Distribution Network Performance Measurement and Improvement (Case Study On B.G.I Ethiopia)
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Date
2020-06
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Addis Ababa University
Abstract
Over the past decade, there has been an increasing emphasis on Supply Chain
Management as a vehicle through which firms can achieve competitive advantage in
markets. In this research downstream part of a supply chain (distribution network) of the
case company (BGI Ethiopia) has been discussed. BGI Ethiopia is one of the biggest beer
producing companies in the country. Not so long ago the company has more than 50% of
the market share when the annual beer producing capacity of the country was 5 million
hectoliters, though back then there was no strong competition for the company. The
market share began to shift in 2011, when global giants Heineken and Diageo joined the
market, turning it into a show of force between global beer makers who have been taking
chunks of the market. Even though BGI’s producing capacity has also increased to 4.3
million hectoliters annually, the market share of the company has declined to 35.8%.
While increased in production volume, the loss of the market share is linked to the
downstream segment of the supply chain (the distribution network). In the research, BGI’s
distribution network under the scope of Addis Ababa’s distribution network has been
assessed. In Addis Ababa alone, there are six main disruption agents for the company. And
the performance of these agents is determining the competitiveness of the company. The
performance of the distribution network has been evaluated in accordance to SCOR
model, setting five performance attributes and each having their own metrics. A
questionnaire survey was distributed among the outlets of the case company and interviews
where made identify the KPI for the performance of the distribution network. The data
collected from the questionnaires were analyzed using SPSS software. The research has
revealed the KPI for each performance attribute based on the RII and a regression analysis
was made to see the effect of this KPI on the other metrics., pointing out that this selected
KPI has to be well managed for the better improvement of the distribution network which
directly will improve the competiveness of the case company and increase its market share
once again. From the analysis, it has been concluded that perfect condition delivery has
been identified as the KPI for reliability of the distribution network, sourcing time for
responsiveness, distribution network adaptability with sub major distributers and outlets for
the agility, distribution cost for the cost metrics and material handling efficiency for asset
management efficiency. Finally, it is suggested that in order to enhance the performance of
the distribution of the case company, the distribution network’s performance has to
improve by: increasing the number of vehicles doing the delivery to reach the reliability
issue, adding more main distributing agents to address the responsiveness attribute,
adjusting adaptability and creating coherent flexibility making the network more agile,
reducing distribution cost, improving material handling efficiency.
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Keywords
B.G.I Ethiopia, Performance Measurement, Distribution Network