Supply Chain Mechanism On Nigeria Petroleum Products Distribution

Introduction

1.1 Background of the Study

Supply chain management consist of the management of entities which are directly involved in flow of products, services, finances and information from the source to a customer in the upstream and downstream sector of oil and gas industry (Christopher, 2011). The Supply chain management requires the optimization of operations to ensure speed and efficiency. The upstream sector of oil and gas industry is engaged in the supply-chain which takes care of domestic and international transportation, materials handling, import/export facilitation, ordering and inventory, visibility and control, and information technology. The complex nature of oil and gas operations consist of high levels of uncertainty and complexity in terms of what methods and balance of practices should be considered in controlling and managing such international supply chains. Supply-chain management involves the design, organization and continuous improvement of an organized set of operations. The goal of supply-chain management enhance maximum customer service at the minimum cost possible. The challenges confronted in the supply chain upstream sector of oil and gas consist of health challenges , safety, security and environmental management, delays and unclear accountability, materials monitoring and optimizing purchasing. The mismanagement of Supply chain leads to wastage of resources and unavoidable overheads leading to high operating cost. The study seeks to appraise the supply chain mechanism on Nigeria petroleum products distribution.

1.2 Statement of the Problem

The complex nature of the oil and gas industry operations constitute the major reason for the challenges faced in the supply chain of petroleum products distribution. The challenges confronted in the supply chain upstream sector of oil and gas consist of health challenges, safety, security and environmental management, delays and unclear accountability, materials monitoring and optimizing purchasing. The mismanagement of Supply chain leads to wastage of resources and unavoidable overheads leading to high operating cost. The problem confronting the study is to appraise the supply chain mechanism on Nigeria petroleum products distribution.

1.3 Objectives of the Study

The Main Objective of the study is to appraise the supply chain mechanism on Nigeria petroleum products distribution;

The specific objectives include:

To find out how effective supply chain mechanism is in the Nigerian petroleum industry.

To investigate the impacts of the supply chain mechanism on Nigeria’s petroleum product distribution.

To identify the factors militating against effective distribution of petroleum products in Nigeria.

1.4 Research Questions

How effective is the supply chain mechanism in the Nigerian petroleum industry?

What are the impacts of the supply chain mechanism on Nigeria’s petroleum product?

What are the factors militating against effective distribution of petroleum products in Nigeria?

1.5 Statement of the Hypothesis

Ho1: Supply chain mechanism does not impact on petroleum product distribution significantly.

1.6 Significance of the Study

The study appraises the supply chain mechanism on Nigeria petroleum products distribution. The study shall therefore serve as veritable source of information to stakeholders to proffer interventions which will address the problem.

1.7 Scope of the Study

The study focuses on the appraisal of the supply chain mechanism on Nigeria petroleum products distribution.

1.8 Limitation of the Study

The study was confronted with logistics and geographical factors.

1.9 Definition of Terms

Supply Chain Management Defined

Supply-chain management involves the design, organization and continuous improvement of an organized set of operations. The goal of supply-chain management enhances maximum customer service at the minimum cost possible.

Firms Competitiveness Defined

The firm’s competitiveness lies in its ability to provide products and service more effectively and efficiently than its competitors. It is the ability of the firm to maintain sustained success and the ability to compete favorably with the world’s best firms in cost and quality of goods or services.

Financial Performance Defined

This is the measure of the firm’s financial returns or goals through the use of evaluation method or financial indicators.

Return On Investment Defined

The return on investment defines the firm’s efficiency in the utilization of the invested capital. This ratio is determined as net profit after tax divided by total paid in capital.

Customer Satisfaction Defined

Meeting or exceeding customer expectations.

Operational Innovation Defined

Operational innovation is defined as the new ways of doing work” (Close, 2006). The process of inventing new ways of solving old problems. Traditionally, many oil and gas firms expand their operation through the process of diversification of businesses, mergers, and acquisitions and operational innovation.