ASSESSING THE SUPPLY CHAIN STRATEGY OF GARMENT FIRMS

LOCATED AT ADDIS INDUSTRIAL VILLAGE

BY
ASAYE GETACHEW

A THESIS SUBMITTED
TO ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE FOR PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF ART IN
LOGISTICS AND SUPPLY CHAIN MANAGEMENT

ADVISOR
DR. MATIWOS ENSERMU

Id.No-GSE/0539/07

June, 2017 Addis

Ababa
 Addis Ababa University
School of Graduate Studies

This is to certify that the thesis prepared by Asaye Getachew Haile; assessing the supply chain
strategy of garment firms located at Addis industrial village and submitted in partial fulfillment of
the requirements for the Degree of Master of Logistics and Supply Chain Management complies
with the regulations of the university and meets the accepted standards with respect to originality
and quality.

Signed by the Board of Examiners:

_____________________ _________________ _____________

Advisor Signature Date

_____________________ _________________ _____________

Internal Examiner Signature Date

_____________________ _________________ _____________

External Examiner Signature Date
 I

LETTER OF CERTIFICATION
This is to certify that Asaye Getachew has carried out his Thesis on the topic of “Assessing the supp
ly
chain strategy of garment firms located at Addis industrial village” under my Supervision. This wor
k
is original in its nature and it is suitable for submission in partial fulfillment of the requirement f
or
the award of Masters of Arts Degree in Logistics and Supply Chain Management.

Matiwos Ensermu (PhD) _____________________

(Advisor) Signature

__________________
Date
 II

DECLARATIONS
I, Asaye Getachew, declare that this Thesis entitled “Assessing the supply chain strategy of
garment firms located at Addis industrial village” is my own original work. I have carried out it
independently with the guidance and suggestions of the research advisor. And it has not been
presented in Addis Ababa University or any other University.

Asaye Getachew ___________________

(The Researcher) Signature

____________________
Date
 III

Table of content
Page
CHAPTER ONE
1.1. Background of the study …………………………… ………………………………...1
1.2. Statement of the problem……………………………………………………………...3
1.3. Research Questions…………………………………………………………………...5
1.4. Objective of the Research……………………………………………………………..5
1.5. Definition of Terms……………………………………………………………………5
1.6. Significance of the study………………………………………………………………6
1.7. Scope of the study……………………………………………………………………..6
1.8. Organization of the Research Report………………………………………………….7

CHAPTER TWO
Review of Related Literature ………………………………………………………………….8
2.1.Introduction……………………...…………………………………………………... .8
2.2.What is Supply Chain Strategy? ………………………………………………………8
2.3.Different Supply Chain Strategies…………………………………………………….9
2.4.The characteristics of lean and Agile Supply Chain in Strategic aspects ……………12
2.5.Factors for Determining Supply Chain Strategy……………………………………..14
2.5.1. Supply Chain Strategy and the Product……………………………………...15
2.5.2. Supply Chain Strategy and the Manufacturing Environment……………….16
2.5.3. Supply Chain Strategy and decision drivers of supply chain ……………….18
2.6.Overview of Textile and Garment Industry in Ethiopia …………………………….20
2.6.1. Garment sub-sector in Ethiopia……………………………………………...21
2.6.2. Garment Supply Chain in Ethiopia………………………………………….22
2.7.Conceptual Framework……………………………………………………………….23

CHAPTER THREE
Research Design and Methodology……………………………………………………………...26

3.1. Introduction……………………………………………………………………………..26
3.2. Research Approach……………………………………………………………………..26
3.3.Sampling and Sampling Techniques……………………………………………………27
3.4. Source and Instruments of Data Collection………………………………………….....27
3.5.Procedure of data collection………………………………………………………….....28
3.6.Method of data Analysis……………………………………………………………..;…28
3.7.Ethical Clearance………………………………………………………………………..28
3.8.Validity and Reliability………………………………………………………………….29

IV

CHAPTER FOUR
Data Presentation, Interpretation, and Analysis………………………………………………..30

4.1.Introduction……………………………………………………………………………30
4.2.Response Rate………………………………………………………………………….30
4.3.General Information……………………………………………………………………31
4.3.1. Respondent Profile…………………………………………………………….31
4.4.Analysis of Product Characteristics and Manufacturing Characteristics to Imply
The Appropriate Supply Chain Strategy to the Sample Garment
Companies...…………………...……………………………………………………….33
4.4.1. Responses on Product Characteristics ………………………………............. 33
4.4.2. Response on the Manufacturing Characteristics……………………………...35
4.4.3. Implied Supply Chain Strategy based on Product Characteristics and
Manufacturing Characteristics………………………………………………...36
4.5.Supply chain strategies using the decoupling point…………………………………...37
4.6.Analysis of the Management of Supply Chain Drivers to identify Potential
Areas to be Improved…………………………………………………………………... 38

CHAPTER FIVE
Summary of Major Findings, Conclusion and Recommendations ……………………………41
5.1.Introduction…………...………………………………………………………………..41
5.2.Summary of Finding……………………………………………………………………41
5.3.Conclusion……………………………………………………………………………...42
5.4.Recommendation…………………………………………………………………….....43

Reference………………………………………………………………………………………..44
Appendix………………………………………………………………………………………..47

V
 VI

List of Tables
Table2.1. Comparison of lean, agile and leagile supply chain ………………………………………11
Table2.2.The characteristics of lean and agile supply chains in strategic aspect …………………....13
Table2.3. Factors cited in research studies for choosing supply chain strategy……………………...14
Table2.4.The characteristics of market demand and market winners of lean and agile supply
chains…………………………………………………………………………………………………15
Table2.5.Types of operation strategies ………………………………………………………………17
Table2.6.The management of supply chain drivers according to lean and agile supply chains……...19
Table2.7.The summary of SWOT analysis of the current condition of garment firms...…………….21
Table2.8.Comprehensive framework for determining supply chain strategies and practices………..24
Table3.1. Reliability of Constructs…………………………………………………………………...29
Table 4.1.Profile of Respondents……………………………………………………………………..31
Table4.2. Product characteristics related supply chain variables…………………………………….33
Table4.3.The Responses of the Companies Regarding to Their Manufacturing Environment……...35
Table4.4. Positions of the company in terms of the decoupling point……………………………….37
Table.4.5. Management of supply chain drivers ……………………………………………………..38
 VII

List of Figures

Figure Title Page

2.1. Different manufacturing processes………………………………………………………….16
2.2. Garment Supply Chain………………………………………………………………………22
2.3. A Conceptual Framework of the study……………………………………………………...25
 VIII

Abstract
In the rapidly changing global business environment, many companies want to become
efficient and flexible, but have struggled, in part, because they have not been able to formulate
and implement appropriate supply chain strategies. The root cause of the problems plaguing
many supply chains is a mismatch between the supply chain strategy and the business strategy,
and supply-chain strategies based on a one-size-fits-all strategy often fail. Companies can use
supply chain strategies to gain a competitive advantage for the supply chain. A competitive
advantage can be achieved by means of low cost or by means of differentiation. The objective
of this research is to assess the supply chain strategy implementation on selected Garment
companies in Ethiopia and to imply the appropriate supply chain strategy. Furthermore, the
research aimed to identify potential areas where these Garment firms may be able to improve
 their supply chain management practices. The supply chain strategies implemented by those
selected garment companies are assessed through the analysis of those factors that can be
considered when determining supply chain strategies i.e. the product characteristics, the
manufacturing characteristics and the supply chain drivers. The potential areas where the
companies may improve are identified through the analysis of how these companies are
managing their supply chain drivers. Companies with lean supply chains should manage their
supply chain drivers to achieve efficiency, while companies with agile supply chains should
manage their supply chain drivers with responsiveness towards customers’ needs in mind.
Non-probability sampling is used to include eight companies in the research. However, out of
all the companies targeted, only four effectively responded. The entire sample Garment
companies do not manage their supply chain drivers according to the implied supply chain
strategy principles.

Keywords: Supply Chain Management, Supply Chain Strategy, Supply Chain Drivers,
Product Characteristics, Manufacturing Characteristics

IX

CHAPTER ONE

1.1.Background of the study

Independently competing firms have no chance of achieving optimal customer value;

rather it is through those firms acting together in harmony as a supply chain.
Accordingly, the current globalized market as well as fiercer competition urges for more
efficient and effective supply chain strategies to provide products /services at low price
while having the ability to quickly cope the changing customer need (Douglas, 2010).

Moreover, in this current business scenario, companies must implement the right supply
chain strategy that much their business strategy. Studies proved that strategic
management is the key tool for organizations performance (Thomas and David, 2012).

Now a day’s supply chain is considered as a strategic asset among those market leader
companies (Shoshanan and Joseph, 2005).This signal that companies must not viewed
supply chain management simply as a logistical function, rather it bear to be treated as
strategic plan for the enhancement of better performance across the entire supply
chain(Asefa,2015).However, except those leading companies which understood and start
to implement supply chain as a strategic asset, most companies don`t have a documented
and communicated supply chain strategies (Shoshananet al., 2005).

