Cost as a Factor of Outsourcing Third-Party Logistics Providers and the Performance of Food and Beverages Manufacturing Companies in Kenya

Manufacturing companies in Kenya have been experiencing problems in the performance of their production and operations management. One strategy of improving their performance is resorting to logistics outsourcing. Outsourcing of non-core activities to Third Party Logistics providers (3PL) is one of the ways of ensuring efficient and effective performance of companies. This study therefore, sought to establish the influence of cost on the performance of food and beverages manufacturing companies in Kenya. The study adopted cross-sectional survey design using both quantitative and qualitative approaches. The target population of this study was 197 registered food and beverages manufacturing companies in Kenya as per Kenya Association of Manufacturers (KAM) Directory 2015. Data was collected using a questionnaire. Descriptive statistics was used aided by Statistical Packages for Social Sciences (SPSS) version 24 to compute percentages of respondents’ answers. Inferential statistics using linear regression and correlation analysis was applied in examining relationship between the research variables. The study found out that cost was significant predictors in the performance of food and beverages manufacturing companies in Kenya. The study found out that cost of transportation and distribution costs, customs clearance, document processing, freight forwarding, tracking and tracing affected performance of food and beverages manufacturing companies in Kenya. The study recommended that it would be appropriate for management to consider cost as criteria of outsourcing 3PL providers in improving performance of food and beverages manufacturing companies in Kenya.