Supply Chain Management Success Factors in Nigerian Commercial Banks
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International Journal of Advanced Studies in Business Strategies and Management | IJASBSM p-ISSN: 2354-4236 | e-ISSN: 2354-4244 Volume 7, Number 1 March, 2019 Supply Chain Management Success Factors in Nigerian Commercial Banks Okeke Augustine Department of Banking & Finance Faculty of Management Sciences, University of Jos, Plateau State – Nigeria A b s t r a c t upply Chain Management (SCM) is taking deep roots in banking owing to the increasing deployment of banking logistics and equipment. In view of Sthis, the need for effective supply chain management in commercial banks is quite critical. This study, therefore, seeks to identify the supply chain management success factors in the Nigerian banking sector. To achieve this, a quantitative research approach was used. The population for this study is the 433 administrative employees in the supply chain departments of the head offices of the top ten banks in Nigeria according to the “Financial Times” group of London's 2016/2017 rankings. Based on this population, the sample size was determined using Krejcie & Morgan (1970) formula to be 204. A randomly self- administered questionnaire was used to collect data. This questionnaire was built on a five-point Likert scale. A total of 105 completed questionnaires were deemed appropriate for data analysis. This represented a response rate of 51.4%. the data was analyzed using SPSS version 21. The exploratory factor analysis was used to reduce the dimension of the success factors and dependent variable while multi-linear regression was used to model the relationship between SCM success and the six factors identified. Results indicated that planning, motivation, management commitment, competency of SCM staff, communication and benchmarking positively influence supply chain management success in Nigerian banks. Based on this finding, it was recommended that commercial banks should enhance their priority to supply chain success factors identified in this study and take necessary steps to fine-tune their supply chain management procedures towards maximized growth. Keywords: Supply chain management, Critical success factors, Commercial banks, Supply chain process, Nigeria Corresponding Author: Okeke Augustine http://internationalpolicybrief.org/journals/international-scientific-research-consortium-journals/intl-journal-of-business-vol7-no1-march-2019 IJASBSM | page 60 Background of the Study Supply Chain Management (SCM) is taking deep roots in banking (Wagner et al. 2012). This is owing to the increasing deployment of banking logistics and equipment (e.g ATMs, money counting machines, etc) and the need to integrate banks with customers and stakeholders through banking services and products. In this respect, Kristofik et al. (2012) made the submission that there is an emerging need for banks to engage in supply chain management as an avenue for disbursing financial resources among banks. In view of this, the need for effective supply chain management in commercial banks is quite critical. Supply chain management forms a major part of business management and it is believed to contribute largely to organizational growth. Supply chain processes have been a major part of organizational activities for a long time (Thakka et al. 2008). Moreover, supply chain constitutes one of the main management functions of organizational growth especially among firms which depend largely on logistics, material or equipment (Mensah et al. 2014). Thus, supply chain management is of priority to many organizations since it forms the basis for the efficient and effective flow of products, services, and logistics. This is even more so in the banking sector since commercial banks make financial returns from products and/or service. Supply chain, therefore, comes with a medium in which services and products flow efficiently to create the needed link between banks and its customers or stakeholders. An effective supply chain is the one based on the observance of the success factors in supply chain management. Unfortunately, an insignificant number of studies hold this evidence from the perspective of commercial banking. It is even worse that no identifiable study points to this evidence in a Nigerian context. Meanwhile, the growing commercial banking sector of Nigeria ought to leverage these new developments in financial and banking supply chain to maximize growth. This study, therefore, seeks to identify the supply chain management success factors in the Nigerian banking sector. Statement of the Problem Several qualitative and quantitative studies have provided evidence on what the success factors of supply chain management are. These are planning, employee commitment, top management commitment, training and education, communication and benchmarking. Planning in the context of the supply chain is the process of drawing a scheme and road map of work to define all the processes and activities of the chain and their timelines. But since planning is done by people, there is a school of thought that believes it cannot impact supply chain management success if employees and stakeholders of the company are not committed. Similarly, employee commitment significantly drives dedication of employees to their responsibilities defined in planning. Failure to ensure that employees are well motivated would hinder the realization of maximum organizational performance. Often, employee dedication in the organization depends on the commitment of its management to supply chain. Without management commitment, the organization may be unwilling to deploy financial resources for the implementation of the supply chain plan. IJASBSM | page 61 Furthermore, training and education are needed to equip employees with the necessary skills and knowledge to be able to play their roles as defined in the supply chain planning. Lack of competent employees may derail the success of the supply chain as it is the basis for effective communication. Without effective communication among supply chain employees and stakeholders, the network is broken and its activities come with no success. This is because the relationship among distributors, suppliers, and retailers are glued by communication. In the same vein, success in supply chain management cannot be measured without bench marking. Yet, benchmarking is treated as a factor that is not important in the supply chain management practices of Nigerian commercial banks. It is worth mentioning that the above factors have been identified in various studies. Yet, it is obvious that all the studies have been conducted outside Nigeria and Africa, with most of them conducted in Asia. This means that academic debate on the subject from a Nigerian and African point of view is abysmally weak. In terms of banking, only one related study (Kristofik et al., 2012) is identifiable. This means that the volume of the current literature is skewed in favour of manufacturing firms. This is a problem because banks are major drivers of economic development in many economies. So, the fact that banks are less featured in the subject's literature is a major gap that this study will seek to fill. Research Question The research question for this study is as follow: (i) Does planning, employee commitment, motivation, management commitment, competency of SCM staff, communication and bench marking positively influence supply chain management success in Nigerian commercial banks? Objective of The Study The aim of this study is to identify supply chain management success factors in Nigerian commercial banks. More specifically, this study seeks to achieve the following objective: (i) To determine whether or not planning, employee commitment, management commitment, competency of SCM staff, communication and benchmarking positively influences supply chain management success in Nigerian commercial banks. Statement of Hypothesis The hypothesis for this study is as follow: Ho: Planning, employee commitment, management commitment, competency of SCM staff, communication and benchmarking does not positively influence supply chain management success in Nigerian commercial banks. Literature Review Conceptual Framework Supply chain management in service organizations or financial institutions are based on almost a common procedure. It has been proved by research that supply chain management success is dependent on the thoroughness and appropriateness of the planning associated with IJASBSM | page 62 it. According to Ngai et al. (2004), the plan involves who does what, at what time and how? It defines the roles and actions of each stakeholder in the network and establishes policies and strategies for evaluating and controlling success (Kurieen & Qureshi, 2011). Another factor that drives success in supply chain management is therefore employee or stakeholder commitment (Attaran, 2012). In some studies, it is referred to as “employee motivation.” Motivation significantly drives success in the supply chain because it determines the dedication of employees to their responsibilities defined in planning (Attaran, 2012). A third factor of supply chain success is management commitment. According to Quesada et al. (2012), a lack of commitment from management of an organization would mean that issues of supply chain would not be taken seriously. However, when management of an organization focuses on the short and long term benefits of supply chain, they would be able to commit to its tasks and requirement. Furthermore, training and education are the fourth success factor in supply chain management to be