Supply chain management can be viewed as the strategic management of the entire
business entities that engaged in the flow of goods, services, money and information both
within and across the network of organizations that form the supply chain. Supply Chain
Management can be defined as “the design and management of value-added processes (or
activities) and relationships within organizations and across the network of organizations
that form the supply chain to meet the real needs of the end customer and to increase
efficiency and value to gain a sustainable competitive advantage for all the organizations
that form part of the supply chain”(Danie and Johenna, 2011).

Asli (2007) puts the major goals of supply chain management as 1) waste reduction 2)
time compression 3) flexible response, and 4) unit cost reduction. Hence, organizations

Page 1

should develop and implement clear supply chain strategies to accomplish the ultimate
goal of supply chain management (Asli, 2007).

The trend for formulating and executing a supply chain strategy is not accustomed by
most companies. In line with this, even during the formulation of their company business
strategy, most of them don`t pay particular attention on its possible effect for supply
chain activities. Most of them consider the reform to their supply chain when crises
happened in their supply chain; such as when inventory levels are too high, customers are
 complaining about poor service, or a supplies is late with a critical shipments. Otherwise,
when the situation is getting worse and the company become bankrupt, that results to
factory closure, facility consolidation and outsourcing of manufacturing (Shoshananet al.,
2005).

The manufacturing industries of Ethiopia, including the Textile and garment industries,
have been participated in the global supply chain as suppliers of raw material and
manufacturer of finished goods for the considerable period of time. However, the supply
chain in Ethiopia scenario is at a very low development stage which could not perform as
expected (Fasika, Klaus and Marcus,2014).

Although a lot of attention and reform has been made in the Textile and garment industry
by the government policy makers; but when it is about supply chain of Ethiopia Textile
and garment industry, it is full of challenges and a lot of work needed to be done in terms
of the supply chain management practices of the manufacturing industries (Fasikaet
al.,2014;Mulu,2013).

This research aims to assess the supply chain strategy implementation practices in
selected Garment firms in Ethiopia and to imply the appropriate supply chain strategy.

Page 2

1.2.Statement of the problem

With the high increasing rate of competition in today’s market, Textile and garment
companies must know about their supply chain strategy to survive and win the market
versus their competitors. In addition, the industry must implement the right supply chain
strategy that much their business strategy. However, due to the failure to implement the
right supply chain strategies the industry faces several challenges(Asli,2007).

Ministry of Industry was planned to generate 165million USD from the export of textile
and garment products in 2015/16 plan. However, achieved only 78million USD, which is
47.3% of the target and 20% lower than previous year performance. Moreover, it was
planned to create job opportunities for 39 thousand citizens, but only achieved 13,044
employments (ETID, 2016).

The Textile and garment industry is characterized by low qualities of raw material and
accessories, utilization of inappropriate level of machineries and equipments, shortage of
skilled manpower, application of improper methodology of production techniques, and
unbalanced supply and high demand of the market. Studies revealed that the industry
experience high rate of turnover of skilled manpower, bottlenecks, unbalanced
arrangement of machineries and low rate of productivity, poor supply of right quality and
quantities of raw material and accessories ,unavailability`s of spare parts
(Negede,Terefe,and Tibebu,2011).

The industry supply chain is starting from the cotton farm to the final customer both to
local and foreign market is full of challenges.

Looking to their supplier relationship and integration, the industry faces problems such as
inconsistency in raw material quality, late delivery, loyalty and price fluctuation.
Managing inventory is also a major issue for the industry. In most factories, against the
inventory level requirement of the industry, they keep very high level of inventory for
long period of time to cope supply and demand uncertainties. This trend caused

Page 3

overstocks, which blocks the space for demanded products and resulted for financial
constraints (Fasikaet al., 2014).

Logistical challenges such as: high cost of transportation specially marine cost and the
 cost incurred to transport from seaports to center of the country, challenges from Banks
to open LC, insufficient infrastructure of seaports and the bureaucratic custom clearance
procedurals which causes long waiting time of the containers at the ports that resulted
high demerge and service costs, are alarmingly increase production cost for the industry
(ETIDI, 2013/14).

Internal integration as well as the concept of collaboration among the manufacturing

industries in Ethiopia including the one in Textile and Garment firms is also at infant
stage. The major supply chain challenges in this respect are: inefficient internal
management system resulted for fragmented information flows and absence of integration
across the different functions of the firms as well as low level of rationalization and
standardization in operational process. Moreover, most of them lack the knowledge of
forming a collaborative relationship with suppliers and customers (Fasikaet al., 2014).

The other problem is regarding customer relationship. Some of the challenges includes,
low involvement of customers to the improvement of the product (Fasikaet al.,2014) ,
inadequate knowledge of foreign buyers regarding the Ethiopian apparel producers, lack
of marketing knowledge as well as little exposure of Ethiopian firms to the international
market(Atakilty,Girma,and Zemen,2015).

Therefore, the Textile and garment industry in Ethiopia has faced a lot of supply chain
related challenges which limit the industry potential to be responsive and competitive
both locally and globally. So these challenges motivated the researcher to study how
effectively and efficiently the Garment industry in the country cope up with the changing
market situations, customer demands and overcoming the various supply chain
challenges even with existing resource constraints. In line with this, we should identify
the correct supply chain strategies that facilitate the supply chain models which suit the
different product offerings in different market.

Page 4

1.3. Research Questions

 Studies on Supply Chain Management practices in Ethiopia Textile and garment industry
have tended to ignore how effectively & efficiently the firms integrate within the
organization and with their suppliers and customers. Therefore, the study attempts to
answer the following research questions.

1. What kind of supply chain strategies may imply to selected sample Garment companies?
2. How the entire sample Garment companies are managing their supply chain drivers?
3. What are the potential areas where these Garment companies may be able to improve
their supply management practices?
1.4. Objective of the Research
The aim of this research is to assess the Supply Chain Strategy implementation on
selected Garment companies in Ethiopia and to imply the appropriate supply chain
strategy.

Furthermore, a number of specific objectives have been defined in achieving the general
aim of the research ፦

• To analyze Supply Chain Management practices in managing supply chain drivers

in selected Garment companies.
• To identify potential areas where these Garment firms may be able to improve
their supply chain management practices.

1.5.Definition of Terms

Supply Chain Strategy: can be defined as “a mix of ranked supply chain management
objectives which supply chain aims to reach them and also way of operating
them”(Masoud,Farhad,Syed,and Ali,2012).

Supply Chain Drivers: Are drivers that determine performance of the supply chain.
These includes; Integration, collaborative relationship, facilities, inventory, location,
transportation, information, sourcing and pricing (Danielet al., 2011;Intaher, 2012).

Page 5
1.6.Significance of the study
Looking the manufacturing industries in developing countries, including Ethiopia, the
industry suffers in the competition of the global market due to the new business trends.
The Manufacturing industries have attempted several manufacturing techniques for the
sack of enhancing their operations like Total Quality Management, Business Processing
Reengineering, and Lean Technology and others. However, the manufacturing industries
could not able to achieve their market share in the global economy. Hence, the industry is
forced to consider supplementary strategies to boost their production system. Most
companies realize that effective Supply Chain Management is the prominent emerging
concept as a critical success factor for business (Fasikaet al., 2014). In line with this, the
integration of Supply Chain Management concept with those modern management
concepts like Just In Time, Lean Production and Efficient Customer Response, resulted
an efficient and effective Supply Chain that has much to do in improving the companies
competitive advantage (Balkan,Richard,Graham,Thorsten,Wojciech and Christoph,2011).

Studies on Supply Chain Management practices in Ethiopia Textile and Garment industry
has tended to ignore how effectively and efficiently the firms integrate within the
organization and with their suppliers and customers.

In view of the above facts, there is a need for a study to provide an insight on the
appropriate implementation of Supply Chain Strategies in the industry. In this regard, the
study undoubtedly has practical significance for supply chain managers in implementing
the right supply chain strategies for their company.

1.7.Scope of the study

This research is intended to assess the practice of supply chain management in light of
supply chain strategy implemented on Garment firms located at Addis Industry Village.
The concept of supply chain strategy implementation is manifested in to different
dimensions: the product, the manufacturing environment and decision drivers of supply
chain.
 Page 6

1.8.Organization of the Research Report

The research is organized under five chapters. The first chapter contains background of
the study, statement of the problem, basic research questionsand objectives of the study,
definition of terms, significance of the study, and scope of the study. The second chapter
discussed the literatures relevant to the studywhich included the conceptual frame work
adopted for the study.Thethird chapter dealt with methods adopted for the study, research
design, sample and sampling procedures/technique, sources and data collection
tools/procedures, data analysis/presentation procedures. The fourth chapter is focused on
the analysis of data and discussion of results. The last chapter is devoted to the summary
of findings, recommendations and then the conclusion.
 Page 7

CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1. Introduction
This chapter focused on literature review with an emphasis on the theoretical and
empirical review of supply chain strategies. The literature review is composed of basic
theories and empirical findings about the concept of supply chain strategy, different types
of supply chain strategies, and factors for determining supply chain strategies which is
presented by different scholars and finally a conceptual framework of the study which is
constructed based on the theoretical framework.

2.2. What is Supply Chain Strategy?

The current business environment is largely expressed by constant change in customer

requirements, technology, social and economic factors. Hence, individually competing
firms have no chance of achieving optimal customer values; rather it is through those
firms acting together in harmony as a supply chain (Douglas, 2010).

