Factors Influencing Outsourcing of Logistics Services in Container Freight Stations in Kenya Case Study of Mitchell Cotts Limited

Abstract

Outsourcing is a growing aspect of supply chain management and has received a lot of attention from organizations globally as a strategy to remain competitive. Mitchell Cotts Container Freight Station (CFS) serves as the extension of the Kilindini port after the Kenya Ports Authority decided to decongest the port of Mombasa by licensing CFS'.  The company outsourced its logistics function to Shiva Carriers LTD. The general objective of this study was to establish factors influencing outsourcing of logistics services. The specific objectives were management objectives, perceived benefits, perceived risks and nature of logistics services. The sample size in this study was 35 members of staff out of the target population of 350 employees of Mitchell Cotts CFS. Stratified random sampling technique was used, it involved dividing target population into the following subgroups, clearing and forwarding, procurement and logistics, warehousing and finance and selecting respondents from each subgroup. A structured questionnaire with both open and closed ended questions was administered to the respondents. A pilot test for the developed questionnaire was done using a sample of Mitchell Cotts CFS staff so as obtain responses of each of the developed questions. The data collected through the use of questionnaires was then coded and analyzed with the help of computer software Statistical Package for Social Sciences (SPSS) version 22. The study found out that business focus and cost effectiveness were the major objectives that influenced management to outsource logistics functions, cost saving and increased productivity were major perceived benefits that influenced the decision to outsource, perceived risks had very little influence in outsourcing. Logistics services that were outsourced were those that were non-core and required high capital investment like trucks though some other non-core functions were performed in-house like labeling and but they were seen as contributing to competitive advantage.