SUPPLY CHAIN COLLABORATION AND MARKETING PERFORMANCE OF OIL SERVICING FIRMS IN PORT HARCOURT

SUPPLY CHAIN COLLABORATION AND MARKETING PERFORMANCE OF OIL SERVICING FIRMS IN PORT HARCOURT

The aim of the study is to ascertain that there is an effective execution of supply chain collaboration and marketing performance of the oil servicing industry.

OTHER RELATED PROJECT TOPICS

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Nigeria is blessed with profuse natural resources of which fossil oil and natural gas products play a dominant role in the economy. These resources can be conserved and effectively tied up and controlled for the benefits of all Nigerians. The oil industry is one of the few justly global industries; besides providing a large chunk of the world’s energy consumption, it also makes the feedstock for the petrochemical industry which eventually goes into millions of products. The oil and gas industry is involved in a global supply chain that includes domestic and international transportation, ordering and inventory visibility and control, materials handling, import/export facilitation, and many more.

In an ideal world, every agency involved in turning raw materials into goods, selling them, and distributing them to business customers or consumers would collaborate, thus maximizing supply chain cost-effectiveness and reliability. As yet though, that degree of collaboration is more likely to be the exception than the rule. A retailer might collaborate with a wholesaler or manufacturer from which it purchases goods. A manufacturer might collaborate with a raw materials supplier to add value for its end-customers. A raw materials supplier might collaborate with one or more companies to generate service and cost benefits for its largest manufacturing customers. Much of the modern world’s accumulation of material wealth has been fuelled by cheaply available and abundant energy. A good way to get a better understanding of the oil industry, which provides a large chunk of this energy, is to take a look at the decisions oil companies face along their supply chain. Incorporated oil companies, such as Shell, have not been operated as integrated supply chains so far.

As an amended result, the industry has developed a storage tower-viewpoint that is supported by the incentive systems in place. Thus, an understanding of supply chain collaboration (SCC) has become essential for staying cutthroat in the global competitors and for advantageous improvement. The concept of supply chain collaboration can be described as an inter-organizational relationship, in which the members are mutually willing to share the resources and activities such as information sharing, decision synchronization, and resource sharing in order to achieve the common goal together.

Companies increasingly exchange information sharing as a critical element for marketing performance. Similarly, marketing performance is viewed as a source of sustaining long-term business operations in the last decade. Today, the new source of business competition lies outside the walls of the organization, and it is determined by how effectively and efficiently companies link their supply chain partners such as suppliers, distributors, wholesalers, retailers, and end customers.

Supply chain collaboration has become an integral part of supply chain management. The general idea is that much can be gained from collaborative practices. Over the past decade, the traditional purchasing and logistics activities have emerged and shifted into a broader strategic approach to materials and distribution management known as supply chain management. Mentzer, Dewitt, Keebler, Min, Nix, Smith & Zacharia (2001) argue that the effectiveness of supply chain has become a critical business process as a result of the competitive environment and pressures; the need to consider sustainability and risk; the need to achieve cost efficiency in order to be cost-competitive and many more. Collaboration is the cornerstone of effective supply chain management. More and more businesses are counting on their supplier to lower cost, improve quality,. Operational flexibility to cope with high demand uncertainties and develop innovations faster than their competitors’ suppliers can.

To this end, many experts agree that most servicing firms such as Elf Marketing Nig Ltd, Geolynx Ltd, Basic Engineering Services which specializes on Precision Engineering and Procurement Company, Point Engineering Ltd, Oil, and Gas Design Engineers, Fabrico Oil And Gas Limited which specializes on Calibration, Chemical Valves And Steel Supply, Weltek Nigeria Limited which specializes on Engineering Design, Procurement, Construction and Automation Applications, Spill Responders Nig Ltd. and many more Should build suppliers network that learns, improve, and prosper in synchronization with their parent companies.

(Source: Names and Address of Oil Companies in Nigeria).