Therefore, companies should not plan their business objectives and strategies
individually, but should instead focus on supply chain, as a whole.

Supply chain strategy can be defined as “a mix of ranked supply chain management
objectives which supply chain aims to reach them and also ways of operating them”. The
intent of supply chain strategy is to enhance the benefits of the entire activities of the
organization according to its specific strategy ( Masoudet al., 2012).A supply chain
strategy clears the role of supply chain capabilities (such as cost efficiency, response
speed and flexibility) in the company’s effort to attain its competitive advantage.
Moreover, a supply chain strategy clears the way the manufacturing, purchasing,
 marketing, and logistics functions act together to mount the planned competitive strategy
(Intaher, 2012). Knowing and executing the right supply chain strategy, is now, becoming
mandatory in the current fiercer competitive market scenario (Masoudet al., 2012).

Page 8

2.3. Different Supply Chain Strategies

Since supply chain strategies are market driven, the supply chain strategy should be
designed so as to achieve the unique needs of its customers. Accordingly, the planning of
supply chain strategies intends to create a more efficient and/or a more effective supply
chain. Hence, there are two generic supply chain strategies, i.e. Lean and Agile supply
chain strategies (Danieet al., 2011).

The Lean Supply Chain Strategy

Leanness in supply chain strategy is referred as “developing a value stream to eliminate

all wastes, including time, and to enable a level schedule”. The ultimate goal of lean
supply chain strategy is cost reduction through executing the basic processes with a
minimum of waste (Intaher, 2012).

The Agile Supply Chain Strategy

Agility in supply chain strategy is to refer” using market knowledge and a virtual
corporation to exploit profitable opportunities in a volatile marketplace”(Intaher, 2012).
Agility can be defined as “responding to market requirements by producing new and
existing products and services fast and flexibly” (Nigel, Stuart &Robert, 2010). Likewise,
agility in the supply chain management is primarily concern on ‘Responsiveness’. Hence,
the ultimate goal of agile supply chain strategy are based on competition, business
practice, strategic response, adaptability, building defenses against competitors , a
 paradigm shift, a step towards innovation, and the promise of a business world based
around cooperation(Intaher, 2012).

Page 9

Leagile Supply Chain Strategy

Looking the basic features of lean and agile supply chain strategies, they possess both
opposing and complimentary attributes, so that a hybrid approach of supply chain is
designed, i.e.”leagile” (Sylwia,2010).

A leagile supply chain strategy is to mean that “a system in which the advantages of
leanness and agility are combined”. Hence, the ultimate goal of leagile supply chain
strategy is to induce competitiveness in a cost- effective manner. Leagile supply chain
strategy provides the capacity for the entire supply chain in the positioning of the
decoupling point to manage a volatile demand downstream, where at the same time
practice a level schedule upstream from the decoupling point (Intaher, 2012).

The decoupling point is “the point in the product flow stream to which the customer`s
order penetrates and where real-time data and forecast-driven activities meet”. Therefore,
it is imperative to consider the position of the decoupling point in developing any supply
chain structure(Danie et al., 2011).Hear, lean concerns on waste reduction, (achieving
low-cost delivery of a standardized and stable products), and agility enables to manage
complexities created by constant and unpredicted changes(Intaher, 2012). Table 2.1
shows the Comparison of lean, agile and leagile supply chain.
Distinguishing attributes Lean supply chain Agile supply chain Leagile supply chain
Market Demand Predictable Volatile Volatile and
unpredictable
Product variety Low High Medium
Product Life cycle Long Short Short
Customer drivers Cost Lead time and Service level
availability
Profit Margin Low High Moderate
Dominant Costs Physical Costs Marketability Physical/Marketability
Costs cost
Stock out penalties Long term Immediate and No place for stock out
contractual volatile
Purchasing policy Buy goods Assign capacity Vendor manage
inventory
Information enrichment Highly desirable Obligatory Essential
Forecast Mechanism Algorithm Consultative Algorithm and
consultative/Algorithm
or consultative
Typical Products Commodities Fashion goods Product as per
customer demand
Lead time compression Essential Essential Desirable
Eliminate Muda Essential Desirable Arbitrary
Rapid Reconfiguration Desirable Essential Essential
Robustness Arbitrary Essential Desirable
Quality Market qualifier Market qualifier Market qualifier
Cost Market winner Market qualifier Market winner
Lead Time Market qualifier Market qualifier Market qualifier
Service Level Market qualifier Market winner Market winner

Page 10
Table 2.1: Comparison of lean, agile and leagile supply chain

Source: Masoud,Farhad, Syed &Ali (2012)

 Page 11

2.4. The characteristics of lean and Agile Supply Chain in Strategic aspects

Supply chains should be developed to achieve strategic advantage. By and large,

organizations could decide among the three major generic competitive strategies, i.e., low
cost, differentiation or focus strategies, to attain a competitive advantage(Danieet al.,
2011).

Accordingly, the current supply chain management practices should target either the cost
reduction through employing the lean strategy, or differentiation/higher service level
through agile strategy. Cost leadership can be attained through enhanced operations
which result to produce and market identical or better offerings at a cheaper price than
competitors .This low cost strategy which aims to provide a product at a price or cost
lower than that of competitors could be achieved through the lean supply chain
management. The lean management allows reducing the logistics costs through different
techniques such as; JIT, Continuous improvement, time compression, no-stock
production, and TQM. The goal of lean supply chain management could be achieved
through designing of efficient operation, the reduction of stocks levels, the flow time`s
reduction, lower use of resources, lower employment and elimination of non-value added
activities, and by and large implementation of scale economies. However, the benefit of
lean management is limited to markets which are characterized by predictable market
demand (Sylwia, 2010; Danieet al., 2011).

For exploiting advantages in a volatile market, and where customers demand for variety
is high, agile supply chain strategy is an alternative strategy. Agile supply chain
management allows a quick response to changes in the demand through the employment
of flexible and agile logistics operations. This could be manifested through; the ratio of
products delivered to ordered, the quality of mistakes made during the sorting process,
the ability to ‘cancel’ the orders, the percentage of orders fulfilling in hundred percent in
accordance with requirements, the size of damage, price reduction due to failure to meet
delivery times, easiness to prepare the goods in accordance with order etc. Agility is also
 capable of handling unforeseen events such as short delivery delays, change in demand,
and natural disasters (Sylwia,2010). Table 2.2 depicts thecharacteristicsof lean and agile

Page 12

Characteristics Supply chain

Lean Agile
superior objective meet the foreseeable demand in respond quickly to changes in
the mostefficient and therefore demand inorder to reduce the
the cheapest way shortage of supply, price
reductions and obsolescence of
goods
market success factors Quality Quality
total delivery time cost
availability total delivery time
the most important cost availability
element of
competitiveadvantage

the strategy in the to shorten the cycle of the boldly invest in methods to
orders’ area fulfillment of the orders and if it is reduce the cycle of the
possible, withoutincreasing costs fulfillment of the orders

suppliers’ selection the superior criteria for selection the superior criteria for
strategy should be: the price and quality selection should be: speed,
flexibility and quality
stocks keeping strategy to shorten the cycle of the to allocate the important buffer
inventoryrotation and to minimize stock ofsemi- and final products
the stock levels in whole supply
chain

strategy in the area of to design products regarding the to use the modular designing to
product designing costreduction and increasing of postpone the phase of the
productionproductivity diversification of theproduct

production strategy to keep high level of production to keep the surplus of buffer
capacityutilization productioncapacity

supply chains in strategic aspect taking into account the strategy of production and
replenishment.

Table 2.2:The characteristics of lean and agile supply chains in strategic aspect
Source: Sylwia(2010).

Page 13
Determining factor Authors
Product characteristics Fisher (1997); Naylor et al. (199); Lee (2002); Mason-Jones etal.
(2000); Lo and Power (xx); Christopher and Towill (2000);
Christopher and Peck (2004); Astrom and Ohgren (2010);
Chibba (2007); Hines (2006); Sun et al (2009); Vinodhet al.
(2009); Simch-Levi et al. (2003); Misty (2005); Jacobs et al.
(2009); Rahiminia and Moghadasian (2010); Zhan and Chen
(2006); Agarwalet al. (2006); Chopra and Meindl (2010);
Bowersoxet al. (2010); Stavrulaki and David (2010); Qi et al.
(2011); Amir (2011); El-Tawy and Gallear (2011); Duarte and
Machado (2011)
Manufacturing Naylor et al. (1999); Mason-Jones et al. (2000); Cohen and
characteristics Rousell (2006); Taylor (2004); Waller (2004); Hull (2005);
Zhang & Chen (2006); Webster (2008); Bowersoxet al. (2008);
Vinodhet al. (2009); Jacobs et al. (2009); Stavrulaki and David
(2010); El-Tawy and Gallear (2011); Duarte and Machado
(2011)
Decision drivers Christopher and Towill (2000); Christopher and Peck (2004);
Stavrulaki and Davis (2010); Duarte and Machado (2011)

2.5. Factors for Determining Supply Chain Strategy

Different scholars presented three major factors that need to be considered when
determining the appropriate supply chain strategy. This section of the research presents
these three major categories of factors i.e. the characteristics of the product, the
manufacturing characteristics and the decision drivers of supply chains, which are
considered in choosing the right supply chain strategy. Table 2.3 indicates the
determinant factors cited in research studies for choosing supply chain strategies.

