Effect of logistics Outsourcing on the Performance of Dairy Processing Firms in Kenya
Abstract
The concept of logistics outsourcing has become increasingly popular in the dairy industry in an attempt to reduce operational costs amongst other benefits that accrue. The objective of the study was to determine the effect of logistics outsourcing on the performance of dairy processors in Kenya. The population of study in this research was 28 dairy processors in Kenya as per KDB (2017) and the study was a census survey of all these firms. The study used primary data which was collected through a structured questionnaire from logistics and operations managers or their equivalents. The response rate was 89.3%. Data were analyzed using Statistical Package for Social Sciences (SPSS), and descriptive statistics were generated with the main analysis tools being frequencies, mean and standard deviation to achieve the first objective. Regression analysis was done to achieve the second objective. The results established that the concept of logistics outsourcing has not been fully adopted. The firms opted to outsource services like warehouse management only during high seasons. However, the study established that firms outsource logistics operations to reduce costs such as the cost of vehicle acquisitions and maintenance, fuel costs, and risk cost amongst others. The study also established a high correlation between logistics outsourcing and a firm's performance. Hence, the researchers concluded that logistics outsourcing can enhance a firm's performance if fully adopted. The study recommended that dairy processing firms should fully adopt an outsourcing strategy to cut costs on non-core activities in their logistics functions.
Keywords: Logistics outsourcing, transport management, inventory management, warehouse management, information management, distribution management and firm performance.
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