Service Outsourcing And Supply Chain Performance Of Cement Manufacturing Firms In Kenya

Abstract

Service outsourcing is a concept that has been widely adopted by many manufacturing firms in today‟s world. Globalization has been the main reason of outsourcing. Companies have therefore worked tirelessly in order to find out new ways of running their business without losing track of their main reasons for existence. This has therefore prompted them to outsource services and this includes having their non-core functions being performed by third parties. Through effective service outsourcing, cement manufacturing firms are able to reduce costs that are related with building internal competencies, increased quality, and improved response to the changing marketing demands, ability to concentrate on their core functions and the effectiveness and efficiency in the supply chains. Cement manufacturing firms outsource their non-core functions which include:- security guard, laundry, cleaning, catering, transport and logistics, information technology and customer care services. This study therefore sought to determine the relationship between service outsourcing and supply chain performance of cement manufacturing firms in Kenya. The research used a descriptive and cross sectional research design. Primary data was collected using questionnaires and administered to 53 heads of department in the cement manufacturing firms in Kenya. The data was analyzed using descriptive, regression and correlation analysis. The study established that cement manufacturing firms outsourced services in order to reduce their operating costs, concentrate on their main functions, increase quality and to improve response to the changing market demands. The study concludes that cement manufacturing firms outsource services and accrue various benefits including ability to concentrate on their main functions, risk sharing, cost reduction and increase in quality. The challenges in the study included lack of client focus, fear of exposing confidential data and lack of management support. The study then recommends that performance contracting for the case of service providers and a method of measuring supply chain performance be devised.