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Logistic Challenges
BS Accounting Tech (BSAT111)
Occidental Mindoro State College
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Resource-Based Analysis of Logistics Challenges of Cooperatives in Occidental Mindoro Philippines: A Case Study Marilou D. Domingo 1 , Rommel A. Avillanoza 1 , Angela M. Galisanao 2 1- School of Accountancy; 2-College of Business, Administration, and Management ABSTRACT This study examines the logistics challenges faced by cooperatives through the lens of Resource- Based Theory (RBT). Cooperatives, as key drivers of economic development in rural areas, rely heavily on effective logistics management to sustain their operations and achieve competitive advantage. However, these organizations often encounter significant obstacles that hinder their growth and efficiency. This research identifies and categorizes the issues within the logistics processes of procurement, transportation and distribution, production, and warehousing using qualitative analysis. The findings reveal that limitations in leadership, human resources, physical assets, financial resources, partnerships, and process efficiency, are critical factors contributing to logistical inefficiencies. By applying RBT, the study underscores the importance of leveraging internal resources and capabilities to overcome these challenges. The insights gained provide cooperatives with a framework for enhancing their logistics performance, thereby improving their overall competitiveness and sustainability. This research contributes to the growing body of knowledge on cooperative management and offers practical recommendations for addressing logistical issues in resource-constrained environments. Keywords: logistics, cooperatives, issues, Resource Based theory, SAMARICA SDG: SDG 1: No Poverty, SDG 2: Zero Hunger, SDG 8: Decent Work and Economic Growth, SDG 17: Partnerships for the Goals INTRODUCTION Logistics composes of the series of challenges and organizations that supplies are in motion through on their passage from preliminary contractors to end users (Helmold &Terry, 2021). It is a critical component of modern business operations, encompassing the management of goods, information, and resources from origin to consumption (Ceyhun & Keser, 2020). It involves various functions, including inventory management, transportation, warehousing, and human resources, with the goal of optimizing the supply chain (Vasanthy & Chandramohan, 2023). Logistics plays a significant role in macroeconomic development, representing approximately 10% of GNP (Savy, 2016). The field emerged in the 1950s due to increasing globalization and supply chain complexity, leading to the development of specialized logisticians (Ceyhun & Keser, 2020). Beyond cost optimization, logistics is fundamentally about gaining a competitive advantage and creating customer value (Kasarda, 2016). Effective logistics management ensures timely delivery of products to customers at the lowest possible cost, integrating various activities
to achieve this goal (Vasanthy & Chandramohan, 2023). As a result, logistics has become a crucial political and economic issue in modern society (Savy, 2016). Logistics plays a crucial role in enhancing the functionality and efficiency of cooperatives. Studies have shown that logistics knowledge and operations significantly impact cooperative associations' performance, especially in the coffee industry in Ethiopia (Kant et al., 2022). These studies emphasize the importance of leadership in logistics operations and the need for improved networking among cooperative members. In Ukraine, logistics is recognized as a factor in increasing the role of cooperatives in the agro-industrial complex (Мищук, 2013). For food cooperatives, which are gaining popularity due to consumer preferences for healthy and local food, collaborative logistics activities can lead to more efficient and sustainable operations. A decision support system developed for Austrian food cooperatives demonstrated that collaboration in logistics can substantially reduce travel distances and vehicle requirements, particularly for infrequent and small orders, although it may impact food quality due to longer transit times (Fikar & Leithner, 2020). The study highlights the challenges encountered by the cooperatives in logistics. Challenges in the logistics of cooperatives include potential losses and inefficient processes, necessitating innovative solutions (Kasarauskaitė & Vienažindienė, 2021). De Souza et al., (2013) mentioned that effective logistics management of cooperatives is crucial for customer satisfaction and organizational outcomes. For cooperatives in Ethiopia, logistics knowledge operations and supply chain management significantly impact cooperative functionality, with leadership and awareness being key factors (Kant et al., 2022; Shashi Kant et al., 2022). These studies emphasize the need for improved logistics orientation and collaboration among cooperative members and underscore the critical role of addressing logistics challenges in enhancing the overall performance and efficiency of cooperatives. Research on challenges in logistics of cooperatives is limited, but partnerships between cooperatives and trading companies have been explored in developing countries like Ethiopia. These partnerships aim to enhance product quality by building capabilities at the farmer and primary cooperative level. Challenges faced by cooperatives include poor governance, a lack of skills and resources, and difficulties in maintaining product quality while being inclusive in value chains. Contract farming arrangements are being used to provide better inputs and technical assistance to cooperative members. However, more research is needed to understand the sustainability and fairness of these arrangements (Jos et al., 2017; Stoelzle & Wildhaber,2019). The resource-based theory (RBT) has emerged as a valuable framework for analyzing logistics capabilities and their role in creating competitive advantage (Gönül Kaya Özbağ & Osman Arslan, 2020; Sergio Olavarrieta & Alexander E. Ellinger, 1997). This approach focuses on how firms bundle specific resources into valuable, rare, and difficult-to-imitate capabilities that can lead to superior performance (Gönül Kaya Özbağ & Osman Arslan, 2020). RBT has been applied to strategic logistics research, supporting the proposition that distinctive logistics capabilities can be a source of sustainable competitive advantage (Sergio Olavarrieta & Alexander E. Ellinger, 1997). The theory has also been used to analyze the competencies of small third-party logistics firms (Fang-Xiao Hu & Qinghui Yu, 2012). In practice, companies in the logistics sector should develop and improve strategic resources that contribute to competitive priorities important to customers (Cláudia Fabiana Gohr & Yuri Laio Teixeira Veras Silva, 2015).