In order to achieve long-term and sustainable competitive advantages these industries regularly adopt and implement plans and policies aimed at enhancing the performance of their suppliers. Oil servicing firms is surprising, given the importance of conferred on this sector by virtue of its economic and societal contributions.

The servicing firms in the oil industry consider collaborative practices which seek to manifest the operation’s outcome in terms of quality, delivery, cost technical support, responsiveness, geophysical survey services, drilling program, well closure and rehabilitation, professional services, logistics and support, and many more. Therefore, the collaboration of the supply chain facilitates the cooperation of participating members along the supply chain to improve performance. Thus, an understanding of supply chain collaboration (SCC) has become essential for staying competitive in the global competitors and fro advantageous improvement. In addition, the research studies on the collaboration in the context of the supply chain on the oil servicing industry in Port Harcourt. However, earlier studies on supply chain collaboration had paid little attention to conceptualizing prominent collaborative practices that help the chain members to understand performance drivers. It is, therefore, worth investigating the consequences of supply chain collaboration in the oil servicing industry on marketing performance.

To have an in-depth understanding of the complex phenomenon of supply chain collaboration, the researcher sort to accommodate two theories, such as; Resource-Based View (RBV) theory as prescribed by Penrose (1959) and Wernerfelt (1984) and Transactional cost economics (TCE) coined by Ronald Coase (1937), who used it to develop a theoretical framework for predicting when certain economic tasks would be performed by firms, and when they would be performed on the market. It is imperative to mention that almost all the studies conducted were foreign-based, and there is an absolute scarcity of empirical proof of any studies on supply chain collaboration and marketing performance.

1.2  Statement of the problem 

Marketing performance in the oil service industry has been unproductive in the reference years. After nearly 50 years of searching for oil in the country, Shell-BP discovered oil at Oloibiri in the Niger Delta. The First oil field began production in 1958. After that, the economy of Nigeria should have seemingly have experienced a strong increase. In somewhat the department of petroleum products in Nigeria such as the Department of Petroleum Resources (DPR), Petroleum Products Price Regulatory Agency (PPPRA), Petroleum Equalization Fund (PEF), Petroleum Products Marketing Company (PPMC), Petroleum Products Supply and Distribution Review Committee (PPSDRC), NCDMB, Petroleum Training Institute (PTI), PTDE, Nigeria Nuclear Regulatory Agency (NNRA) amongst others have not been able to balance demand with supply and it is found to be ineffective and inefficient due to the complex environmental and social challenges arising from oil spills, gas flaring, degradation of land, large scale smuggling, rampage fire incidents as a result of mishandling of product, pipelines vandalization, insecurity, corrupt practices, poor allocation and distribution of petroleum product to the public, low investment opportunities in the sector, adulteration of oil and many. From the foregoing analysis, petroleum distribution is a complex task that involves collaborative practices in transporting and storing across the country. This process is done by a variety of players including the major marketers that transport products from the depots to the service stations. As highlighted in the NNPC bulletin (2006) the distribution of petroleum products is facing a lot of challenges in the Nigerian environment. In fact, the environment surrounding petroleum product distribution in Nigeria is challenging and begs for an immediate solution. The petroleum industry is characterized by product shortages and scarcity, incessant strike actions, thefts, and pipeline vandalization, inadequate inventory control, poor distribution channels, and transportation, under capacity production and uncontrollable price increase, etc.

The researcher proposes that supply chain collaboration is the construct of decision synchronization, information sharing, resource sharing between supply chain partners. Supply chain collaboration can help in the coordination in the supply chain. It is pertinent to note that supply chain coordination occurs when all the different stages of supply chain work toward the objective of maximizing total supply chain profitability rather than each stage devoting itself to its own profitability. The oil servicing industry has become more responsive to customers in order to ensure their supply chain operations with the absolute minimum of stock-out events, with prompt response to market fluctuations while at the same time carrying minimal buffer stocks.

