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CM has gradually become an area of interest to academics and business management practitioners alike (Chen and Pauraj, 2004). It offers many insights on how industries as well as the agricultural sector are organised. It draws on aspects of marketing, economics, logistics, organisational behaviour and management. CM presents a framework from the literature on economics, which may be useful for those interested in understanding and in exploring the concept of SCM. It further describes the origins and development of

transaction cost analysis and explains the key concepts of the framework. It discusses the potential effects of transaction costs on vertical co-ordination within an industry and hence SCM. Finally, CM suggests methods for empirical transaction cost analysis, providing recommendations for closer co-operation between researchers and business managers. Storey et al. (2006) view SCM as both an emergent field of practice and an emerging academic domain. Although neither perspective is fully mature, each has considerable promise. The future progress of each can be enhanced and, certainly, ultimately both depend upon each other.

According to Van Dalen (1997), chain theory deployment is an autonomous scientific discipline within the collection of scientific approaches to the chain phenomenon. This study indicates how chain science is similar to other sciences, with its own set of theoretical propositions, its own domain and its own methodology. Although chain science is not a mature branch of science, its autonomous position will stimulate the scientific development of chains thereby supplying business life with effective and innovative concepts (Beers et al. 1997). A number of fields such as purchasing and supply, logistics and transport, operations management, marketing, organisation theory and organisation behaviour, management information systems as well as strategic management contributed to the development of SCM literature. As Chen and Pauraj (2004) remark, research reveals a great deal of progress towards understanding the essence of SCM.

Researchers have directed their attention to the supplier-buyer relationship to identify the numerous theoretical determinants of SCM. The supplier-buyer link is of paramount importance to the effective management of the supply chain (Andersen et al. 1994). The relationship aspect of this link is a widely recognised area that has generated abundant scholarly works based on an extensive review of literature. This framework incorporates some key aspects of the supplier-buyer relationship such as base reduction, communication, cross-functional teams and supplier involvement. Otto and Katzab (2003) observe that there is a puzzling diversity of interpretations and understandings of SCM each with its own perspectives and leading to a specific goal. SCM(SCM) has been one of the most powerful operations paradigms for improving organisational competitiveness both in manufacturing and services. Gunasekaran and Chung (2004) believe that many companies and other business organisations such as those in agriculture are working together based on shared values and a common goal of doing business to exploit a particular business opportunity. Specifying each partner’s business model, their organisational and technical co-ordination and the appropriate criteria for agreements between them, can solve the problem of combining the different competencies of the partners. Table 2.1 summarises proposed different metrics referring to the main disciplines of SCM.

Table72.1: Perspective to Derive the Goals of SCM

Perspective Purpose of SCM Focal Area of Improvement

System Dynamics Managing trade-offs along the complete supply chain Order management

Logistics Integrating generic processes sequentially, vertically and

horizontally Integration of processes

Marketing Segmentation of products and markets and combine both using the

right distribution channel Fit between products, channel andcustomer

Organisation Determining and mastering the need to plan, budget, co-ordinate,

manage and direct relationship Intra-enterprise segmentation

Strategy Merging competencies and re-locating into the deepest segments of

the profit pool Ability to partner, positioning in thechain Source: Otto and Katzab (2003)

A number of fields such as purchasing and supply, logistics and transport, operations management, marketing, organisational behaviour and theory, management information systems as well as strategic management have contributed to the development and propagation of SCM theory. Chen and Pauraj (2004) assert that there is substantial progress towards understanding the essence of SCM. However, the new orthodox of SCM is in danger of collapsing into a discredited management whim unless a reliable conceptual base is developed. Accoring to Chen and Pauraj (2004), this situation emanates from the fact that, while research on various SCM relationships has been growing, there has not been a comprehensive approach to construct development and measurement. This could be largely attributed to the fact that astronomical efforts are required to undertake the development and validation of constructs and measures of SCM. Conversely, Hobbs (1996) and Katzab (2003) have highlighted the pressing need for clearly defined constructs and conceptual frameworks to advance the field of SCM.