Financial Resources High maintenance costs, high fuel expenses, limited financial resources, delayed payments, no standard pricing, bad debts, “under the table” transactions. Partnerships Dependence on a few big clients, issues with government grants and payments. Process Efficiency Lack of clear policies, non-adherence to established procedures and policies, Lack of QR code scanners, insufficient technology knowledge, and outdated classification equipment. Production Leadership High turnover, insufficient manpower, lack of production policies, halted production. Physical Resources Underutilized equipment and facilities, machine troubleshooting, halted production. Financial Resources Lack of funds, high operational costs, costly diesel prices. Partnerships Delays in supplier deliveries, insufficient and defective supplies from partners. Process Efficiency Prioritization of quantity over quality, no operational manuals, Outdated technology and equipment, lack of standard operations procedures. Warehousing Leadership Underutilized warehouse capacity, location susceptible to flooding, limited local facilities. Physical Resources Susceptibility to product damage from water and mold, lack of facilities. Partnerships Insufficient warehouse facilities outside of Occidental Mindoro. Financial Resources High maintenance costs, inaccurate inventory records, unclear policies. Physical Resources Limited access to standard packaging materials, distant suppliers. DISCUSSION Role of Logistics in Cooperatives Logistics is a vital component in the success and sustainability of cooperatives, particularly in ensuring efficient movement of goods and services from production to consumption. For cooperatives in the SAMARICA area, logistics plays a crucial role in efficient
procurement, transportation, production optimization, warehouse and storage, order fulfillment and delivery, returns management, inventory management, and collaboration with suppliers, customers, and other stakeholders. Efficient procurement logistics ensures timely acquisition of raw materials and inputs, which is essential for maintaining continuous production cycles. Efficient transportation logistics facilitate the movement of goods between production sites, warehouses, and markets, overcoming barriers such as road accessibility and high transportation costs. Production optimization supports the production process by ensuring materials and products are available where and when they are needed, minimizing downtime, meeting targets, and responding quickly to market demands. Warehousing and storage are also vital aspects of logistics, ensuring optimal conditions for maintaining quality and minimizing waste. Order fulfillment and delivery involve managing inventory levels, processing orders efficiently, and coordinating deliveries to meet customer expectations. Returns management manages the reverse flow of goods, reducing waste, recovering value, and maintaining good customer relationships. Inventory management ensures that cooperatives maintain the right levels of inventory to meet demand without overstocking, reducing costs, and avoiding stockouts or excess inventory. Collaboration and partnerships with suppliers, customers, and other stakeholders are essential for cooperatives to work together effectively, leading to better resource utilization, cost savings, and improved service levels. In summary, logistics is the backbone of cooperative operations, supporting every stage of the supply chain from procurement to delivery, ensuring cooperatives can operate efficiently, meet their obligations to members and customers, and remain competitive in the market Procurement challenges in cooperatives Procurement in the cooperative sectors faces numerous challenges which can significantly impact their efficiency, cost-effectiveness, and overall success. Key challenges include geographical limitations, such as high logistics costs due to the remote location of cooperatives, limited market reach, and limited supplier options. Insufficient supply of essential materials, such as registered seeds or certified fertilizers, often leads to increased costs and lead times. Supplier reliability issues, such as material specification errors and defective goods, also pose challenges. Consumer cooperative societies, particularly in regions like Yaroslavl, Russia, face issues such as overemphasis on retail trade and underdevelopment of agricultural cooperation and public services (Mayorov, 2024). Cooperatives face significant financial challenges that impact their operations and competitiveness. Limited funds often restrict cooperatives' ability to make timely purchases, leading to delays and prioritization of transactions (Saitone et al., 2018). High operational costs, particularly for electricity, can discourage cooperatives from fully utilizing their facilities (Decena et al., 2021). Cooperatives also face competition from outside companies, further
