Influence of outsourcing logistics services on perfomance of manufacturing companies: a case of Coca-Cola Kwanza Bottlers Limited

The study was conducted at Coca-Cola Kwanza Bottlers Limited on “Influence of outsourcing logistics services on performance of manufacturing companies.” The main objective of the study was to assess the influence of logistics services outsourcing on performance of manufacturing companies. Specific objectives of the study were to determine the relationship between logistics outsourcing and cost reduction, to determine the relationship between logistics outsourcing and quality of logistics services and to identify risks and challenges associated with outsourcing of logistics services. The study used stratified random sampling to pick a sample size of 100 respondents. Data was collected following a survey and questionnaire technique. Descriptive statistics was used aided by SPSS to compute percentages of respondents’ answers. Inferential statistics using linear regression and correlation analysis were done to examine the relationship between the research variables. The study found that logistics outsourcing is positively influencing both cost and service quality which ultimately affects performance of manufacturing companies. Based on risk assessment, it was established that dependency risk, failure to comply with delivery schedules, hidden costs, lack of customer focus were some of risks and challenges associated with logistics outsourcing at Coca-Cola Kwanza Bottlers Limited. Therefore, the study recommended outsourcing has the potential to beneficial to the firm. On service quality the study recommends manufacturing companies should consider outsourcing logistics service providers who are capable of providing timely and accurate services as this would enable companies to improve service quality. Based on risk assessment, outsourcing of logistics services should be geared toward transferring risk to competent service providers and manufacturing firms should outsource logistics activities whose risks are transferrable. The study conclude that management should consider cost, service quality and risk assessment as criteria of outsourcing logistics service providers in improving performance of manufacturing companies.