Challenges in the Era of Globalization - iaabd

Challenges in the Era of Globalization
Edited by Emmanuel Obuah
Redundancy buildup strategy can be used as a proactive measure against shortages of electric power
supply. Anas and Lee (1988) argue that inventory and production scheduling strategy can be used given
that the delivery times for inputs and outputs are often seriously influenced by anticipated or real
disruption in infrastructural services. Therefore, manufacturing firms must take advantage of any seasonal
variations in the availability and reliability of key infrastructural services by building up redundancies
during more reliable periods and reducing such inventories during less reliable periods. Fafchamps et al.
(2000) assert that manufacturing firms in Zimbabwe hold higher liquid assets and inventories in response
to high levels of contractual risk.
Furthermore, to manage the unknown-unknowns supply chain sources of risks, Simchi-Levi (2010)
recommended the following strategies including 1) investing in capacity redundancy, 2) increasing
velocity in sensing and responding, and 3) creating a flexibility supply chain community. For the knownunknowns
supply chain sources of risks, Kogut (1985) recommended the following control strategies
including 1) speculative strategies (e.g. maintaining excess inventory of productive inputs in order to
avoid unfavorable currency exchange rate fluctuations), 2) hedge strategies (e.g., outsourcing production
to Ghana given its available and reliable supply of electricity and/or supportive operating environment),
and 3) flexible strategies (e.g., use of dual sourcing and redundant manufacturing capacity (David-Levi,
2010)).
Conclusions and policy Implications
The Nigerian manufacturing sector still suffers from lack of development and growth due to growing
multiple layers of supply chain disruption risks, despite attracting attention among practitioners and
academicians in the popular press. Nigerian manufacturing operations environment is characterized by
relatively limited physical infrastructure, unpredictable regulatory regimes, poor governance, high
corruption, and/or institutional uncertainties that not only undermine long-term investment and growth
but also erode economic growth, poverty alleviation initiatives, trade competitiveness, and national
security. For Nigeria to achieve economic development, compete favorably in the global marketplace, and
meet the proposed vision 2020, it must urgently reverse the geometric decline of the manufacturing
sector. Supply chain disruptions associated with unreliable electric energy, poor transportation systems,
misguided regulations, corruption, lack of access to credit, police checkpoints, and so on can have an
enormous impact on manufacturing activities, revenue, shareholder value, jobs, and future investment,
product and service prices, and long-term competitive advantage.
Collier (2000) contends that African manufacturing firms suffer high transaction costs because of
inappropriate government policies and poor quality of the infrastructure services. For Nigerian
manufacturing firms to be successful, Soderbom and Teal (2001) recommend that a sound economic
policy is imperative for economic development. Instituting and implementing supportive policies such as
the new proposed energy reform, efficient and effective transportation logistics systems, and favorable tax
regime will not only dwarf high cost of manufacturing supply chain operations but they will also foster
economic development, alleviate poverty, promote international competitiveness, and meet national
security agenda. To be competitive in today’s global business landscape, the Nigerian manufacturing
firms must be able to distribute their goods nimbly and efficiently. However, this can only be achieved if
there is adequate and reliable supply chain infrastructure. For example, industrialized nations’
manufacturing and/or services firms depend on strong supply chain infrastructure to be competitive at
global marketplace, grow exports and jobs.
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