Impact of supply chain management practices on competitive positioning of Ethiopian textile firms

Abstract

The textile sector in Ethiopia has many supply chain problems. According to Rahel (2007), the major problems are absence of well developed supplier-customer relationship, lack of access to international market information and technology, outdated processing facilities, lack of raw material and accessories, lack of paved roads, communication infrastructure, and internet services. These challenges impact on a sector’s competitiveness in the global market. In 2008, out of 129 textile exporting countries, Ethiopia ranked 112th in market share (ITC, 2010). The main reason for these problems could be the lack of conceptual framework and basic knowledge of SCM among textile firms. Aware of these problems, this study was conducted mainly to create awareness about the concept, principle and practices of supply chain management in Ethiopian textile firms so as to make them more competitive in the global textile marketplace. The study focuses on analyzing the extent of supply chain management practices and their impact on competitive positioning of Ethiopian textile firms. A descriptive survey design was used. A total of 25 structured questions were developed to find possible responses to the research questions that were used to test 8 research hypotheses. Thirty medium and large Ethiopian textile firms were selected randomly out of 64 textile firms and the questionnaire was mailed through e-mail, distributed in person, through fax and postal service to 90 top management members. Fifty three (58.9%) respondents completed and returned the questionnaire. The data was coded and analyzed using SPSS V-15 statistical tools including descriptive statistics, chisquare, Spearman’s rank order correlation, Kruskal-Wallis and One-way ANOVA. The findings showed that supply chain management practices in Ethiopian textile firms are weak and the firms do not use SCM as competitive weapon. In terms of relationship between SCM practices and competitive positioning, it was found that internal operation flexibility practice positively impacts on the competitive positioning in most of the textile firms. Strategic supplier partnership, customer relationship and information sharing were not influential in increasing competitive positioning of firms. The research was conducted solely using quantitative method, descriptive survey. It had not made use of secondary data and interview to substantiate respondents’ response. So, generalization of these results is limited. Despite this limitation, the study is believed to create awareness about the concept, principle and practices of SCM in Ethiopian textile firms. Thus, the Government of Ethiopia, academicians and other concerned organizations which assist Ethiopia in its effort to reduce poverty and foster development should assist the sector by providing/sponsoring effective SCM training for business leaders and investors so that the firms will increase their competitiveness in global marketplace and contribute to the economic development of the country.