Characteristics of Supply Chain Integration of Manufacturing Firms in Ethiopia

Recent studies reveal that supply chain integration (SCI) has a fully mediating role between supply chain management practices (SCMPs) and supply chain performance (SCP). It enhances SCP and facilitates other elements of SCMPs, although it is a great challenge for many manufacturing firms to achieve a higher level of integration. The severity of the challenges varies based on: product characteristics, industry characteristics, location of suppliers, and the role of firms in the global supply chain (GSC). However, there is a lack of study on the characteristics and challenges of SCI while firms make a shift of role in the GSC. The aim of this study is to assess the characteristics of SCI taking the leather and leather products manufacturing industry in Ethiopia as empirical evidence, wherein a dynamic shift has occurred from the state of raw material supplier to supplier of value-added products to the GSC. Survey, observation, and questionnaire were applied to collect data. The data were analyzed with the framework of Supply Chain Operations Reference (SCOR) Model and compared against the McLaren’s five levels of SCI characteristics. The study has identified six typologies of supply chains, which are practiced by large and medium-scale firms. Out of the six typologies, supply chain-5, formed by vertical expansion of firms, is dominantly practiced by many of the firms. This supply chain doesn’t satisfy any of the higher levels of McLaren’s SCI characteristics (Level-III, Level-IV, and Level-V) since there is a lack of horizontal integration among firms by outsourcing non-core activities. The output of this study can help to shed light on the nature of supply chains in developing countries while moving from raw material supplier to producer of value-added products. In the end, further study is needed to study the complete supply chain including raw material and input suppliers in order to understand its effect on firm’s overall performance.