Role Of Communication In Supply Chain Management

Project and Seminar Material for Purchasing and Supply PS

Abstract

This study is concerned with examination of the role of communication in a supply-chain management, it will help any firm or organization that are still in doubt as to known the contributions of communication, its effectiveness, efficiency of supply-chain management in an organization at large. The role which the information plays or passes through supply-chain management team to serve the organization better by making supply’s available for use as and when needed; forms the main theme of the study.

It has to be noted that this project is written primarily not to look at communications and supply-chain management alone but, to take a good look at the functions performed by the supply-chain department that highlights the role which communication plays.

Chapter one, is the introduction, general view of the study, chapter two, is the literature survey. In chapter three of this projects, deals more on the research design, chapter four is the data presentation, analysis and its interpretations of such data while finally chapter five, is the summary, conclusion and implications and recommendations before references.

Chapter One

1.0 Introduction

This study is concerned with examination of the role of communication in supply chain management, it will help organization that are still in doubt as to the contributions of communication to effective, efficient and timely managing of materials. The role which this communication plays in assisting the supply-chain management team to serve the organization better by making supply available for use as and when needed forms the main theme of this study.

“Without the means, the capacity and the will to communicate, what we know as business government, and community activities could not be (But it is not enough for) people to talk to others. They need to know how to talk with others, too”. This assertion of lee (1952) highlight how important communication is in every aspect of life, then how do people view communication? Looking at it ordinarily, people refers to communication as conversation between two or more persons the word communication how ever entails more than this by dictionary meaning, communication has been explained to be “A process by which information is exchanged between individuals through a common system of symbols, signs or behavior” (Webster 1991). This meaning seems to be in agreement with Kwofie (1981) who defined communication as “Any means by which information in form of ideas, protest.

Supply chain management in any organization seeks to ensure that the goods materials are of the right quality, quantity, though at the right price and from the right source and made available for the organization in use at the right time. These five qualities are of great importance to shell Petroleum Development Company of Nigeria Limited. Little wonder then why any department embarking on a project usually prepare a supply chain requirement planning and make such available to the procurement department well in advance before the commencement of such project or time period the supply chain will be made use of the procurement department which comes under the human resources and services division of the company headed by a deputy general manager (supply chain and procurement) who reports to executive general manager, the department is responsible for the supply’s, distribution and issuing of all operational and administrative supply chain needed for the company’s operations. And for any public liability company like the shell to improve in its supply chain there is need for all hands to be on deck to make positive thought to happen.

1.1 Background of the Study

Every organization develops the need for supply chain. This has be made available on timely basis i.e. as and when required by the organization especially to meet up with production schedule. The function responsible for this is termed supply chain management in several organizations. The nature of the product and the complexity of the organization effect the number of product produced and the amount of money available and spent and sizes of products.

Whatever the case may be, the plain fact remains that a huge sum of money is spent on supply chain department of various organizations, it has been discovered that over seventy percent (70%) of the capital of most business organization are tied up on supply chain management have the need for proper control with this in mind, it is necessary to know in a nutshell what supply chain management is Lee JR and Nobler (1977) Define supply chain activities bound by a common idea. The idea of an integrated management approach to planning, acquisition conversion flow and distribution of production materials from the raw materials state to the finished product state”.
Going a little bit further and looking at it from the point of view of Akindele (1952) who defined management as efficient utilization of resources (both human and materials) in order to achieve organizational aims and objectives. He went further to explain that management, as embedded in the above definition, involves the control and effective use of resources, decision making and achieving result through other people.

This being so, we can in one way look at supply chain management (being a management function) from the point of view of the classical management theorists and as such define it as a function involving planning, organizing and coordinating the activities of people in order to achieve result. This could further be interpreted to mean the efficient utilization of resources (human and materials) through supply chain personnel utilizing everything at their disposal to ensure availability of supply chain personnel utilizing everything at their required by their organization.

The history of supply chain management is not just the present day’s affairs it is as old as man and has remained in existence since the earliest days of mankind and civilization. A good example is found in the biblical days of Joseph “The Dreamer” (Holy Bible-Kings James Version 1987) who after interpreting pharaoh’s dream, was put in charge of gathering, storing, issuing and administration of food for several years before and after the famine came into existence in the land of Egypt. He could then be referred to as the first materials manager. In recent years, materials management in many organizations has been given specialized departmental status together with clearly defined responsibilities and authorities. What is observed however is that its (materials management), role in increasingly complex and mass production economy is not fixed.