1.3 Aim and objectives of the study

The aim of the study is to ascertain that there is an effective execution of supply chain collaboration and marketing performance of the oil servicing industry. The following objectives are considered in the study:

1. To determine the relationship between information sharing and service quality
2. To determine the relationship between information sharing and customer satisfaction
3. To determine the relationship between resource sharing and service quality
4. To determine the relationship between resource sharing and customer satisfaction
5. To determine the relationship between decision synchronization and service quality
6. To determine the relationship between decision synchronization and customer satisfaction

1.4 Research questions

1. What is the relationship between information sharing and service quality?
2. What is the relationship between information sharing and customer satisfaction?
3. What is the relationship between resource sharing and service quality?
4. What is the relationship between resource sharing and customer satisfaction?
5. What is the relationship between decision synchronization and service quality?
6. What is the relationship between decision synchronization and customer satisfaction?

1.5 Research hypotheses

H₀₁:          Information sharing has no significant relationship with service quality.

H₀₂:          Information sharing has no significant relationship with customer satisfaction.

H₀₃:          Resource sharing has no significant relationship with service quality

H₀₄:          Resource sharing has no significant relationship with customer satisfaction.

H₀₅:          Decision synchronization has no significant relationship with service quality

H₀₆:          Decision synchronization has no significant relationship with customer satisfaction.

Model specification

The following models were specified in accordance with the objectives and formulated hypotheses in order to guide the study. Thus:

• MP_j =          F (SCC_j)

Rewriting equation 1a explicitly:……………………………1a

MP_j = βo + β_jSCC_j + N_jµ_j…………………………………….. 1b

• SSC = f (IS, RS, DS) ……………………………….…..2a

Rewriting equation 2a explicitly

SCC = µ₀ + µ₁ IS₁+ µ ₂ RS₂ + µ ₃ DS₃ + µ……………..……. 2b

3)        MP = f (IS, RS, DS,) ………………………………………..3a

Rewriting equation 3a explicitly

MP = a₀ + a₁ IS₁ + a₂ R1₂ + a₃ + DS₃+ µ₃ …………………..3b

4)        MP = F (IS, RS, DS,)

Rewriting equation 4a explicitly

MP = a₀ + a₁ IS₁ + a₂ RS₂ + a₃DS₃

WHERE

MP                  =          Criterion Variable (Marketing Performance)

SCC                =          Treatment Variable (Supply Chain Collaboration)

IS                     =          Information Sharing

DS                   =          Decision Synchronization

RS                   =          Resource Sharing

µ₀                    =          Intercept

µ₁– µ₃                  =          Regression coefficient

µ1                   =          stochastic term

1.6 Significance of the study

The importance of the findings of this study cannot be overemphasized. The study hoped will prefer a solution to an identified problem and thus make informed suggestions to interested parties as well as adding values in the field of study wherein the research is conducted.  This research work will play a chief role in the oil servicing industry as a result of the excellence sequence, it will make available to principal officers who occupy planned position and make calculated decisions in the service sector in order to solve imminent marketing tribulations ravaging the industry.

In the phase of the intellectual, consumers, and society at large, the study will be of great help. The results of this study will be beneficial to university students because it will expose them as practitioners and potential managers to have in-depth knowledge as well as appreciating the influence of supply chain collaboration on marketing performance.

This study will be very useful to the government, school authority, teachers, and the student community at large. It will guild the government and other interested parties to know their areas of defects such as the complex environmental and social challenges arising from oil spills, gas flaring, degradation of land, large scale smuggling, rampage fire incidents as a result of mishandling of product, pipelines vandalism, insecurity, corrupt practices, poor allocation and distribution of petroleum product to the public, low investment opportunities in the sector, adulteration of oil, etc. and make amend.