Table 2.3: Factors cited in research studies for choosing supply chain strategy
 Page 14

2.5.1.Supply Chain Strategy and the Product

The important factor in supply chain strategy decision is to know the product
characteristics in terms of ;the customer and market uncertainty, functional and
innovative attributes, the product life cycle and the market winner, in which a given
supply chain has to serve (Intaher, 2012).

Generally, the essence of supply chain strategy is to pursue a trade-off between

responsiveness and efficiency in the entire supply chain. This could be achieved by
Supply Chains
understanding customer demand pattern and the market winner of the supply chain. In
Table 2.4, the characteristics of market demand and market winners of lean and agile

Lean supply chains Agile supply chains

Market winners Low cost High service levels; time, availability
Source:demand
Market Danie& Johanna (2011)
Predictable Unpredictable

supply chains are depicted (Danieet al., 2011).

Table.2.4: The characteristics of market demand and market winners of lean and agile

Source: Intaher (2012)

Moreover, the product type (functional/innovative product) is a critical factor in

developing a supply chain strategy. The model developed by Fisher (1997) clearly
explains how product type is matched with supply chain strategies. Accordingly, since
functional products possess predictable and stable demand, it matches with a lean supply
chain strategy. Innovative products possess a shorter product lifecycle and unpredictable
 demands, so that it matches with an agile supply chain strategy (Intaher& Johanna, 2011).

Chibba(2007) elaborates upon the match between supply chain strategies and product
characteristics by considering the product life cycle(PLC)theory. Chibba(2007) specifies
the type of supply chain strategies that fits the different phases of the product life cycle.
According to Chibba (2007), agile SC is best suit for products at introduction and decline
phases, while lean SC is appropriate for products at maturity phase, and hybrid SC for
products at growth phase in the product life cycle (Intaher, 2012).

Page 15

2.5.2.Supply Chain Strategy and the

ManufacturingEnvironment
The decision around the manufacturing process, operation strategies, production process,
and push/pull based supply chain approaches, defines the types of supply chain strategies
(Intaher, 2012)

Manufacturing Process

Manufacturing process can be defined as “an arrangement of resources that produce some
mixture of products and services”. All operations consist of a collection of processes
interconnecting with each other to form a network. One manufacturing process can be
distinguished from the other mainly through the different volume – variety positions of the
operations. The five manufacturing process types based on the increasing volume and
decreasing variety are Project, Jobbing, Batch, Mass and Continuous processes
respectively. Figure 2.1 depicts the different volume – variety in relation to the different
manufacturing processes (Nigel et al., 2010). An agile supply chain strategy is appropriate
for Project and Jobbingprocesses, because they characterized by low product volume and
high variety of products. On the other hand, for Mass and Continuousprocesses, a lean
supply chain strategy will be the right strategy (Intaher, 2012).

High Variety Low

Low Volume High

Diverse/ Intermittent Project
Complex Processes Jobbing
processes
Batching
Process Process processes Mass
tasks flow
Processing

Continuous
processes

Repeated Continuous Manufacturing Process Type

Figure: 2.1. Different process types imply different volume–variety characteristics for the process
Source:Nigel, Stuart &Robert(2010)

Page 16
Strategy When to Choose This Benefits
Strategy
Make to stock For standardized products Low manufacturing costs;
selling in high volume meeting customer demands
quickly
Configure to order For products requiring Customization; reduced
many variations inventory; improved service
levels
Make to order For customized products or Low inventory levels; wide
products with infrequent range of product options;
demand simplified planning

Engineer to order For complex products that meet Enables response to specific
unique customer needs customer requirements

Operation Strategies

The choice about how the company produces goods and services, i.e., whether make to
stock, make to order, engineer to order, or some combination will definitely impact and
 shape the whole supply chain. Operation strategies are dynamic based on different
attributes of the product. The major drivers for operation strategy are the product life
cycle and the number of product variants. For instance, at the growth and maturity phase
of the product life cycle the demand for products will reach at the highest level and then
decreases at the maturity phase, so that managers should consider a shift from make to
stock to make to order. This strategic decision enables to alleviate inventory risk, and at
the same time guarantee the products presence in the market (Shoshananet
al.,2005).Moreover, the decision of operation strategy is largely dependent on the lead
time experienced by customers (Intaher, 2012).Table 2.5 explains the types of operation
strategies in relation to the appropriate situations to choose the strategies and their
benefits.
Table 2.5: Types of operations strategies

Page 17

Production Process
Mass production and mass customization are the major approaches of production strategy
in a manufacturing environment .Accordingly; mass production is based on forecast-
driven production, so that a lean supply chain strategy is recommended. On the other
hand, mass customization is achieved through customer-driven production approach; an
agile supply chain strategy is the appropriate strategy (Intaher, 2012).

Push and Pull Supply

Supply chains could be categorized as pull-based supply chain, push-based supply chain,
and a hybrid one. When the entire supply chain, including production and distribution is
governed by long-term forecasts with stable demand of homogenized products, the
supply chain is push-based supply chain. Hence, a lean supply chain strategy could be
employed. In the case of pull-based supply chain, the whole supply chain is determined
Source: Shoshanan& Joseph (2005)
by actual demand (Intaher et al., 2011), so that agile supply chain strategy is the right one
(Intaher, 2012).

2.5.3.Supply Chain Strategy and decision drivers of supply

chain
A supply Chain decision drivers play a significant role in determining the performance of
any supply chains, and therefore, have much to do in the decision of supply chain
strategy. How these supply chain drivers are managed, will have different repercussion
on the supply chains responsiveness and efficiency (Danieet al., 2011).These decision
drivers include, integration, collaborative relationships, information technology,
production/facilities, inventory decisions, sourcing decisions, location decision,
transportation and pricing(Danieet al., 2011; Intaher, 2012).The management of supply
chain drivers according to lean and agile supply chains is illustrated in Table 2.6 below.

Page 18
Supply chain driver Agile supply chains Lean supply chains
(high customer service levels) (low cost)

Facilities (e.g. capacity and Flexible manufacturing;Many smaller factories, Narrow focus; Few central plants serve
location) closer tocustomers wide areas
Excess capacity (maintain excess buffer Little excess capacity (lower costs
capacity to meet unexpected demand); through maintaining high average
utilization rate);

Inventory (e.g. variety and High inventory levels; Low inventory levels;
levels) Wide range of items; Fewer items; Generate high turns and
Maintain significant buffer stocksof parts or minimize inventory throughout the
finished goods to meet unexpected demand supply chain to lower cost
Transportation Frequent shipments; Shipments are few, large;
(e.g. cost, Fast and flexible mode (choose fastest means Slow, cheaper modes (choose lowest cost
frequency and of delivery depending on need, regardless of mode of transport);
lead times) cost); Shorten lead time as long as it does not
Invest aggressively in ways to reduce lead time increase cost
even if it means incurring higher cost

Information, Obligatory; collect and share timely, accurate Highly desirable; cost of information
data drops while other costs rise
Sourcing Dependent on other parties included; Economies of scale;
Supplier selection criteria: Speed, flexibility, Supplier selection criteria: Price and
quality and dependability quality

Integration Integrate marketing, engineering, distribution, Integrate manufacturing, purchasing,

and information systems quality, andSuppliers, that ensure a two-
More rapid Integration of business partners to way communication between the
enable a rapid response to changing & manufacturer-supplier & manufacture-
fragmented market. customer
Collaborative More collaborative barriers; visual organization High information sharing; traditional
relationships alliance

Pricing Higher margins as price is relatively Lower margins, higher volume, price is
less important to the customer the prime customer driver

Table 2.6: The management of supply chain drivers according to lean and agile supply chains
Source:Compiled from Danie&Johanna(2011) &Intaher(2012)

Pag
e1
9
2.6. Overview of Textile and Garment Industry in Ethiopia

Textile and garment industry is one of the pioneer industries in the global economy. This
industry has a recognized presence across the developing and developed nations comparing
to other industries (Ethiopian International Textile & Apparel Expo Directory, 2012). Due
to the fact that the industry operates using low-skill labor intensive process, textile and
garment firms migrate from developed countries to developing countries so as to cope the
increasing competition in the globalized market (Daniel &Amare, 2012).

Textile industry history in Ethiopia began long before of all manufacturing industries. It
dates back to the late 1930`s, when the first textile factory, i.e. Dire Dawa Textile mill was
established (Ethiopian International Textile & Apparel Expo Directory, 2012).The
country`s current textile industry comprises more than 136 factories including ginning,
spinning, waving, and Knitting as well as woven &Knitted garment producing
firms(ETIDI,2016). Currently, Ethiopia Textile & garment industry contributes about 8%
to manufacturing industry production, 14.4%to the country`s capital investment and 38%to
country`s export earnings (Growth and Transformation Plan II-5 year plan, 2015).It also
creates permanent employment opportunities for more than 13,044 citizens and national
GDP about 1% (ETIDI, 2016).