We therefore see continued innovation in this function towards inter-dependence, there is the need for co-ordination, which could only be achieved free flow of reliable and accurate information transmitted in a timely manner. Between the supply chain management department and all their aims of the organizations, the work of supply chain management depends upon accurate communication especially by whoever does the buying as this involves committing the organization to huge sums of money. The correct spelling and pronunciation are more than important in carrying out management operations.

The role which is (information) plays in assisting the supply chain management team to serve the organization better by making supply chain management team to serve the organization better by making materials available for use as and when needed forms the main them of the study.

1.2 Statement of the Problem

One of the major problems facing most manufacturing firms concerns in recent time is the soaring cost of supplying. An attempt to cut down on such costs has sometimes led to the supply of “poor quality” the recent trend however towards cutting down costs and minimizing poor quality is an integrated supply chain management approach through the use of effective communication. To this end, we intend to find out, with shell as a case study.

What supply chain management entails and how communication comes into the management of supply’s chain?
What has been achieved in the management of supply chain with the aid of communication?
What communication problem may be encountered in the supply chain management?
How a communication problem is encountered and may be remedied towards attaining set supply chain objective.

1.3 Purpose of Study

The purpose of this project is to look into the special functions of supply chain management and see what role communication plays in the carrying out of these functions with special reference to shell Petroleum Development Nigeria Limited.
Take a look into communication problem in the supply chain management in shell Petroleum Development Nigerian Limited.
Make suggestions as to attain set supply chain objective through effective communication
Also take a look at the relationship between suppliers, good human/customers, the link between shell Petroleum Development Nigeria Limited and the above mentioned people.

1.4 Research Questions

How effective has communication help in the transactions especially in the management of supply chain in Shell Petroleum Development Nigeria Limited.
How has effective communication helped, in the creation of good human/customers and supply relationship in Shell Petroleum Development Nigeria Limited?
How has effective communication help Shell Petroleum Development Nigeria Limited to save much time, effort and cost in getting supplies to the point of need in production line.
How can a link be established between supply chain management and other functions with the result that each sees itself as working towards the attainment of organization goal.
Is communication important among Shell Petroleum Development Nigeria Limited the effect on supply chain management.

1.5A Hypotheses Testing

The purpose of hypotheses testing is to enable one making inference about an unknown population parameter. We can define hypothesis as an assumption or statement made well in advance of the observation (or about collection of data) about what can be expected to occur concerning one or more populations under stated or given conditions.
Such assumption might be, true or false. A test performed in order to verify whether a hypothesis is true or flase is called a test of hypothesis. A qualify control manager must determine whether a process is working properly.
Consequently, a statistical hypothesis is formulated for the purpose of rejecting it or accepting it.

These assumptions of statements when accepted to be true they form policy decisions, and laws. The process of testing these assumptions or statement made in well advance of the observation is the hypothesis testing.

Null and Alternative Hypothesis

The Null hypothesis is central in research and is the hypothesis that is tested. It is stated in a negative sense (assertion) form by the use of the words “No and “Not”. The null hypothesis is the H0 and its and its alternative is HA (Hi).

The statistical test of the null hypothesis, H0, may suggest the rejection of the H0, at a particular level of significance and degrees of freedom, as the case may be. The rejection of null hypothesis signals an automatic acceptance or non-rejection of the alternative hypothesis, HA. This is because both hypothesis are complementing as a guide to the research to look for an alternative way of demonstrating the relationship between the relevant variable should the null hypothesis fail to be accepted.

1.5B Hypothesis Statements

Null Hypothesis (H0):

That as in all other organizational management functions, communication is important in the supply chain management.

Alternative Hypothesis (Hi):

That as in all other organizational management functions, communication is not important in the supply chain management.

1.6 Significance of the Study

This study will go a long way to help me and other student in quest for knowledge along this line, as well as purchasing and other professions in realizing how important communication is in the supply chain management. Lastly this study will be conducted to highlight the role of communication in supply chain management, it will help shell and other organization that are still in doubt as to the contributions of communication to effective, efficient and timely managing supply chain.

1.7 Scope and Delimitations of Study

This study involves the procurement department, registered suppliers and other departments of shell petroleum development Nigeria limited any generalization of the findings to other population is at best tenuous.

The result of this study is based on one sample of respondents’ behaviors at a specific time, probably at another time using the same instrument; respondent behavior might be different. The assumption that respondents would honestly and accurately answer the survey questions.

1.8 Limitations of the Study

If not that Nigeria is know longer safe for the white men working under oil companies. I the writer tend to cover the role of communication in supply chain management, A case study of Shell Petroleum Nigeria Plc in Port-Harcourt Shell.

