Logistics Outsourcing and Performance of Horticultural Firms in Nairobi County

Abstract

The study sought to establish the key logistics practices being outsourced among the horticultural firms in Nairobi County; the relationship between logistics outsourcing and firm operational performance; the enablers of logistics outsourcing and the challenges faced by the horticultural firms when outsourcing logistics services. The researcher administered a total of 78 questionnaires to horticultural firms in Nairobi and obtained 60 filled questionnaires constituting a response rate of 76.9%. The collected questionnaires were inspected for completeness, edited for errors and omission before being coded and keyed into the Statistical Package for Social Sciences (SPSS version 21). Descriptive statistics was used to analyze the data. Measures of central tendency like frequency distribution, mean and standard deviation. The questionnaires contained questions that addressed the objectives of the study. The study established that the key logistics practices outsourced are human resource management practices, packaging practices, information technology services, warehousing practices, transportation practices and inventory management practices. All of them are outsourced to a large extent except human resource management practices which are outsourced to a moderate extent. On the enablers of logistics outsourcing, the study established that the key factors that enable logistics practices outsourcing are improved productivity, focus on core competencies, streamlined operations, innovation and improved service to customers. The study also revealed that challenges are faced to a moderate extent when outsourcing logistics practices. The research findings further indicated that there is a strong and positive relationship (R= 0.721) between logistics outsourcing and operational performance of the horticultural firms. The result of the study also indicated that the value of adjusted R-squared is 0.466. This means that changes in logistics outsourcing accounts for 46.6% of the total variance in operational performance of the horticultural firms in Nairobi. The study established that one of the key challenges faced by the horticultural firms in Nairobi is the possible loss of control through interferences with a firm’s data privacy. The researcher recommended that the firms should sign binding contracts with third parties to prevent interferences with a firm’s data privacy. On the limitations of the study, most of the respondents were reluctant in filling the questionnaires fearing that the information sought would be used to as leverage against their businesses. The researcher assured the respondents that the information sought would be treated with utmost confidentiality and would only be used for academic purposes. Further, the study was mainly dependent on the data provided by the respondents. This means that the accuracy of the data about the logistics practices outsourcing by horticultural firms in Nairobi was dependent on the information provided by the respondents. The researcher handled the challenge by making calls for clarifications. The following directions should be followed by future researchers in regard to outsourcing of logistics activities. In future, a similar study should be conducted considering non-horticultural firms. This will serve the purpose of comparing how different industries outsource logistics practices.