Abstract
Most African countries depend on international trade to stabilise their economies. This is the case in South Africa where China and the United States of America (USA) play a significant economic role. The South African economic well-being depends largely upon the Rand/Dollar exchange rate, the international cost of crude oil and the effects of climate change. There are seven major industries sustaining the South African economy: viz., construction, mining, trade, agriculture, transport, electricity, and manufacturing. Of these, this thesis specifically focuses on the supply-chain administration of milled-grain products with specific focus on the farming (agricultural), transport (transportation), manufacturing (milling), and trade (retail) components. These four components are fundamental to the central discussion of this thesis. The available literature revealed that many authors tend to interlink these components, however with no clear explanation of their interrelationships. This research work identified each component’s flow and investigated the relationship and interactions between the components; indeed, the economic and natural correlation is high.
This study contextualises the components of the supply chain system of milled grain products in South Africa and investigates how these are affected by economic and natural parameters namely, the exchange rate between ZAR and USD, the inflation rate, the price of international crude oil, climate change and natural disasters. A review of available literatures revealed that previous works have focused on either two or three components that complement the entire supply management of milled grain products. This research found this approach limiting and therefore expanded the modelling procedures for supply chain to include all four components of farming, transport, mill plant and retail.
The research methodology adhered to the pragmatic research paradigm. The approach enabled the research to frame complex research problems by decomposing them into smaller activity components that were managed systematically. This contributed to the development of conceptual frameworks that specify the relevant parameters and their effects on the system of milled grain supply chains. System dynamic (SD) model was developed to formalise and illustrate the system's four primary components: farming, transportation, mill plant, and retail. This study focused on four grain products that are most consumed in South Africa: rice, maize, samp, and wheat.
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A total of 281 questionnaires were distributed and 22 interviews were conducted to the target population. The results from the quantitative data showed that the mean score for most questions in the questionnaire is more than 0.4, which established a positive reliability of the questions asked. Almost all questions relate to each other which asserted that economic shocks and natural factors impact the total supply chain management of milled grain products. Majority of the respondents (98%) stated that both the economic and natural parameters have a huge impact on them. When running the SD model, results clearly indicated that the impact of economic and natural parameters in the administration of milled grain products is significant. The research indicates that economic and natural parameter impact the four-sub systems that complements the supply chain of milled grain products either positively or negatively. Each of the sub system viz, farming, milling, transportation, and retail were modelled, and results correlated to each component. It is quite clear that each sub model is dependent to one another since they are all controlled by same parameter reactions.
This research contributes to a greater knowledge of the impact of economic and natural parameters on the milled grain supply chain system through the application of the SD model. It provides the theoretical understanding necessary to explain the observed pricing management realities, which contributed to the formation of the scant literature on pricing distortions for milled grains in South Africa. This is a novel study to employ SD modelling to examine the effects of economic and natural characteristics on the supply chain of milled grain products in South Africa. Through SD modelling, the study rises to new insights and practices that devise new and innovative methods of work in the four components namely, farming, retail, transport, and mill plant. By establishing a gap in the use of the SD model, the study induces other researchers to investigate and develop new approaches for SD modelling in the supply chain management.
The SD model demonstrated the interdependent relationships among the components and subcomponents of the supply chain of milled grain products. Changes in the current system are immediately observed when economic or natural parameters are altered. For instance, changes in the ZAR/USD exchange rate or the price of international crude oil are reflected on the cost of grain production. It has been determined that the SD model is a necessary guide for supply chain planning and quality control. By analysing the evolution of the milled grain supply chain over time, supply chain practitioners can make better decisions regarding how to plan the
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capacity of multi-component supply chains in highly uncertain environments. Several recommendations for supply chain practitioners, stakeholders, investors, and government agencies are presented based on the research findings. The recommendations are also applicable to other industries affected by economic and natural factors.
Keywords: Supply chain management, system dynamic model, farming, retail, transport, and mill plant.