Drivers of logistics outsourcing practices in tea processing firms in Bomet County

Abstract

The study sought to determine the drivers and practices of logistics outsourcing practices among tea processing firms in County. The study surveyed the logistics outsourcing practices being used by the tea processing firms in Bomet by collecting primary data through self administered questionnaire. Data was analyzed using descriptive statistics. The study found out that the firms use several logistics outsourcing practices with own or in-house transport being the most common. All the tea processing firms that were surveyed outsourced some of their logistics functions though at varying degrees. Logistics outsourcing among the tea firms was most prevalent in operations such as warehousing, fleet management, fleet operations, transport and distribution. The study concluded that there exists a drive towards the use of logistics outsourcing as a strategy to reduce costs, to pursue core business activities, reduce risks and gain competitive advantage. The survey also established some of the challenges faced by the firms as they moved to outsource their business activities; these included loss of control of the activities, loss of employee loyalty, industrial unrests, switching costs, loss of information to competitors and resistance to change by the stakeholders. I. Background of the Study The global nature of business has forced companies to recognize the critical role of back end operations of a logistics supply chain. As the firms focus on production, marketing, Human Resource Management and finance, greater attention is required to achieve customer satisfaction through efficient logistics (Watson and Pitt, 1989). Due to improved Information and Communication Technologies (I.C.T), logistics has become an integral part of e-commerce and e-business. Logistics is a source of core competency and a linking tool for attaining competitive advantage (Muller, 1993). Emerging trends indicates that Logistics management has shifted from the traditional back end operation to a strategic boardroom activity (Stock and Lambert, 2009). These trends have come to the fore as a result of various reasons such as; Globalization which is making national economies more and more integrated into the Global economy, International trade which is expanding at an exponential rate, technological advancement has become an integrating force, informed customers whoare demanding value for their money, marketers are experiencing competitive pressure and businesses struggling not only for growth but also for survival (Sople, 2011).