Considering the Medium-&Large-Scale manufacturing in Ethiopia, Textile and Garment

industry ranked as the second largest, however, its share has decreased over time.
According to Mulu G/Yessus study on industrial policy and development in Ethiopia,
Textile products are among the top ten industrial products in terms of output (gross value
of production) in the year 2010.Similarly, the study ranked Textile and garment exports
among the top ten most important exports. When we observe the export reports in 2011,
we found that textile products like Knitted and Crocheted preparation, spinning of textile,
made-up textile as well as apparel are among the top ten manufacturing exports.However,
like the other manufacturing exports, the export to sales ratio of the textile and apparel
industries declined in the past decades. With the rapid growth of the country`s export, this

Page 20
 national phenomena (the declining export to sales ratio) justifies the focus ofmanufacturing
industries is increasingly shifting to local market than the export market (Mulu, 2013).

Looking the dependency on imported raw materials, the textile industry is among the least
dependent sectors that account a maximum of 50%which is below the
average.Paradoxically, however, the apparel industry experiences a growing reliance on
imported raw materials across time(Mulu, 2013).

2.6.1. Garment sub-sector in Ethiopia

The historical development of Ethiopian garment manufacturing began in the 1950`s, with
the establishment of Addis Garment Factory (Daniel &Amare, 2012). Currently, there are
48 garment manufacturers in Ethiopia, and with the expectation to be increase to 81 in the
coming years. The garment manufacturers are largely engaged in cut make trim (CMT)
activities. Moreover, the larger portion of these garment firms are dependent on imported
fabrics for the production of both knitted and woven apparel. These clearly witness that the
sector is facing shortage of adequate fabrics produced at the local industries (ETIDI, 2014).
The following table 2.7 i.e. the summary of SWOT analysis of the current condition of
garment firms will provide the overall pictures of garment firms in Ethiopia.

Table 2.7:The summary of SWOT analysis of the current condition of garment firms

Strengths Weakness
􀂾Abundant labor resources 􀂾Poor quality of labor force
􀂾Gradual increase of domestic market 􀂾Limited variety & low quality of products
􀂾The sector is in the priority list of thegovernment 􀂾Low market concept unclear market role
program 􀂾Absence of market networking
􀂾Relatively increased number of investment 􀂾Lack of skilled human resources
􀂾Poor productivity
􀂾Insufficient export incentives
􀂾Poor infrastructure

Opportunities Threats
􀂾Vast international market 􀂾Stiff global competition
􀂾Global garment firm relocation 􀂾Limited capital for infrastructure
􀂾Potential of trainable labor force 􀂾Commitment to continuous change
 Page 21

Source: Daniel &Amare( 2012)

2.6.2. Garment Supply Chain in Ethiopia

Generally, the garment supply chain comprises the following stages; fiber and yarn
production, fabrication, garmenting, distribution, and retailing (Sunil et al, 2013).In the
chain, fiber and yarn production is performed by textile firms. The Textile industry in
Ethiopia ischaracterized by capital intensive and large size capacity comparing to
fragmentally organized apparel industries. Moreover, apparel firms utilize less
sophisticated technology, and are highly labor intensive sector. Likewise, different
integrated firms in the chain are engaged in producing fabrics (knitted and woven) and
various products that would be an input for garment firms. The next stage in garment
supply chain is garmenting. Therefore, the apparel manufacturers are involved in
producing different types of garment for local market consumption as well as foreign
export (Yared, 2010).

The distinctive features of the Ethiopian textile and garment industry is that the majority of
the textile firms are vertically integrated (spinning-weaving/knitting-apparel).This in turn,
results for lack of specialization in the industry supply chain. Moreover, since the textile
firms utilize the fabrics produced for their own productions, the apparel firms lack access
Fiber
to adequate fabrics produced at the local industry (Yared,2010).

Distribution Yarning Fabric Garment Fiber

Production /Spinning Production production Production
 Retailing
Customer

Page 22

Figure 2.2: Garment Supply chain

Source: Sunil &Siddharth (2013)

2.7. Conceptual Framework

The conceptual framework for this research is the comprehensive framework for
determining supply chain strategies and practices developed by IntaherM.Ambe (2012)
and a strategic supply chain framework crafted by Dr.SuniGiri and
SiddnarthShankaRai(2013).Table 2.8 shows the comprehensive framework for
determining supply chain strategies and practices of Intaher(2012).

Suniet al. (2013) in their strategic supply chain framework considers only product type as
the only factor to determine the right supply chain strategy. However, Intaher (2012) had
made an intensive study regarding to the factors that could be considered in determining
the right supply chain strategy. According to his study, three groups of factors are
identified, i.e. product characteristics, manufacturing characteristics and decision
drivers. His study reveals that most scholarly researches consider primarily product
characteristics in determining the right supply chain strategy, followed by
manufacturing characteristics and decision drivers. In this research, therefore, the
framework developed by Suniet.al. (2013)is modified by adding additional factors: the
manufacturing characteristics and decision drivers of the supply chain, because the
researcher is interested to assess the whole factors that determine the right supply chain
strategy instead of considering a single element.
 Page 23
Criteria Description of criteria Lean supply chain Agile supply chain
Demand uncertainty Predictable Unpredictable
Product type Functional products Innovative products
Profit margin Low High
Product variety Low High
Order lead-time Long Short
Market winner Cost Availability
Product life cycle Long Short

Market segment Serve only current market Develop new productlines

segment and open up newmarkets

Manufacturing focus Maintain high average utilization Deploy excess buffer capacity
rate

Manufacturing process Continuous (large volume) Job shop; batch; line flow

Production process Standardized product Customized products

(Mass production)
Techniques MTS MTO; ETO
Approach Push-based system Pull-based system
Integration Integrate manufacturing, Integrate marketing,
purchasing, quality, and engineering, distribution,
suppliers and information systems

Collaborative High information sharing; More collaborative

relationships traditional alliances barriers; visualorganization

Information technology Highly desirable; cost of Obligatory; collect and

information drops while share timely, accurate data
other costs rise

Facilities Narrow focus; few Flexible manufacturing;

centralized plants many small factories

Inventory Low inventory levels; few High inventory levels

items
Location Few central locations Many locations
 Transportation Shipments are few and in large Frequent shipments
quantities

Source: Intaher( 2012)

Table 2.8: Comprehensive framework for determining supply chain strategies and practices
Productcharacteristics

Page 2
4
Sourcing Supplier attributes Supplier attributes
include low costs and involve speed, flexibility
high quality and quality
Manufacturingcharacteristics

Pricing Price based on volume Price based on margins

With the above modification, this study came up with a conceptual framework to guide this
research.
Decisiondriversofsupplychain

Garment Company

Supply Chain Strategy

Restructuring

Matching with Product Characteristics, s of Supply Chain

Manufacturing Characteristics,and ecision Driver
 No Problem

Yes

Efficiency and /or

Effectiveness

Figure 2.3: A Conceptual Framework of the study

Source: Modified from Intaher (2012) and Sunilet.al. (2013)

Page 25

CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY

3.1. Introduction
The main purpose of the research methodology is to explain how the research is
accomplished, what knowledge is required, what information is needed and how
information is collected.

Research methodology consists of research approach, sample design-sampling

techniques, source and instrument of data collection, methods of data analysis ethical
issues, validity and reliability of the study.
3.2. Research Approach
This research builds on a combination of approaches. Firstly, an exploratory literature
study was conducted to point out clearly the major issues regarding supply chain
strategies, which is intended to make clear about those supply chain characteristics that
could be applied to determine a supply chain strategy. Secondly, an empirical research
was conducted by means of descriptive approach to gain an insight in to the current
supply chain management practices in light of supply chain strategies implemented by
those organizations in the study. In this regard, supply chain drivers were analyzed to
suggest the right supply chain strategies for the organizations under study.

The researcher intention to choose these approaches is based on an argument presented

by scholars that these approaches are used in research to describe phenomena and

Page 26

relationships between events, of which little is known (Jone,Hafiz,Robert,and

David,2007).

3.3. Sampling and Sampling Techniques

Non- probability sampling was used in this study. The Garment companies included in
the research sample were selected by means of judgmental sampling to ensure that
Garment companies were included that experience challenges in their supply chain
management. Yogesh (2006) asserted that purposive sampling is used to pick up samples
in relation to some criteria, which are considered important for the particular study.

The organizations selected in the research sample were Garment firms located in Addis
Industrial Village. Addis Industrial Village, dating back to the 1980s, was the first ever
industrial park established in Ethiopia, and it is geared towards domestic exporters. In
Addis Industrial Village there are eight Garment firms namely, Abem Garment PLC,BM
Ethiopia Garment and Textile S.C, Concept International Ethiopia PLC, Lucy Garment
Industry PLC, Oasis Abyssinia PLC, Village Industrial PLC, Wossi Garment Design
Factory PLC and Yonis Garment PLC. Therefore, the researcher considered these
domestic Garment firms as important for this particular study.

3.4. Source and Instruments of Data Collection

Quantitative method of data collection was used as a research instrument to describe the
supply chain management practices of the companies. More of closed endedequations
were developed from the literature study to collect responses for quantitative analysis. To
conceptualize the factors of the research model, respondents were asked to determine
their level of agreement with statements for product characteristics, manufacturing
characteristics and supply chain decision drivers for their company on a five-point type
Likert scale. It is an ideal measurement approach since it helps to ask respondents to rate
their opinion for the items of various dimensions.

