THE EFFECTS OF OUTSOURCING LOGISTICS SERVICES ON OPERATIONAL EFFICIENCY IN MANUFACTURING INDUSTRY: CASE STUDY OF DEL MONTE KENYA LTD

Gilbert Gichia Muiruri

Abstract


The purpose of the research was to determine the effects of outsourcing logistics services on operational efficiency, a case study of DMKL Thika Branch. In the rapidly changing business environment Logistics Services play a vital role in the Operational Efficiency of an organization. In the manufacturing industry the companies tend to focus on their core activities which are producing raw materials or finished goods for their consumers so as to ensure quality products reach their clients.

The research used a quantitative survey method on consensus of 45 employees. Data was collected using questionnaire administered through interview with the relevant employees of DMKL. Different questions were based on the objectives. The target population was the employees of DMKL, Procurement Department and other employees from those Departments which work closer with the Procurement department such as Stores and Finance. Data was analyzed using tables and simple descriptive statistics such as pie charts and graphs.

After having a detailed literature review and thorough discussion in analysis, this study concluded that outsourcing of logistics services has an encouraging impact on the operational efficiency. The findings of the study were that the outsourcing services adopted by the firms were freight logistics, customs brokerage, road transportation and distribution, packaging and removals and warehousing. The outsourcing practices being adopted by DMKL resulted in increased productivity, organizational effectiveness, increased profits, continuous improvement, improved quality and improved quality of work life and thus outsourcing of these processes was an ideal solution that helps the firm expand internationally and operate on a much larger scale. At the same time, outsourcing resulted in decreased operating costs, improved customer satisfaction, increased productivity, timely delivery of services to clients, and reduced lead time, improved profits and faster response to customer demands. This was an indication that the performance of the firms was influenced by the outsourcing practices adopted by the firms.

Key Words: Outsourcing, Operational Efficiency, Manufacturing Industry


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