expenses, significantly impact the overall cost of transportation, straining cooperatives' financial resources (Hamid et al., 2020). Financial constraints prevent cooperatives from investing in new vehicles, leading to cash flow issues and difficulties in managing day-to-day transportation operations. Effective coordination and optimization of transportation systems are crucial for minimizing costs and improving efficiency (Crainic & Laporte, 2016). Logistical coordination is also a challenge, with lack of clear policies and procedures leading to inefficiencies and inconsistencies in transportation and distribution management. Fraud and mismanagement can result in financial losses for cooperatives. Additionally, product damage, regulatory compliance, and fraud pose significant risks to supply chain integrity (Benallou et al., 2023). Finally, cooperatives may need to make unofficial payments to facilitate smooth transportation, adding to operational costs and ethical concerns. Production challenges in cooperatives The production process in a cooperative is characterized by several challenges. High turnover and insufficient manpower, lack of clear production policies, and human resources challenges contribute to these issues. Collaboration issues in transportation and low commitment and human error also contribute to production delays. In Venezuela, cooperative members often lack administrative and technical skills, struggle to compete with capitalist enterprises, and are overly dependent on state institutions (Piñeiro, 2009). These challenges can hinder the efficiency and productivity of cooperative production processes, making it difficult for them to thrive in the market. It is crucial for cooperative members to receive proper training and support in order to overcome these obstacles and achieve success. Furthermore, the cooperatives encountered challenges in connection with underutilized equipment and facilities, machine troubleshooting, financial resource limitations, and partnerships. Insufficient funds and high operational costs make it difficult to maintain and operate production facilities. Also, financial instability, including delayed payments and bad debts, disrupts planning and operations. Implementing cost-effective maintenance strategies and exploring alternative sources of funding could help address some of these challenges. Developing stronger partnerships with suppliers and customers may also help mitigate financial instability and improve overall operational efficiency. Partnership challenges include delays in supplier deliveries, inadequate and defective supplies, and prioritization of quantity over quality. The focus on producing large quantities can compromise products and harm the cooperative's reputation and profitability. The absence of detailed operational manuals leads to inconsistencies and inefficiencies in the production process. Additionally, lack of clear communication among partners can lead to misunderstandings and conflicts, further hindering the partnership's success. It is crucial for partners to establish effective communication channels and protocols to address issues promptly and prevent potential disruptions in operations.
Innovation and technology gaps are also present. The use of outdated technology and equipment hinders efficient and competitive production. The absence of standard operations procedures (SOPs) leads to variability in product quality and production timelines. Implementing standardized operating procedures and investing in training for employees can help improve consistency and efficiency in production processes. Additionally, updating technology and equipment to modern standards can enhance competitiveness and overall product quality. By staying up-to-date with industry trends and continually seeking ways to streamline operations, companies can position themselves as leaders in the market. Warehousing challenges in cooperatives Cooperatives face significant warehousing and storage challenges. Insufficient storage capacity leads to food grain wastage and inadequate protection from pests, moisture, and weather (Journals Iosr et al., 2015). India, for instance, lacks proper storage facilities for its substantial agricultural production, resulting in significant post-harvest losses (M. Raghavalu, 2012). The high cost of land and limited access to finance hinder the establishment of new warehouses (Raghavalu, 2012). Public-private partnerships are suggested as a potential solution to address the large investments required for developing agricultural markets, quality certification, warehouses, and cold storages (M. Shah, 2015). These partnerships can bridge the gap between public and private sector competencies to meet farmers' needs (M. Shah, 2015). In Sub-Saharan Africa, smallholder farmers face similar challenges in storage, transportation, and aggregation of agricultural products, highlighting the global nature of these issues (Gockel & Hampton, 2011). The challenges faced in warehousing and storage include operational-related issues such as underutilized warehouse capacity, a location susceptible to flooding, limited local facilities, and product damage due to inadequate climate control or maintenance. The warehouse's location also poses a risk to stored goods, leading to losses and operational disruptions. Physical resource challenges include a general shortage of adequate warehousing facilities, particularly outside key areas like Occidental Mindoro, which hampers safe and efficient storage, leading to potential delays and increased transportation costs. Partnership challenges arise from the lack of adequate warehouse facilities outside key areas, which can affect the quality and availability of stored goods. These issues highlight the need for improved management and resource allocation to ensure the safety and efficiency of warehouse operations. Additionally, the lack of proper infrastructure in remote areas may also impact the timely delivery of goods to customers. Implementing strategic partnerships with local businesses or government agencies could help alleviate some of these challenges and improve overall supply chain efficiency. Furthermore, the lack of proper infrastructure in remote areas can also hinder the timely delivery of goods to those in need. It is crucial for organizations to address these challenges through strategic planning and investment in infrastructure development.