Page 27

A cross-Sectional design was administered to collect the primary data, i.e. the primary
data was collected at the same time or within a short time frame .Structured
questionerswas used as instrument to collect primary data. The questioners was
developed from literature study and it was include questions regarding to supply chain
strategy, market demand predictability, Market winners and Market qualifiers, the
management of supply chain drivers, and the manufacturing environment(manufacturing
process and techniques, production process, and push and pull supply)

3.5. Procedure of data collection

In collecting data using questioners the following procedure was administered. First, the
respondents were asked to get their consent, and after getting their consent the prepared
questionnaires weredistributed to each respondent. And then, the questionnaire was
collected by checking the completeness of the data.

3.6. Method of data Analysis

The data collected by questionnaires was checked to detect whether there is any
omissions and errors.Then the checked data was analyzed by the means of Statistical
Package for Social Sciences (SPSS). Descriptive statistics is used to describe a set of data
in terms of its frequency of occurrences, its central tendency, and its dispersion. Study
result was presented by using tables.

3.7. Ethical Clearance

A formal letter was written from Addis Ababa University, School of Commerce,
Department of Logistics and Supply Chain Management to the sample Garment
companies.The data collection only started after getting consent from the parties
mentioned above. In addition to this, name of the employees (selected for the sample)
were not included to maintain confidentiality.

No Variables Value of Cronbach’s alpha

1 Product Characteristics 0.701
3.8.
2 Validity and Reliability
Manufacturing Characteristics 0.727
3 Supply Chain decision variables 0.709
3.8.1. Relia
bility
Reliability and validity are very important criteria when doing a research. Validity
indicates the degree to which an instrument measures what it is supposed to measure

Page 28

while reliability has to do with accuracy and precision of a measurement procedure. A

measuring instrument is reliable if it provides consistent results. As multiple items in all
constructs were used, the internal consistency/reliability of Product Characteristics,
Manufacturing Characteristics and Supply Chain Drivers were carried out using
Cronbach’s alpha. Alpha values over 0.7 indicate that all scales can be considered
reliable (Nunally, 1978). According to Sekaran (2003) values between 0.50 and 0.80 are
acceptable while values below 0.50 are considered less reliable and therefore
unacceptable. The reliability values for all constructs are confirmed as greater than 0.7,
which are considered ideal. Table 3.1,shows the summary of reliabilities of all constructs.
Table 3.1.Reliability of Constructs

Source: (Survey Output, 2017)

3.8.2. Analysis of Validity

Since the questions are derived from an extensive literature review the measures are
generally considered to have content validity. Geoffrey and David (2005) mention about
three type of validity in their study: content validity, predictive validity, and construct
validity. This study addressed content validity through review of literature.

Page 29

CHAPTER FOUR

DATA PRESENTATION, INTERPRETATION, AND ANALYSIS

4.1. Introduction

As discussed in previous chapters, this study attempted to assess the practice of Supply
Chain Strategy implementation on Garment firms located in Addis Industrial Village and
 then to identify potential areas where firms may be able to improve their supply chain
management practices. Therefore, the findings of the study are presented and discussed in
this chapter. The findings of the empirical research are discussed in four sections. The
first section covers the general information of the respondent. The second section
discusses supply chain strategies that are suggested based on the product characteristics
and the manufacturing characteristics of the respondents. If there is alignment between
firm`s responses in terms of product characteristics and manufacturing characteristics, a
specific supply chain strategy is suggested to the firms. The third section discusses the
use of the decoupling point to suggest a supply chain strategy for firms. The fourth
section provides an analysis on how the firms were managing specific supply chain
drivers to identify where these organizations may be able to improve their supply
management practices.

4.2. Response Rate

It was one of these thesis objectives to reach out to all the Garment companies located at
Addis Industrial Village as much as possible with the questionnaire in order to provide
more evidence to results. However, out of all the companies targeted, only 4 effectively
responded by completely filling in the questionnaire and sending them in within the due
dates. Based on these, the response rate is 50%.

Page 30
Case company Frequency Percent Valid Percent Cumulative
Percent
Yonis Garment 14 25.9 25.9 25.9
Concept International Garment 11 20.4 20.4 46.3
Lucky Garment 14 25.9 25.9 72.2
Village Industry PLC 15 27.8 27.8 100.0
Total 54 100.0 100.0
Educational qualification Frequency Percent Valid Percent Cumulative
Percent
College diploma 33 61.1 61.1 61.1
First degree 20 37.0 37.0 98.1
Second degree 1 1.9 1.9 100.0
Total 54 100.0 100.0
Job Title Frequency Percent Valid Percent Cumulative
Percent
General Manager 4 7.4 7.4 7.4
Production Manager 4 7.4 7.4 14.8
Procurement Manager 4 7.4 7.4 22.2
Marketing Manager 4 7.4 7.4 29.6
Others(sales, accountant and 38 70.4 70.4 100.0
operation staffs)
Total 54 100.0 100.0
Department Frequency Percent Valid Percent Cumulative
Percent
Production Department 16 29.6 29.6 29.6
Logistics Department 14 25.9 25.9 55.6
Marketing Department 14 25.9 25.9 81.5
Finance Department 6 11.1 11.1 92.6
General Management 4 7.4 7.4 100.0
Total 54 100.0 100.0

4.3. General Information

The study used several socio-economic factors which include educational qualification,
job title and departments.
4.3.1. Respondent Profile

Table 4.1: Profile of Respondents

Page 31

Source: Survey Output

The analysis of the respondents profile in terms of their Educational qualification, Job
title and Department/work units in line with Table 4:1 is presented as follows.
EducationalQualification:33 respondents (66.1%) are diploma holders, 20 respondents
(37%) have 1st degrees (BA/BSC Degree) and the remaining one respondent (1.9%) has
2nd degree (MA Degree).From the educational background of respondents, 53
respondents (98.1%) are diploma and 1st degree holders. According to the response, the
respondents provide relevant and reliable information needed for the study and they are
fit in line with response of the questionnaire.

Job Title:4 respondents(7.4%) of them are General Managers of the companies, 4

respondents (7.4%) are Production Managers of the companies, 4 respondents (7.4%) are
Procurement and Supply Managers of the companies, 4 respondents (7.4%) are
Marketing Managers of the companies. The rest 33 respondents (70.4%) are Production
unit staffs, Sales/Marketing officers, Procurement and supply officers and Finance
Department staffs. According to the response, all the respondents are directly and
indirectly involved in the supply chain practices of their respective firms and hence, their
information can be considered as reliable and relevant for the study.

Departments/Work Units:16 respondents (29.6%) are from Production Departments, 14

respondents (25.9%) of them are from Logistics Departments,14respondents (25.9%) of
them are from Marketing Departments,6 respondents(11.1%) are from Finance
Departments and the rest 4 respondents (7.4%) are General Managers of the companies.
This implies the fact that all the respondents are directly and indirectly involved in the
operations of supply chain management of their respective companies and hence, their
information can be considered as reliable and relevant for the study.

Page 32
4.4. Analysis of Product Characteristics and
Manufacturing
Characteristics to Imply the Appropriate Supply Chain
Strategy to the Sample Garment Companies

4.4.1.Responses on Product Character

The respondents were asked to indicate the product type, product life-
cycle,market

Organization Product Product Market demand Market Product

type life- cycle predictability winners life-cycle
stage
Yonis Garment Functional Long product Predictable Low cost Maturity stage
life-cycle

Concept Functional Long product Predictable Low cost Maturity stage

International life-cycle
Ethiopia PLC

Lucy Garment Functional Long product Predictable Low cost Maturity stage
life-cycle

Village Customized Short product Unpredictable High Growth stage

Industry PLC life-cycle services
level

demand predictability, market winners, and product life-cycle phase of their company.

Table: 4.2. Product characteristics related supply chain variables

 Page
33

As shown in the table, three companies (Yonis Garment, Concept International Ethiopia
PLC and Lucy Garment) indicated that their product type is functional /standard while
Source:the
Survey
otherOutput
company (Village Industry PLC) indicated that its product type is innovative
/customized. Three companies (Yonis Garment, Concept International Ethiopia PLC and
Lucy Garment) indicated that the market demand for their product is predictable while
the other company (Village Industry PLC)indicated that the market demand predictability
of their company is unpredictable. Similarly, three companies(Yonis Garment, Concept
International Ethiopia PLC and Lucy Garment)agree that their product life-cycle is long
and one company (Village Industry PLC)agree it has short product life-cycle.
Moreover,Yonis Garment, Concept International Ethiopia PLC and Lucy
Garmentindicated that themarket winner for their product is low cost while Village
Industry PLC indicated that the market winner for its products ishigh service level.
Regarding to the product life-cycle phase of their products three companies (Yonis
Garment, Concept International Ethiopia PLC and Lucy Garment) indicated that their
products are at the maturity phase while Village Industry PLC indicated its products are
at growth phase. Based on the product characteristics a lean supply chainstrategy can be
suggested for Yonis Garment, Concept International Ethiopia PLC and Lucy Garment.
An agile supply chain strategy can besuggested for Village Industry PLC. However, only
product characteristics are not enough to determine the right supply chain strategy for the
companies, rather manufacturing characteristics should be considered.

