INFLUENCE OF THIRD-PARTY LOGISTICS ON PERFORMANCE OF CEMENT MANUFACTURING FIRMS IN KENYA

Abstract

Organizations in the modern business world are increasingly making use of third-party logistics providers to outsource logistics functions that are not core activities. These third-party companies have specialized in logistics and often perform transportation and Warehousing Activities services with superior outcomes at relatively lower costs. However, before choosing whether to use them, it is prudent for contracting organizations to understand what they gain from engaging in this kind of set-up. As such, this study sought to determine the influence of Third-Party Logistics outsourcing on the performance of cement manufacturing firms in Kenya. To achieve this, the study assessed transport management, distribution management, Warehousing management, and inventory management as the key four variables on the performance of the cement manufacturing firms. The study used a descriptive research design to conduct the study since this technique allows for participants to be observed in a natural and unchanged environment, making it easier for the researcher to collect real-time information. Given that there were only six leading cement manufacturing companies that had adopted the use of third-party logistics, the study involved 103 employees in the respective organizations. All of the respondents were involved through use of questionnaires, which was the main data collection tool. Data obtained was analysed with the help of SPSS software and it mainly involved an analysis of the demographic characteristics which were presented in tables and graphs. A regression analysis was fitted to determine the effect of the identified demographic statistics. The results obtained thereof were used to make conclusions about the influence of third-party logistics on the performance of cement manufacturing companies. In conclusion, four main factors were mentioned as the rationale for outsourcing logistics services to 3PL providers. Like in many other studies, cutting down costs was cited as the most important reason for 3PL followed by operational flexibility which entails, among other things, other justifications mentioned by respondents were saving management time so that they could focus in core activities and spreading logistics/supply chain risks.