fostering collaboration across the supply chain. Strengthening cooperative governance through clear guidelines on financial management, procurement policies, and accountability mechanisms will ensure cooperatives manage their logistics more effectively and avoid financial mismanagement, leading to more sustainable operations. Incentives for collaboration and innovation are also necessary, as they foster resource- sharing among cooperatives, reduce logistical costs, and improve overall operational efficiency. By implementing these policy recommendations, the government can play a crucial role in supporting cooperatives, improving their logistics capabilities, and ensuring their continued contribution to rural economic development in the Philippines. REFERENCES Agyei, E., Koomson, E., & Akrasi, E. (2021). The Role of Procurement in Quality Management of Ghana COCOBOD, Ghana. Barton, D., Boland, M., Chaddad, F., & Eldon, E. (2011). Current Challenges in Financing Agricultural Cooperatives. Choices. The Magazine of Food, Farm, and Resources Issues, 26, 1-5. Ceyhun, G. C. & Keser, H. Y. (2020). Introduction to International Transportation and Logistics. In G. Ceyhun (Ed.), Handbook of Research on the Applications of International Transportation and Logistics for World Trade (pp. 1-17). IGI Global. doi/10.4018/978-1-7998-1397- 2 Decena, A., Sunga, M., & Fontanilla, H. (2021). Business Practices and Performance of Multi- Purpose Cooperatives in San Jose, Occidental Mindoro. SSRN Electronic Journal. doi/10.2139/ssrn. Gohr, C., & Silva, Y. (2015). Gerenciando o relacionamento entre recursos estratégicos e prioridades competitivas segundo a visão baseada em recursos. Revista Produção Online, 15, 734-757. doi/10.14488/1676-1901.V15I2.1939. Hamid, Z., Msuku, G., & Mehdi, M. (2020). Transportation Challenges in Fertilizer Supply Chain in Malawi. International Journal of Supply Chain Management, 9, 356-365. Helmold, M., & Terry, B. (2021).Operations and Supply Knowledge4: Industry Insights, Area Experiments and Best Operations. Springer Nature. Hu, F., & Yu, Q. (2012). Using the resource based view theory to analysis logistics competencies of a small third party logistics firm. Jos, B., Gumataw, K. (2017) "Cooperatives, partnerships, and the challenges of quality upgrading: A. case study from Ethiopia. Journal of Cooperative Organization and Management, 5
Kant, D., Belay, B., & Dabaso, A. (2022). Coffee Logistics Operation Knowledge Effect on Cooperative Associations Functionalism in Ethiopia with Mediation of Cybernetics and Local People Knowledge Base. Journal of Production, Operations Management and Economics. doi/10.55529/jpome.31.21. Kasarauskaitė, R., & Vienažindienė, M. (2021). Challenges of Raw Milk Transportation and Possibilities of Their Solutions: A Case of Lithuanian Dairy Cooperatives. doi/10.13165/PSPO-21-26- Kasarda JD. Logistics Is about Competitiveness and More. Logistics. 2017; 1(1):1. doi/10.3390/logistics Olavarrieta, S., & Ellinger, A. (1997). Resource based‐ theory and strategic logistics research. International Journal of Physical Distribution & Logistics Management, 27, 559-587. doi/10.1108/ Mayorov, A. (2024). Main Problems of Procurement Activities of Consumer Cooperative Societies in Yaroslavl Region. Strategies of Sustainable Development: Social, Law and External- economic Aspects. doi/10.31483/r- Özbağ, G. K. & Arslan, O. (2020). A Resource-Based Theory Perspective of Logistics. In G. Ceyhun (Ed.), Handbook of Research on the Applications of International Transportation and Logistics for World Trade (pp. 195-209). IGI Global. doi/10.4018/978-1-7998-1397- 2. Raghavalu, M. (2012). Challenges Faced by Warehouses in Indian Agricultural Marketing. SEDME (Small Enterprises Development, Management & Extension Journal), 39, 51
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Logistic Challenges
Course: BS Accounting Tech (BSAT111)
University: Occidental Mindoro State College
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