Page 34
 4.4.2. Response on the Manufacturing Characteristics

The respondents were asked to indicate the volume-variety position, target mar
ket
segment, manufacturing process, operation strategy, cycle of production proce
ss,
manufacturing focus and Supply chain operation approach of their company. Table
4.3

Manufacturing Companies
characteristics Yonis Garment Concept Lucy Village Industry
International Garment PLC
Ethiopia PLC
The Volume-Varity High volume and High volume and low High volume Low volume and
position low variety variety products and low variety high variety
products products
Target market Current market Current market Current market Undecided
segment
Manufacturing Mass process Continues process Mass process Jobbing & Batch
process
Operation strategy Make-to-order Make-to- order Make-to-stock MTO&configure-
to-order
Cycle of Mass production Mass production Mass Mass customization
production process production

Manufacturing Maintaining high Maintaining high Maintaining Deploying excess

focus average utility rate average utility rate high average buffer capacity
utility rate
Supply chain Pull based SC Pull based SC Push based SC Pull-based SC
operation approach

illustrates respondent’s position in terms of the above supply chain variables that
are
related to the manufacturing environment.
Table: 4.3. The responses of the companies regarding to their Manufacturing Environment

Source: Survey Output

Page
35

As it shown in table, threecompanies (Yonis Garment, Concept International Ethiopia

PLC and Lucy Garment) replied the volume-Varity position of their company is
characterized with high volume and low variety products while one company(Village
Industrial PLC) characterized with low volume and high variety products. Three
companies (Yonis Garment, Concept International Ethiopia PLC and Lucy Garment)
 agree that their company target market segment is the current market while one company
(Village Industrial PLC) agrees that both current and new markets are its target market.
Yonis garment and Luck garment replied that their manufacturing process is mass
process, and Concept International Ethiopia PLC replied continues process while Village
Industrial PLC replied jobbing and batch processes. Regarding to operation strategy two
companies (Yonis Garment and Concept International Ethiopia PLC) replied that their
operation strategy is Make-to-order, and Lucy garment replied Make-to-stock while
Village Industrial PLC replied both Make-to-order and Configure-to-order. Three
companies (Yonis Garment, Concept International Ethiopia PLC and Lucy Garment)
replied that mass production is their cycle of production process while one company
(Village Industrial PLC) replied mass customization. Maintaining high average utility
rate is the focus of manufacturing for the three companies (Yonis Garment, Concept
International Ethiopia PLC and Lucy Garment), the manufacturing focus of one company
i.e., Village Industrial PLC is deploying excess buffer capacity. Moreover,
threecompanies (Yonis Garment, Concept International Ethiopia PLC and Village
Industrial PLC) replied that their supply chain is operated based on actual demand (pull
based) while one company (Lucy Garment) replied push based.

4.4.3. I Companies Decoupling Point mplied Supply

Concept International Ethiopia PLC At organization
Chain S Yonis Garment PLC At organization trategies based
on Prod uct Characteris
tic
And Manufacturing Characteristics

A lean supply chain strategy can be suggested for Lucy Garment based on its product
characteristics and manufacturing characteristics, so that it should manage its supply
chain drivers according to lean supply chain principles.

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 An agile supply chain strategy can be suggested for Village Industry PLC based on its
product characteristics and manufacturing characteristics, therefore, it should manage its
supply chain drivers according to agile supply chain principles.

For the other two companies (Concept International Ethiopia PLC and Yonis Garment
PLC) the decoupling points in the supply chains of the companies have to be considered
to suggest supply chain strategies to them.

4.5. Supply chain strategy using the decoupling point

The position of these two companies (Concept International Ethiopia PLC and Yonis
Garment PLC) in terms of the decoupling points in their supply chain were used because
there was not a clear indication of the focus of the supply chain when the responses for
product characteristics and manufacturing characteristics were considered .Table 4.4
shows the responses of these two companies in terms of their decoupling points.

Table: 4.4.Positions of the company in terms of the decoupling point

Source: survey output

Concept International Ethiopia PLC was positioned at the decoupling point of its supply
chain. Therefore, a hybrid supply chain strategy i.e. leagile supply chain strategy is
suggested. Because of its product characteristics several supply chain drivers can be
managed according to lean supply chain principles and because of some of its
manufacturing characteristics (operation strategy and Supply chain operation approach)
several supply chain drivers should be managed according to agile supply chain
principles.

Yonis Garment PLC was also positioned at the decoupling point of its supply chain.
Similarly, a hybrid supply chain strategy i.e. leagile supply chain strategy is suggested.
 Because of its product characteristics several supply chain drivers can be managed

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Company Management of supply chain drivers according to:

Agile supply chain strategy Lean supply chain strategy

Lucy Garment Capacity utilization Information, Transport cost, Transport
frequency, Inventory, Facility location,
Pricing, Supplier selection
Concept International Transport cost, Transport Capacity utilization ,Facility location,
Ethiopia PLC frequency , Pricing , Inventory, Supplier selection
Information
Yonis Garment Facility location, Supplier Capacity utilization ,Inventory, Pricing,
selection Transport cost, Transport frequency,
Information
Village Industry PLC Capacity utilization , Facility location, Transport cost,
Inventory and Supplier Transport frequency, Information and
selection Pricing

according to lean supply chain principles and because of some of its manufacturing
characteristics several supply chain drivers should be managed according to agile supply
chain principles.

4.6. Analysis of The Management of Supply Chain Drivers to

identify Potential Areas to be Improved
The respondents were asked to indicate how their company is managing the different
supply chain drivers which include: capacity utilization, facility locations, inventory,
transportation, information, sourcing and pricing. Table 4.5 shows how these garment
companies are managing their supply chain drivers.

Table: 4.5.Management of supply chain drivers

 Page 38

A lean supply chain strategy was suggested for Lucy Garment based on the previous
section analysis of its product characteristics and manufacturing characteristics, so that it
should manage its supply chain drivers according to lean supply chain principles.
However, Lucy Garment is managing one of its supply chain drivers (Capacity
utilization) according to agile supply chain principles. Lucy garment may analyze why it
is maintain excess capacity to meet unexpected demand instead of lower costs through
maintaining high average utilization rate.

Concept International Ethiopia PLC is positioned at the decoupling point of its supply
chain. Therefore, a hybrid supply chain strategy i.e. leagile supply chain strategy was
suggested. Because of its product characteristics several supply chain drivers can be
managed according to lean supply chain principles and because of some of its
manufacturing characteristics several supply chain drivers should be managed according
to agile supply chain principles.Concept International Ethiopia PLC is able to mange
most of its supply chain drivers according to the implied supply chain principle.
However, Concept International Ethiopia PLC may consider its facility location policy.
The company may use more decentralized facilities to effectively respond to a volatile
demand downstream.
Source: Survey Output
Yonis Garment PLC is alsopositioned at the decoupling point of its supply chain.And,
because of its product characteristics several supply chain drivers can be managed
according to lean supply chain principles and because of some of its manufacturing
characteristics several supply chain drivers should be managed according to agile supply
chain principles.Therefore, a hybrid supply chain strategy i.e. leagile supply chain
strategy is suggested. However, Yonis Garment PLC is managing several aspects of its
supply chain drivers according to lean supply chain principles. Yonis Garment
PLCshould focus on using a hybrid supply chain strategy.Yonis Garment PLC should
also analyze why it is selecting suppliers based on speed and flexibility instead of
selecting them based on low cost because suppliers are positioned upstream from the
decoupling point.

An agile supply chain strategy can be suggested for Village Industry PLC based on its
product characteristics and manufacturing characteristics, therefore, it should manage its

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supply chain drivers according to agile supply chain principles. However, Village
Industry PLC is managing most of its supply chain drivers according to lean supply chain
principles. Village Industry PLC may analyze its information management policy as well
as pricing policy. It may even use more decentralized facilities and quicker modes of
transport to reduce lead time because long lead times reduce agility.
 Page 40

CHAPTER FIVE
SUMMARY OF MAJOR FINDINGS, CONCLUSION AND
RECOMMENDATION

5.1. Introduction
This chapter presents the summary of the findings and offers conclusion and
recommendations drawn from the study with regard to the objectives of the study. The
relevance and contribution of this study to the field of supply chain management with
specific emphasis supply chain strategy is considered. The findings of the study are
summarized with regard to the objectives. Finally, the conclusion and recommendations
are explored.