The paper would have gone behind this if not for the following problem.

1. Kidnapping:

Due to the hard economic stress of Nigeria and bad situation in which Nigeria is passing through, where white men working under oil companies especially Shell in Port-Harcourt are been kidnapped made these research work to be difficult for me.

2. Financial Constraints:

Due to hard economic realties, enough finance that should have allowed a most diversified research wasn’t available at the time it was needed.

3. Time Constraints:

The researcher combined many class work with the research itself, this made the researcher to experience a very tight schedule.

4. Transportation:

This problem posed a big trait to the project. The researcher (i) wasted much time for vehicle may succeed only to get his point to call very late.

5. Materials Requirements:

There was limited resources in terms of materials in the library or the internet to get this work done.

1.9 Abbreviation and Terms Used

This study would want to give definitions to the following communication, supply, materials, management, integrated, embedded, soaring, procurement, encountered and stock yard etc.

1. Communication:

This is a process by which something either thoughts, words is shared between two persons or thing etc.

2. Supply:

To provide what is needed to someone, or somebody. A stock or store of things that is supplied: e.g. gas, food, water supply, shelter for stranded persons etc. All this and more can be supplied.

3. Chain:

This simply means when an activity is connected like a metal links or rings, used for pulling or supporting loads or for fastening things.

4. Integrated:

If people integrated into a social group, they mix with people in that group helping the individual integrate quickly into the community.

5. Embedded:

If an object is embedded in a mass of surrounding substance it is fixed there firmly and deeply.

6. Stock Yard:

An open storage area where materials etc, that do not suffer attacks from the natural elements are stored.

7. Code Symbols:

Whatever method of coding is followed, the symbols used are either alphabetical e.g. (OPEC). Coding is the identification of stock items, by numerals, or letters or by a combination of both, etc.

8. Operational Discrepancies:

This is a situation where, although the difference between the calculated and physical stock is small, but the item involved is very important to the operation of the organization.

9. Administration Costs:

This are cost which are independent of quantity. When goods are held in stock there is a great deal of administration work involved.

10. Supply Chain handing Cost:

When supply chain are held by an organization, they have to be stored. Simply the cost of supplying or incurred in supplying.

11. Bins:

Are storage equipment used for storage of small, low-cost items, in companies.

12. Pipes:

This a means supplying items like water, oil, crude, fuel etc to those who has paid or consumers in need of it.

13. Right Quality:

The represents the degree or grade of excellence which is appropriate for a particular purpose.

14. E-Invoicing:

Is one of the ways of combining the advantages of centralized facility with a high level of customer service.

15. E-Procurement:

Is yet another terminology associated with purchasing and supply chain management. And it is one of the most exciting developments in supply management in an organization.

16. CIF:

Cost, insurance and freight.

17. Letter of Credit:

Letter of credit is normally for a willing ness to give credit.

18. Management:

To control and make decision in a business or similar organization.

19. Role:

A function that a person or thing typically has or is expected to have.

20. Shell Company:

This is an oil producing firm in Port-Harcourt River State and some parts in Nigeria.

21. Materials:

This simply item which is used to produce an item etc?

22. Production:

Which is creating utility etc.

23. OPEC:

This is organization of petrol Exporting Countries.

24. Pipe Line:

This the areas where this fuel, oil etc passes through, that enable the oil fuel to reach the final consumer either individual or country.

Chapter Five

Conclusion and Recommendation

5.1 Conclusion

Supply chains do not only involve flows of products or services, but also flows of knowledge. Firms can access complementary knowledge resources from their supply chain partners. As supply chains become the unit of competition in today‟s global markets, strategies to help supply chain firms adapt and create competitive advantage at the supply chain level are imperative. This dissertation aims to understand IT-enabled knowledge management in supply chains – an increasingly important and yet substantially under-researched area in IS literature. Specifically, the dissertation focuses on the technology antecedents and performance consequences of knowledge management by supply chain firms. Taking the perspective of a supply chain dyad, the dissertation first presents a survey research that examines the relationship between the supply chain‟s IT capability and knowledge management capability, and the knowledge management capability‟s impact on supply chain performance. The results suggest that the ability of supply chain firms to collectively manage knowledge resources is an important requirement of supply chain strategic performance. In addition, supply chains‟ IT infrastructure capabilities facilitate supply chains in managing knowledge through the supply chains‟ relational capability.

