Challenge Of Integration Of Fuel Supply Chain In Ethiopia

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Addis Ababa University


The oil industry is involved in a global supply-chain that includes ordering, transportation, import/export facilitation, inventory visibility and control, depot administration, distribution management, customer service and information technology. Realizing the synergies that exists in these functions, many companies have extended the concept further upstream and downstream; the supplier of suppliers and customer of customers. The country is facing sporadic shortage of fuel at different times and the supply chain members give different reasons, sometimes contradicting to each other. The purpose of this paper is to assess the existing fuel supply chain integration practices, identify the gap and potential constraints for a seamless integration that would ensure reliable supply of fuel in the country. To meet the purpose, qualitative assessment of the existing information integration, coordination and collaboration, and process integration within the supply chain partners are made. From different literatures, the study identified factors that are considered as a good measure of the three aspects of the supply chain integration. Then, information from primary & secondary sources is used to conduct out the assessment. The relative importance index run on the mean factors indicated that, most of the factors that are essential for internal (within Ethiopia Petroleum Supply Enterprise), customer and supplier integrations are not implemented effectively. The study further revealed that capacity constraints of Horizon Terminal, low profit margin of Oil Companies, vehicle shortage, dealers (retailers) & transporters have adversely affected the synergy of the partners involved in the supply chain. Implementing a complete integration both on upstream, and downstream of the supply chain is a better solution. Some of the major challenges identified are lack of information sharing, lack of collaboration on development program and decision making, no robust inventory management system, and lengthy approval process to uplift from NPRAD depots. Therefore, the supply chain partners and the stakeholders should have a regular open and transparent meeting, maintain collaborative relationship and work collaboratively on development program and decision making to address the barriers captioned above and thereby ensure a seamless integration across their supply chain.



members give different reasons, relative importance, supplier integrations