CHAPTER ONE

INTRODUCTION

This chapter is divided into the following subsections; background of the study, statement of the problem, research questions, objectives, hypotheses, scope of the study, significance of the study, organisation of the study and definition of key terms.

1.1 Research context

Traditionally, distribution focused on products at the plant and tried to find low-cost solution to get them to customers. According to Kotler (2005), distribution addresses not only the problem of outbound distribution moving products from the factory to the customers but also the problem of inbound distribution among products from suppliers to the factory. It involves the management of the entire supply chain value added flows from suppliers to final users. Distribution refers to the activities used to move finished goods from manufacturers to final consumers including order processing, warehousing, material handling and inventory control (Michael, 2003).

Distribution is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer. Distribution is part of business management and has six major functions: transportation, storage and deposit, assembling and processing, material handling, packaging and wrapping, and information (Amara, 2012). Distribution functions are annexed to physical distribution facilities such as terminal, distribution center, warehouse, and so, on the other hand in the enterprise logistics is emphasized that it is centered in searching and achieving the best present and future satisfaction of the final costumer. It also includes the socio-environmental and ethic-legal aspects, the planning, execution and control of all related activities with the procurement, flow, warehousing and maintenance of materials, products and even services. From the raw material source, including costumer through inverse logistics, to the sale point of the finished product.

Recently, distribution has been extended and has found a broader concept under title Supply Chain Management. Supply chain management is commenced before distribution and tries to supply proper inputs (primary appliances, combined components and capital equipment) and to convert them into final outcomes efficiently (Bowersox et al., 2007). One of the dominant specifications of supply chain management is making distinction and coordination between internal and external actions. For example, by many scholars, supply chain management has been introduced as a management method for business and internal and external relations with suppliers. The research literature shows that the most successful producers have connected their internal processes with external suppliers (Gualaudris and Kalschmidt, 2014).

Enterprise performance is external efficacy measures in an organization in three general areas; financial performance (profit, asset return, investment return); market and sale performance, market share and equity return (total return, equity, economic value added) (Lynch et al., 2010). Unfortunately, supply chain perspective understands market as a destination. Firstly, a company must examine needs of its goal market. Then, it can increase efficiency by designing supply chain backward. This modern perspective is the core of modern logistics systems and examines supply chain similar to demand chain. The initial point of designing a logistics system is what customers need it and what competitors supply (Mentzer and Konrad, 2017).

Distributing enterprises should now consider the implications for the overall supply chain when making decisions related to their organization’s manufacturing, purchasing, selling, and logistics processes. Those processes are integrated and coordinated throughout the supply chain to better serve the ultimate customers (Plank et al., 2009). It has become critically important to measure the performance at the supply chain level as well as organizational performance.  These stronger relationships result in improved performance of supply chain related functions such as logistics, purchasing and selling. In this particular case, a supply chain focus results in improved logistics performance, which in turn led to improved organizational performance. While organizational managers will likely still be evaluated on organization-level performance metrics, the route to enhancing organizational performance may well be through supply chain performance in the future. In short, global optimization trumps local optimization (Prathap and Mittal, 2010).

In Indonesian, Small and Medium Size Enterprises (SMEs) as in other parts of the globe, were hindered by various obstacles. Some of the problems were related to the internal factors, such as marketing and promotion, technology, and human capital (Manginsela, 2005; Nurul, 2008; Tulus, 2009); and some others are external in nature, like capital market and legal issues (Nurul, 2008). Nurul (2008), found that innovation in certain distribution channel functions, mainly assortment and transportation coordination enhanced the effectiveness of distribution channel, which ultimately improved the performance export-oriented SMEs. This finding provides some implications in several aspects. Theoretically, it is supportive that innovation in distribution channel is important to improve distribution channel performance (effectiveness), which immediately enhances firm performance.

In an African country like Uganda, Odera (2012) carried out a survey on the enterprise Rem Distributors and concluded that, Rem Distributors carried out physical distribution and offered services such as warehousing, transportation, order processing, inventory control customer service, packaging and material handling (Odera, 2012). These services directly affect customer satisfaction and hence company’s performance McGraw (2005).

In Cameroon, Group FOKOU is one of the largest companies operating in mass distribution, services and industry. It has 34 stores and five supermarkets spread across the national triangle. This distribution is divided into eight major regions. FOKOU Group is present in distribution through FOBERD Angola, FOBERD Congo, FOBERD Gabon, FOBERDRCA and FOBERD Tchad. FOKOU sells construction material, tiles, marble and food products. The industrial sector is the main supplier of products and goods sold by the distribution network. The ingenuity of its staff has made it possible to set up commercial strategy known under the name “interactive FOKOU” which has considerably revolutionized the services offered to customers in the sense that the latter have the goods collected at another agency of his choice free of charge or any other form of process, thereby helping to reduce costly travel for customers by making it easier for them. With the worldwide recognition of the positive effect of distribution on enterprise performance, it is important to investigate if Group FOKOU is actually making good use of distribution and how it has affected its performance.

1.2 Statement problem

Distribution firms have always researched for methods to minimize the cost and maximize flow of shipping each unit of commodity to and fro across the supply and demand nodes while ensuring that customers are satisfied. Distribution is an activity that has always been carried out by many enterprises so as to meet customers demand in time, with the right quantity, at the right place and with the right quality so as to increase its performance.

Despite the efforts put in place by Groupe Fokou Douala branch, its performance has greatly been affected negatively due to the outbreak of Covid-19 which makes its distribution channel to be disrupted and meeting customers’ needs in some parts of Bamenda is difficult if not impossible. Some workers have been relieved off their duties who could carry out the activity on time. So it is important to investigate the effect of distribution on enterprise performance: the case of Group Fokou, Bamenda branch.

1.3 Research questions

            The study made use of main and specific research questions. These questions are as follows:

1.3.1 Main question

What is the effect of distribution on enterprise performance at Group Fokou, Bamenda branch?

1.3.2 Specific questions

• What effect does transportation have on enterprise performance at Group Fokou, Bamenda branch?
• To what extend does order processing affect enterprise performance at Group Fokou, Bamenda branch?
• How does material handling affect enterprise performance at Group Fokou, Bamenda branch?

1.4 Research objectives

The study made use of main and specific research objectives. These questions are as follows:

1.4.1 Main objective

To investigate the effect of distribution on enterprise performance at Group Fokou, Bamenda branch.

1.4.2 Specific objectives

• To determine transportation effect on enterprise performance at Group Fokou, Bamenda branch.
• To evaluate the extent to which order processing affect enterprise performance at Group Fokou, Bamenda branch.
• To investigate the effect of material handling on enterprise performance at Group Fokou, Bamenda branch.