A simulation model was used to further study the implications of using KM IT in managing supply chain firms‟ internal and external knowledge. Focusing on the focal firm in a supply chain dyad, the simulation study extends the survey research by modeling the use of KM IT – a particular type of supply chain IT – within and across firm boundaries. In addition, the simulation study enriches the context of the empirical study by taking into consideration the firms‟ internal and external knowledge management strategies. The simulation study puts supply chain relationships under a microscope to discover the intertwining effects of KM IT and firms‟ internal and external knowledge management strategies on the firms‟ long-term average employee knowledge level. Because employees are the conduits in knowledge management processes, the average employee knowledge level can be considered an indicator of firms‟ knowledge competency. The results suggest that electronic communication networks (ECN) – the KM IT that allows individuals to interact with each other – are more effective than knowledge repository and portals (KRP) in improving long-term employee knowledge level in focal firms. This finding corroborates the finding from the empirical research that supply chain IT has an impact on knowledge management capability through the mobilization and utilization of relational resources in the supply chain. This overarching result supports the theoretical perspectives of the relational view and the resource-based view. In addition, the simulation study shows that there is an interaction between firms‟ internal OL strategy and external OL strategy. Specifically, if the firm is in a symmetric supply chain or the firm is the larger firm in an asymmetric relationship, the positive impact of fast learning from supply chain partners is the strongest when the firm‟s internal learning is slow.

Overall, this dissertation contributes to our understanding of the role of supply chain IT in managing knowledge resources in supply chains. First, the empirical study articulates the role of SC IT in facilitating knowledge management, and in turn creating performance advantage. As many IS studies have found, the relationship between IT and performance is indirect (Wade and Hulland 2004). IT impacts firm and supply chain performance by enabling them to marshal other organizational resources. Taking a knowledge perspective, this dissertation shows that relational capability and knowledge management capability are critical for IT to bring performance gains to the supply chain. This insight is useful for supply chain firms to effectively implement and utilize their IT infrastructure. The empirical research also provides a new perspective in studying supply chain performance. The significance of the relationship between knowledge management capability and performance highlights the theoretical and empirical importance of knowledge in supply chains. The results can further help researchers and practitioners to develop knowledge capability measures for supply chain partnerships. The findings of the simulation study contribute to theory development in IT-enabled interorganizational learning by identifying important factors for interorganizational learning and the mechanisms by which those factors interact. A framework is developed for supply chain firms to select appropriate internal and external knowledge management strategies, and to build a knowledge management technology infrastructure for supporting those strategies. Finally, the simulation research helps improve practitioners‟ understanding of how to leverage firms‟ relationship with supply chain partners in order to achieve long-term knowledge benefits.

5.2 Recommendation

Understanding and navigating the myriad elements interwoven in public procurement will help public administrators to better recognize, understand and implement supply chain strategies, common in the private sector, efficiently and effectively in the public sector. Organizations should investigate the flow of information between the supply chains and explore how good communication may be important to procurement effectiveness. Further, results from such research could reveal The effect of miscommunication between these chains.
Another area for exploration is analysis of the differences in structure and function of public and private sector procurement. Public procurement has a reputation of being tactical, even clerical, adhering to “stringent policies and guidelines,” not requiring highly educated professionals and stifling innovation. Quite contrarily, private sector procurement is considered highly strategic and more receptive to entrepreneurship and innovation. The public sector seems to favor the decentralized purchasing structure, while private sector purchasing structures are generally centralized. Investigating the effects of structure and function in public and private procurement would enable public procurement managers to recognize opportunities that will enable their organizations to adopt best practices from the private sector to improve their function and perhaps adopt a centralized purchasing structure that would allow them to eliminate some of the stringent policies and guidelines required for the management of a decentralized purchasing structure.

Public procurement administrators must also understand the influence of transparency and accountability as regulators in public procurement and their relation to successful procurement indicators. An advantage that exists in the private sector but not in the public sector is that transparency is not a criterion for purchasing. Private sector firms use this ”privacy” to their advantage in negotiations with their supply base. Though public procurement administrators are not afforded this advantage, understanding the relation between transparency and accountability and the value and collaborative advantage of a single source supply strategy will allow for the adoption of modified supply chain strategy.

Procurement performance standards or mutually agreed upon criteria that identify the best procurement strategies and considerations for the management of public procurement are another possibility for additional research. Little evidence exists that identifies or measures successful public procurement. Until such indicators and criteria are established, it will be difficult for even the most seasoned public administrator to adopt strategy and practice from the private sector to improve the public procurement function at the local, state, and federal levels.