5.2. Summary of Finding

This thesis work set out to assess the supply chain strategy implementation on eight
Garment companies. However, out of all the companies targeted, only four effectively
responded. This resulted in a response rate of 50 %. According to the study, summary of
the findings is presented as follow:
• The finding from the analysis of the product characteristics and the manufacturing
 characteristics of the respondents were used to imply a supply chain strategy for the
sample companies. Accordingly, a lean supply chain strategy is implied for Lucy
Garment and an agile supply chain strategy is implied for Village Industrial PLC.
Moreover, a hybrid supply chain strategy i.e. leagile supply chain strategy is implied for
the rest two companies i.e., Concept International PLC and Yonis Garment.
• The entire sample Garment companies do not manage some of their supply chain drivers
according to the implied supply chain strategy principles.
• An analysis of the management of their supply chain drivers showed potential areas
where these organizations may be able to improve their supply chainmanagement
practices.The potential areas subjected for improvement are:

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✓ Capacity utilization is the potential area identified to improve for Lucy

Garment.This company is managing Capacity utilization according to agile
supply chain principles. Lucy garment may analyze why it is maintain excess
capacity to meet unexpected demand instead of lower costs through maintaining
high average utilization rate, because the implied supply chain strategy for this
company is lean.
✓ Sourcing is the major area that Yonis Garment PLC should consider to improve.
The company should analyze why it is selecting suppliers based on speed and
flexibility instead of selecting them based on low cost because suppliers are
positioned upstream from the decoupling point.
✓ Facility location is the major area that Concept International Ethiopia PLC may
consider to improve. The company may use more decentralized facilities to
effectively respond to a volatile demand downstream.
✓ Information management, pricing, facility location and transport management are
the areas identified to improve by Village Industry PLC. The company may
analyze its information management policy as well as pricing policy. It may even
use more decentralized facilities and quicker modes of transport to reduce lead
time because long lead times reduce agility.
5.3. Conclusion
In today’s globalized market and increasing rate of competition, Garment companies
must know about their supply chain strategy to survive and win the market versus their
competitors. The purpose of this study was firstly to explore literature studies to point out
clearly those factors that could be applied to determine the appropriate supply chain
strategy and secondly to assess the supply chain strategy implementation by selected
sample Garment companies in Ethiopia.

Product characteristics, manufacturing characteristics and decision drivers, can be

considered when determining supply chain strategies. Concerning to product
characteristics, variables such as the customer and market demand uncertainty, product
type, product life cycle, market winners, etc are need to be considered. Manufacturing

Page 42

characteristics include the manufacturing process, operation strategy, production process,

market segment and supply chain operation approaches (push and pull supply). Finally,
decision drivers include tools such as integration, collaborative relationships, information
technology, facilities, inventory, location, transportation, sourcing strategy and pricing
strategy.

The analysis of the product characteristics and manufacturing characteristics were used to
imply a supply chain strategy for the entire sample Garment companies. Logically
companies should manage their supply chain drivers according to the implied supply
chain strategy.However, all of them were not implementing the appropriate supply chain
strategy implied based on the above factors considered to determine supply chain
strategy. These Garment companies had failed to manage their supply chain drivers
according to the appropriate supply chain strategy principles suggested to them. The
research analysis and findings indicated the potential areas where these companies should
be able to improve their supply chain management practices.

Therefore, the study concluded that product characteristics, manufacturing characteristics

 and decision drivers can be considered as prominent factors when determining the
appropriate supply chain strategy for Garment companies. The article also concludes that
the management of supply chain drivers can be used to determine where the performance
of the supply chain can be improved.

5.4. Recommendation
Based on the study results and conclusions drawn above, some recommendations are
proposed as a means of alleviating the problems found.

• As already indicated, Garment companies must select the correct supply chain strategy
based on their product characteristics and manufacturing characteristics to optimize their
supply chains.
• As the study clearly indicated, Garment companies must manage their supply chain
drivers according to their implied supply chain strategy principles.

Page 43

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 Page 46

APPENDIX 1

QUESTIONNAIRE

Designed questions for the study

ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE

DEPARTMENT OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT

Title of the Thesis “ASSESSING SUPPLY CHAIN STRATEGIES OF GARMENT FIRMS LOCATED AT
ADDIS INDUSTRIAL VILLAGE”
By: Asaye Getachew
Advisor: Dr.Matiwos Ensermu

Questionnaire Survey for Ethiopian Garment Industries

Dear Participants;
With sincerity we would like to extend our deep appreciation to your company and the staff for
the willingness and cooperation in undertaking this valuable research. We ask your kind
cooperation in answering the questions as truthfully as possible and your response will be
highly confidential. For other questions pertaining to this project, please contact Addis Ababa
University, School of Commerce Department of Logistics and Supply Chain Management
Yours Sincerely,
Thank you for your cooperation!!!

Type of Products :
I.
1. Our firm produces functional/standard products 1 2 3 4 5
A. 2. Our firm produces innovative/customized products 1 2 3 4 5 R
1. Product life-cycle: Y
2.
3. Our firm product life-cycle is more than two years 1 2 3 4 5
3. Y
10 4. Our firm product life-cycle is between three month and one 1 2 3 4 5 y
B. year C
4. Aspects of market demand:
5. 5. The market demand for our products are predictable 1 2 3 4 5 C
6. 6. The market demand for our products are unpredictability 1 2 3 4 5 D
The product life cycle phase :
7. Our firm products are at the introduction/innovative stage 1 2 3 4 5
8. Our firm products are at the growth stage 1 2 3 4 5
9. Our firm products are at the maturity stage 1 2 3 4 5
10. Our firm products are at the decline stage 1 2 3 4 5
Market winners :

11. Our firm market winner criteria is low – cost 1 2 3 4 5

12. Our firm market winner requirement is high service levels 1 2 3 4 5

Part ll: Factors for determine Supply chain strategies

Section one: Supply chain strategy and Product characteristics

Indicate the following supply chain strategy variables that are related to the product
characteristics? Please tick ( ) or circle the number that applies to you!The rating Scales are
five point Likert type scales with 1=strongly disagree, 2=disagree, 3=undecided, 4=agree,
5=strongly agree.

The Volume – Varity position:

13. Our firm products characterized with high volume and low variety 1 2 3 4 5
14. Our firm products characterized with low volume and high variety 1 2 3 4 5
Target market segment:
15. Our firm target market is the current market 1 2 3 4 5
16. Our firm target market is a new market 1 2 3 4 5
17. Our firm target market is both the current and new market 1 2 3 4 5
Type of manufacturing processes :

18. Our firm manufacturing process is Jobbing process 1 2 3 4 5

19. Our firm manufacturing process is Batch process 1 2 3 4 5
20. Our firm manufacturing process is Mass process 1 2 3 4 5
21. Our firm manufacturing process is Continuous process 1` 2 3 4 5
The operation strategy:
22. Our firm operation strategy is make - to – stock 1 2 3 4 5
23. Our firm operation strategy is configure - to - order 1 2 3 4 5
24. Our firm operation strategy is make - to – order 1 2 3 4 5
25. Our firm operation strategy is engineer - to - order 1 2 3 4 5
The cycle of production process strategy:
26. Our firm production process is mass production 1 2 3 4 5
27. Our firm production process is mass customization 1 2 3 4 5
Manufacturing focus:
28. Our firm manufacturing focus is to maintain high average utility 1 2 3 4 5
rate
29. Our firm manufacturing focus is deploying excess buffer capacity 1 2 3 4 5
Supply Chain operation approach:
30. Our firm supply chain is based on long- term forecast 1 2 3 4 5
(push-based SC)
31. Our firm supply chain is driven by actual demand (pull - based SC) 1 2 3 4 5
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Section two: Supply chain strategy and the manufacturing characteristics

Indicate the manufacturing environment variables of your company? Please tick ( ) or

circle the number that applies to you! The rating Scales are five point Likert type scales
with 1=strongly disagree, 2=disagree, 3=undecided, 4=agree, 5=strongly agree.
 Page 49

Section three: Supply chain strategy and decision drivers

Capacity utilization :
32. Our firm maintain excess capacity to meet unexpected demand 1 2 3 4 5
33. Our firm lower costs through maintaining high average 1 2 3 4 5
utilization rate
Facility location:
34. Our firm locate few central facilities to serve wider area 1 2 3 4 5
35. Our firm locate many smaller facilities closer to customers 1 2 3 4 5
Inventory management :
36. Our firm has high inventory levels 1 2 3 4 5
37. Our firm has Low inventory levels 1 2 3 4 5
38. Our firm has carrying wider range of items 1 2 3 4 5
39. Our firm has holding fewer items 1 2 3 4 5
Transport management system:

40. We uses Fast and flexible modes of transport 1 2 3 4 5

41. We uses Slow, cheaper modes of transport 1 2 3 4 5
42. Our shipments are few and large 1 2 3 4 5
43. We use frequent shipments 1 2 3 4 5
The nature of information management:

44. In our firm we Collect and share timely, accurate data 1 2 3 4 5

45. In our firm Cost of information drops while other costs rise 1 2 3 4 5
Supplier selection criteria :
46. Our supplier selection criteria is Speed 1 2 3 4 5
47. Our supplier selection criteria Flexibility 1 2 3 4 5
48. Our supplier selection criteria Quality 1 2 3 4 5
49 Our supplier selection criteria Price 1 2 3 4 5
Pricing strategy:
50. Our firm pricing strategy is based on higher margins (price 1 2 3 4 5
based on margin)
51. Our firm pricing strategy is based on Lower margin, higher 1 2 3 4 5
volume(price based on volume)
Ho
w is your company managing the supply chain decision drivers? Please tick ( ) or circle the
number that applies to you! The rating Scales are five point Likert type scales with 1=strongly
disagree, 2=disagree, 3=undecided, 4=agree, 5=strongly agree.

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