Effects of supply chain integration on lead time in the retail industry in Ghana

Abstract

Supply chain integration is concerned with the close alignment and coordination among parties within a supply chain as a means of improving performance. Inventory management of global supply chains presents challenges to retail businesses in developing economies where several uncertainties relating to order cycle, lead times and inventory decisions exist. This paper examines supply chain integration and its effects on lead times for the retail industry in Ghana. In the retail industry where products have varying shelf lives, the importance of supply chain integration is critical for performance and survival in a competitive business environment. A case study approach was used where purposive sampling was employed to select two retail giants operating in Ghana. It was found that an integrated supply chain results in significant reductions in lead times. Depending on the product category and the degree of supply chain integration, lead time reductions can be as high as 40%. A partnership relationship between the buyer and the supplier results in higher percentage reduction in lead times compared with the adversarial relationships. The benefits of reduced lead times include improved product availability, customer satisfaction, supply chain performance and efficiency. A partnership relationship is recommended to derive maximum benefits of supply chain integration. However, in a new, risky or hostile environment, an adversarial buyer– supplier relationship is recommended.