Hobbs (1996) argues that in undertaking any research and analysis like this one on CM, it is helpful to have a framework that enables making of predictions about the likely outcomes of different business strategies and public policy initiatives. It should help observe business behaviour to be evaluated and, therefore, explain better the motivation for firms’ behaviour and the consequences for efficiency within a supply chain. Thus we can use the developed conceptual framework to evaluate behaviour in agricultural businesses in Tanzania and motivate farmers accordingly. This research work proposes a theoretical framework for the study of SCM, which is drawn from economics literature. In identifying the numerous theoretical determinants of SCM, researchers have directed their attention to the supplier-buyer relationship.

Fostering and maintaining a superior relationship between the suppliers and buyers is a daunting task.This is probably why researchers and academicians are tirelessly working on SCM area, as is the case for this study.

Various forces play critical roles in making this a challenging business practice. The proposed framework includes only some of the key driving forces that have been identified from diverse SCM literature. Recognising this, the framework includes constructs such as competitive priorities, top management support, and strategic marketing in order to examine their effect on the effective management of the supply chain. Considering that a supply chain does not focus on only single firm according to Chen and Paulraj (2004), the framework adopts a theoretical definition of structure that focuses on the linked system of numerous organisations. Here one realises that the SCM construct has a supply network structure that reflects a decentralised, horizontal and non-power based structural link among the supply chain members.

However, with all the positive statements about SCM, researchers have come up with the negative side of it. Bello et al. (2004) have the opinion that the adoption of sophisticated SCM by trading partners in agribusiness in the global distribution channels is often limited by the institutional context of the international transaction. In particular, the regulatory, normative and cultural-cognitive elements of institutional environments around the world can enhance or inhibit the ability of trading partners to expertise the contractual, ownership and social element of institutional arrangements required by agribusiness. Since supply chain in agribusiness is often a costly activity, firms may be reluctant to participate in agribusiness unless new institutional arrangements are made to provide adequate safeguards and guarantees. Thus, in order to explore more about this problem, these researchers are proposing that a special conceptual model should be developed to explain the role of institutions in the successful employment of supply chain in agribusiness in the global marketing channels. Chen and Paulraj (2004) share the same opinion with Ellram and Carr (1994), Freeman and Cavinato (1990), Gadde and Hakansson (1994) that SCM is an integrative operation. Integration always occurs in terms of material supply, technology application and information flow.

SCM encompasses all three links identified in the framework. In this framework, a single construct of logistics integration is included to study the integration of information and materials along the supply chain. Furthermore, it is a well established that satisfying customer needs is the central purpose of any business (Doyer, 2002). His framework reflects the notion that customer focus in terms of satisfying needs and providing timely service is a key role of SCM. He equally indicates that SCM seeks to improve performance through better use of internal and external capabilities in order to create a seamlessly coordinated supply chain, thus elevating inter-organisational competition. Therefore, in the context of SCM, performance is no longer affected by a single firm rather the performance of all members involved contributes to the overall performance of the

entire supply chain. In this view, the SCM framework includes both supplier as well as buyer’s performance. In particular, both operational (non-financial aspects) and financial indicators are considered.

Regarding the application of SCM by the top management of the organisation, Chen and Paulraj (2004) remark that the important role of top management has been greatly emphasised in the supply chain literature. They further observe that top-level managers have a better understanding of the needs of SCM because they are the most overseers of the firms’ strategic imperatives to remain competitive in the market place. In addition, they note that top management is responsible in committing resources that will support suppliers. Therefore, farmers are the suppliers who are willing to be long-term partners of the organisations through suppliers’ development.

However, some researchers have a different stance about the application of SCM in agribusiness. Bello et al. (2004) consider the adoption of sophisticated SCM in agribusiness as often limited by the institutional context of transaction. Specifically, the regulatory, normative and cultural-cognitive elements of institutional environments can enhance or inhibit the ability of agribusiness partners in including all the essential elements required by agribusiness. Since supply chain in agribusiness is often a costly activity, new investments and activity sets and firms may be reluctant to participate in agribusiness unless new institutional arrangements are made so as to provide adequate safeguards. Thus, as defined by the Supply Chain Council (2002), a supply chain encompasses every effort involved in producing and delivering a final product from the supplier’s supplier to the customer’s customer. It is from this point of view that SCMM, though commendable, may not be entirely reliable in every aspect.