The study will help educate practitioners, tertiary institution administrators, and professional bodies about the positive and negative aspects of the oil and gas industry that could be discouraging, prevented, avoided, handled, or treated. The academia will find the study relevant since its findings will contribute to the exits body of knowledge in physical distribution.  Authoritarian agencies such as Independent Marketers of Petroleum Products (IPMAN), Pipeline and Products Marketing Company (PPMC), Petroleum Product and Price Regulatory Agencies (PPPRA), Department of Petroleum Resources (DPR), and Ministry of Petroleum and Natural Resources, will find the study applicable since it will help to inject something in the right position and framing regulatory structure and policies that will enhance help fortune-up relief.  More so, this research work shall also be relying upon in further research in this field of studies as a source of secondary data.

The constructs used in this study will be appreciated by upcoming researchers in similar fields of study.  The society will appreciate the outcome of this study as it will shape, direct and focus the attention of both major, and independent marketers as well as distributors in the downstream petroleum sector on how best consumers will be served to avoid diversion, hoarding, and other unethical marketing practices.  The government lawmaking body will also benefit significantly from the findings of this study since it will guide document making so as to make an informed decision toward the conclusion of oil insufficiency in Nigeria

1.7 Scope of the study

The study will be carried out in the south-south region of Nigeria, which it refers to the geographic scope.  The study is residence in collaborative practices. Supply chain collaboration and marketing performance constitute the content scope of the study.  The oil servicing industry is the level of analysis, which also refers to as the database of the study. While the unit of analysis of the study is made up of department/ division in the industry such as 8 oil servicing firms.

1.8 Limitations of the study

The aim of the study is to evaluate the relationship between supply chain collaboration and marketing performance. The results of the findings are likely to be affected based on the following. First, the study will be carried out in the oil servicing firms. This means that the results could not be generalized with absolute certainty to other sectors of the economy. Second, the sample frame will be structure to accommodate the servicing industry only which might not be applicable to other firms. This will constitute a constraint since it will negatively affect the generalization of the findings.

Another setback that will likely affect the findings of this study is respondent bias to respond accurately to the needed questions based on fear of espionage, closely related to this is the mode of data collection equally has its weaknesses. Therefore, it might hinder the desire results of the study.  This study will only accommodate such variables as information sharing, resource sharing, and decision synchronization as the dimensions of SCC and customer satisfaction and service quality as the measures of MP.

1.9  Definition of terms

Collaboration attributes: This is a relational characteristic such as trust, interdependence, and coordination among the partners in the relationships.

Collaboration management: This refers to management practices that must be implemented with the collaborative practice to achieve superior performance. Examples of such management practices are: supply chain leadership, process thinking, and performance management

Communication behavior: This refers to the level of information sharing, the quality of this information (including its reliability and timeliness), and how this information is used and translated into the partner’s business processes.

Customer satisfaction: It is a measure of how products and services supplied by a company meet or surpass customer expectation.

Decision synchronization: This is the ability for channel partners to engage in decision making that considers the interests of the supply chain rather than any individual firm.

Information sharing: Information exchange or information sharing is the act of certain entities passing information from one another. This could be done electronically or through certain systems.

Marketing performance: This is the processes, technologies, and actions used by marketing organizations to plan marketing activities, evaluate marketing’s results against established goals, and make more impactful decisions.

Resource sharing: Resource sharing means that you are collaborating with one or more libraries to maximize access to a larger array of resources by sharing the collections of the cooperating libraries or pooling funding to purchase shared digital resources.

Supply chain collaboration: Supply chain collaboration is defined as two or more autonomous firms working jointly to plan and execute supply chain operations. It can deliver substantial benefits and advantages to its partners

Service quality: Service quality is an achievement in customer service. It reflects at each service encounter.

Supply chain: This is the network of all the individuals, organizations, resources, activities, and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, through to its eventual delivery to the end-user.

Supply chain management: This is the management of the flow of goods and services and includes all processes that transform raw materials into final products

1.10 Organization of the study

The study is organized as follows: chapter one comprises the background to the study, statement of the problem, aim and objectives of the study, research questions and hypotheses, model specifications significance of the study, the scope of the study, and limitations of the study.