The Effect of Transportation Outsourcing (LSP) on Firm Operational Performance, in Case of Heineken Ethiopia (HBSC).
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Date
2024-06
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Addis Ababa University
Abstract
The general purpose of this study was to analyze the performance of a firm through its outsourced transportation function in the case of Heineken Brewery S.C. This study aimed to investigate how outsourcing transporters affected the firm's supply chain performance and what key performance indicators were used to measure that performance. Both primary and secondary data were utilized. For this causal-analytical study, data were collected from a total population of 70. To acquire reliable and representative data, the research employed a census. Primary data were gathered through a questionnaire, and the collected data were analyzed using frequency and percentage. This research paper utilized a mixed methodology to assess the effects of outsourcing in detail.
This paper evaluated the outsourced transportation performance in terms of financial value, customer expectations, flexibility, scalability, geographical coverage, agility, competitive advantage, and supplier relationships. The results demonstrated some improvements in transit times and on-time delivery rates; however, the realization of cost savings was mixed. Customer expectations were generally met with moderate satisfaction, but issues with order accuracy and exception handling required attention. Scalability and flexibility showed moderate improvements in the efficiency of delivery and automation, although further advancements in load planning and routing were necessary. Geographic coverage and market agility were rated as moderate, indicating a need for better responsiveness and route adjustments. Competitive advantage and supplier relations were assessed as moderate, with a mutual understanding and some cost advantages realized through economies of scale; however, enhancing supplier commitment and strategic alignment was necessary.
This paper recommends several solutions to enhance the performance of outsourced transportation services. Key strategies include implementing a robust performance tracking system, establishing strong performance parameters, and enhancing communication with service providers to improve order accuracy. It also suggests using advanced logistics software and forming partnerships with multiple providers to boost scalability and geographical coverage. Strengthening supplier relationships through long-term contracts and aligning with the overall supply chain strategy was enhanced competitive advantage. These actions aim to improve operational performance and customer satisfaction in the transportation function.
Key words: Geographic Coverage, Heineken Breweries S.C, Key performance indicator, scalability