridges Across Cultural Differences, Bookboon Ebook.

Globalization and Proximity." National Research Council. 2000. Surviving Supply Chain

Integration: Strategies for Small Manufacturers. Washington, DC: The National
Academies Press. doi: 10.17226/6369.

Rittel, H.W.J. & Webber, M.M. (1973) Dilemmas in a general theory of planning, Policy
Sciences, 4, 155–169

https://www.scmglobe.com/five-supply-chain-drivers/

https://www.compudata.com/blog/10-ways-to-improve-your-supply-chain-strategy/

17
https://www.nap.edu/read/6369/chapter/6

https://www.shopify.com/encyclopedia/logistics

https://news.ewmfg.com/blog/how-to-overcome-language-barriers-when-manufacturing-
overseas

https://www.supplychaindigital.com/scm/overcoming-outsourcing-language-barriers

https://zambeefplc.com/annual-reports/

https://zambeefplc.com/results-presentations/

https://scm.ncsu.edu/scm-articles/article/logistics-management

http://apps.who.int/medicinedocs/documents/s20211en/s20211en.pdf

https://www.investopedia.com/terms/g/globalization.asp

https://en.wikipedia.org/wiki/Globalization

https://liaison.opentext.com/press-release/2017/09/18/key-issues-supply-chain-management-
overcome/

https://www.supplychaindigital.com/scm/three-supply-chain-challenges-and-how-overcome-
them

https://liaison.opentext.com/press-release/2017/09/18/key-issues-supply-chain-management-
overcome/

https://en.wikipedia.org/wiki/Supply-chain_management

18