Logistics Outsourcing and Last-Mile Delivery Performance among Retail Manufacturers in Nairobi, Kenya
Abstract
Logistics outsourcing is an important transport management practice through which firms engage third-party logistics providers to undertake selected activities such as transportation, warehousing and last-mile delivery. For retail manufacturers operating in Nairobi, outsourcing may provide access to specialized logistics capabilities and flexible delivery capacity in an urban environment characterized by traffic congestion, high transport costs and increasing expectations for timely order fulfilment. This study examined the effect of logistics outsourcing on last-mile delivery performance among retail manufacturers in Nairobi, Kenya. The study was informed by the Resource-Based View and drew on literature concerning third-party logistics relationships and last-mile delivery. A descriptive research design and quantitative approach were used. The target population comprised 163 retail manufacturers in Nairobi County, from which a sample of 40 firms was selected. Structured questionnaires were used to collect data from knowledgeable respondents, and 33 completed questionnaires were returned, representing an 82.5% response rate. Descriptive analysis showed that the extent of logistics outsourcing ranged from 15% to 78%, with a mean of 39.7% and a median of 35%. Transportation was the most commonly outsourced function: 25 firms (75.76%) outsourced transport only, five (15.15%) outsourced transport and last-mile delivery, and three (9.09%) outsourced transport and warehousing. Regression results indicated a positive and statistically significant relationship between logistics outsourcing and last-mile delivery performance (R² = .765, p = .000), with a reported regression coefficient of 0.865 and a constant of 22.622. The findings suggest that outsourcing can strengthen delivery coordination, operational flexibility and on-time delivery performance when firms engage capable third-party providers. The study recommends that retail manufacturers select providers based on service capability and reliability, formalize performance expectations, and regularly monitor delivery outcomes.
Keywords: Logistics outsourcing, third-party logistics, last-mile delivery, delivery performance, retail manufacturers, Nairobi County
References
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and mixed methods approaches (5th ed.). SAGE Publications.
Esper, T. L., Jensen, T. D., Turnipseed, F. L., & Burton, S. (2003). The last mile: An examination of effects of online retail delivery strategies on consumers. Journal of Business Logistics, 24(2), 177–203. https://doi.org/10.1002/j.2158-1592.2003.tb00051.x
Gitonga, C. (2017). Logistics practices and operational performance of fast-moving consumer goods manufacturers in Nairobi County. Journal of Supply Chain Management, 3(1), 45–60.
Hofer, A. R. (2015). Determinants of customer partnering behavior in logistics outsourcing relationships: A relationship marketing perspective. Journal of Business Logistics, 36(4), 293–306.
Mageto, J., Prinsloo, G., & Luke, R. (2018). Logistics outsourcing and performance of manufacturing small and medium-sized enterprises in Nairobi. The Southern African Journal of Entrepreneurship and Small Business Management, 10(1), Article 162. https://doi.org/10.4102/sajesbm.v10i1.162
Mogire, E., Kilbourn, P. J., & Luke, R. (2022). Customer satisfaction with last-mile delivery in Kenya: An online customer perspective. Journal of Transport and Supply Chain Management, 16, Article a672. https://doi.org/10.4102/jtscm.v16i0.672
Mulama, O. (2012). Logistics outsourcing practices and performance of large manufacturing firms in Nairobi, Kenya [Master’s thesis, University of Nairobi]. University of Nairobi Digital Repository. https://erepository.uonbi.ac.ke/handle/11295/13432
Njuguna, P., & Moronge, M. (2019). Influence of supply chain management practices on the performance of fast-moving manufacturing firms in Nairobi City County, Kenya. The Strategic Journal of Business & Change Management, 6(3).
Selviaridis, K., & Spring, M. (2007). Third-party logistics: A literature review and research agenda. The International Journal of Logistics Management, 18(1), 125–150.
Yeung, K., Zhou, H., Yeung, A. C. L., & Cheng, T. C. E. (2012). The impact of third-party logistics providers’ capabilities on exporters’ performance. International Journal of Production Economics, 135(2), 741–753. https://doi.org/10.1016/j.ijpe.2011.10.007
