Logistics outsourcing and performance of commercial banks in Kenya
Outsourcing of services has become a common practic e among commercial banks in Kenya and this is due to the various benefits that accrue to an organisation as a result of outsourcing. Contracting out production of goods an d service to third party providers has been a growing concern by organizations. The need f or outsourcing by organizations is to enable them concentrate on their core business acti vities, and therefore delineate the activities that are none-core and which would be ge nerally expensive to undertake to other service providers. Just like other organizati ons, commercial banks in Kenya have continuously been involved in the outsourcing of va rious services; amongst them the logistic arm of their operations to other banks. Th e implied need for the process of logistic outsourcing by the commercials banks is to increase their performance level, and therefore help improve their productivity, competit iveness and profitability in general. In the past the various studies covered have not exten sively delved into logistics outsourcing practises in relation to the performance of commerc ial banks. As a result, this study explored outsourcing practises viz a viz the perfor mance of commercial bank in Kenya. The population of the study in this research was al l the (43) commercial banks in Kenya. A census method was applied to come up with the sam ple size since the target population was relatively small and it involved a descriptive research design. The primary data was collected from Logistics and procurement managers o r their equivalent by the use of a standard questionnaire which was administered by ‘d rop and pick’ method. The response rate was 69.8%. The results established that the co mmercial banks were outsourcing transportation management, warehouse management and material handling management. The commercial banks opted to outsource their servi ces due to its advantages and its possible influence on organizational performance, a s it enables the commercial banks to focus on their core competencies. The outsourcing p ractises adopted by the commercial banks will in the long run determine their survival as they would seek to reduce operating costs, improved customer satisfaction and timely de livery of services to clients which in turn will increase productivity and reduce lead tim e and improved profits. The study confined itself to commercial bank in Kenya and the findings may not be applicable in other sectors as a result of its uniqueness of comm ercial banks. It is therefore recommended that the study is replicated in other s ervice sector to establish the logistics outsourcing services and performance.