Sunday, June 16, 2024
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The Impact of Organizational Capacity and Logistics on the Development of Nations

Organizational capabilities and logistics development are some of the key development priorities for countries across the world. They are equally relevant for industrialized and emerging countries. Organizational capabilities include a diversity of instruments, approaches, resources, and models, from leadership to quality improvement and lean manufacturing. Logistics development entails the presence of a robust logistics infrastructure, which renders the provision and movement of diverse resources as effective, timely, and affordable. At different times, and at different levels, countries of the world invested in developing, sustaining, and enhancing their logistics systems. However, the study and empirical knowledge of national logistics systems are quite limited. It is possible to assume that organizations that are capable of handling their leadership priorities and the presence of a rigorous logistics infrastructure create a competitive and thriving climate, which allows countries to meet their economic goals and outperform their rivals in the global marketplace.

What does it mean to have high levels of organizational capability and well-developed logistics at a national scale? This question does not have a single answer. “At the micro level, a logistics system is defined as a system of technical and organizational means and people necessary for the flow of goods and accompanying information, which is specifically organized and integrated within a given business area” (Banomyong et al., 2015, p. 24). That is, a national logistics system is a complex network of organizational capabilities, channels, and communication processes, which should allow diverse national stakeholders (i.e., companies, government entities, citizens, etc.) to interact and meet their product, service, and information needs. However, unlike business logistics where resources supply and procurement occur to generate and maintain profitability, national logistics systems aim to create opportunities for business and non-business users to address their needs and ameliorate their concerns. A national logistics system involves more sophisticated and global considerations, as compared to the logistics approaches embraced by a single business entity. In many respects, these global approaches reinforce the existing and potential organizational capabilities, individually and nationwide.

Organizational capabilities and logistics systems are integrally related. Businesses and government organizations cannot promote their capabilities without relying on robust logistics, and vice versa. According to McKinsey & Company (2010), more than 60 percent of businesses acknowledge the importance of building and advancing their capabilities. The latter is usually defined as anything that a business or government organization can do better than others or do it effectively to produce and sustain a competitive advantage (McKinsey & Company, 2010). Organizational capabilities can take a variety of forms, from effective leadership to excellent quality improvement systems. These capabilities apply equally well in business and public administration contexts. Both logistics and organizational capabilities have profound implications for national development: they promote country competitiveness and provide an impetus for pursuing ambitious quality, organizational, security, and peace goals.

Ethiopia has recently developed a formal national logistics strategy, which explains the way it plans to handle its logistics issues and the effects of these management processes on the country’s growth. The national logistics system includes transportation paths, product and service supply chains, and communication networks (United Nations Development Program Ethiopia, 2017). For instance, railways and airports encourage businesses and government organizations to obtain products and services that facilitate effective maintenance of public infrastructure while ensuring that private companies have easy access to resources that preserve their competitiveness in the long run.

Logistics capacity development should be among the top priorities for Ethiopia. Ethiopia is particularly vulnerable to the risks of natural disasters like drought. Logistics and organizational capability positively influence the country’s efforts to prevent and adequately respond to drought or other national catastrophes, providing transportation, product and service, and communication resources that are needed to minimize the losses and facilitate post-disaster recovery. These logistics systems further encourage organizations and public service agencies to work side by side in the most challenging situations (World Food Program, 2017). Against the background of improved infrastructure, organizations in the public and private sectors enhance their capability and competitiveness; their revenues and profits create a strong competitive advantage for countries like Ethiopia.

Logistics systems and organizational capability create a cluster of efforts and processes, which drive countries’ competitiveness. Effective logistics guarantee the presence of effective transportation, reliable storage systems and networks for moving goods and services. These elements, independently and together, foster a country’s competitive advantage. Countries with effective logistics systems and capable organizations are in a better position than countries without such systems to improve their socioeconomic well-being. Effective logistics removes barriers to value creation. It reduces the time and costs needed to produce goods, procure services, link citizens to public organizations at times of need, and so on. Capable organizations grow up with a new, logistics-oriented consciousness, knowing that they can access the services and networks required to promote their competitiveness. It is a win-win situation, like any investments in logistics at the national level quickly pay off. These arguments justify the necessity for developing countries like Ethiopia to promote effective logistics and encourage businesses to use logistic resources for capability development and sustainability.

Ed.’s Note: Samuel Alemu, Esq is a partner at the ILBSG, LLP. He is a graduate of Harvard Law School, University of Wisconsin-Madison Law School, and Addis Ababa University. Samuel has been admitted to the bar associations of New York State, United States Tax Court, and the United States Court of International Trade. The writer can be reached at [email protected].Samuel’s twitter handle is @salemu 

Contributed by Samuel Alemu, Esq.

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