| dc.description.abstract | Much of the previous research into the international outsourcing manufacturers has
been done, however, not much study has focused on local challenges of international
outsourcing by manufacturers in Kenya. This study therefore sought to fill the
existing research gap by carrying out a survey study on the challenges faced by
Kenyan manufacture firms while outsourcing inputs from international Low Cost
Country markets. The main purpose of the study was to investigate the underlying
challenges and identify opportunities available for Kenyan manufacturers by
outsourcing manufacturing inputs. This research was conducted through a survey
study. The target population of this study was the management staff working for
manufacturing firms who overseeing supply chain and sourcing functions. The study
concludes that manufacturing firms in Kenya seek to increases their profits by
decreasing the costs of their input through outsourcing from low cost countries thus
improving their ability to compete in the global economy. Several manufacturing
firms in Kenya are driven towards outsourcing from low cost countries in order to
reduce their overall cost of manufactured products in order to make it more
affordable and competitive to its target customers. The decision to source material and
components domestically or from a low cost country is a complex one. While the
direct and indirect product costs represent one major factor, there are many other
factors that must be considered and weighed appropriately. Products and components
that have extended times between manufacturing changeovers are ideal for low cost
country sourcing. A counterexample would be the life cycle for an electronics
component, which is typically quite short, and would generally be locally
sourced.Savings generally result from low labour and infrastructure costs, as well as
capitalizing on the growing and highly competitive marketplaces for subcomponents
in these regions. And those savings present compelling reasons for companies to
migrate manufacturing operations to low-cost areas. Low labour costs is a primary
driver of the substantial savings companies can experience. The daily wage costs for
unskilled labour in China and Vietnam for example, are lower than of Kenya. Labour
is only one element in the total cost of a component’s price and companies have to
determine the total cost, including manufactured price plus shipping costs, customs
charges and other expenses involved with moving a component from the supply
market to Kenya where it is incorporated in the final product. Successful Low Cost
Sourcing strategy is not a straightforward proposition. It involves a careful balancing
of often competing interests within a company and demands great flexibility. The
decision to source material and components domestically or from a low cost country
is a complex one. While the direct and indirect product costs represent one major
factor, there are many other factors that must be considered and weighed
appropriately. Products and components that have extended times between
manufacturing changeovers are ideal for low cost country sourcing.A robust process
that integrates the low cost country objectives and mitigates the associated risks is
necessary to optimize the value stream. The study further concludes that many of
these manufacturing who proceed with this outsourcing decision face many
challenges related to execution of the outsourcing strategy, key among them being the
main challenge of lead time, unreliable logistic providers, government regulations,
high tariff barriers, poor Infrastructure, and currency volatility. The global economy is
ever changing and the supply management is a key constituent which Kenyan
manufacturing firms should maximize the benefits it provides. | en |
