The Influence of Fourth Party Logistics Services on Performance of Manufactuirng Sector in Kenya: A Study in Food and Beverage Manufacturing Firms
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Abstract
The aim of this study was to establish the relationship between fourth party logistics services and performance of food and beverage manufacturing companies in Kenya. This research study adopted a descriptive and cross-sectional research designs. Data was collected from the food and beverage manufacturing firms using self-administered questionnaires. The data collected was analyzed by use of descriptive and inferential statistics. The findings from the study revealed that freight management, logistics information systems management, customer relations management and product Packaging had a significant influence on the performance of food and beverage processing firms. The study concluded that fourth party logistics through freight management, logistics information system, customer relations management and product Packaging were critical in enhancing the performance of food and beverage processing firms in Kenya. The study recommends that the management of food and beverage processing firms ought to embrace fourth party logistics services by having a freight management framework, enhancing use of logistics information systems, bringing customers on board and embracing effective and innovative ways of Packaging the products in order to gain performance.
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References
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Aggarwal, R., & Singh, S. P. (2019). An integrated NPV-based supply chain configuration with third-party logistics services. Journal of Revenue and Pricing Management, 18(5), 367-375.
Ahmed, R. R., & Zhang, X. (2021). Multi-stage network-based two-type cost minimization for the reverse logistics management of inert construction waste. Waste Management, 120, 805-819.
Alavi, M., & Carlson, P. (2012). A review of MIS research and disciplinary development: Journal of Management Information Systems, 8 (4), 45–62.
Alnahhal, M., Tabash, M. I., & Ahrens, D. (2021). Optimal selection of third-party logistics providers using integer programming: A case study of a furniture company storage and distribution. Annals of Operations Research, 302(1), 1-22.
Aloo, B. A., & Ongwae, G. J. (2021). Relationship Between Fourth Party Logistics Services And Performance Of Manufacturing Firms In Kenya. International Research Journal of Business and Strategic Management, 2(1).
Aydın, S., Yörükoğlu, M., & Kabak, M. (2022). Fourth party logistics firm assessment using a novel neutrosophic MCDM. Journal of Intelligent & Fuzzy Systems, 42(1), 529-539.
Bedeman, M., & Gattorna, J. L. (2017). 4 Third-and Fourth-party logistics service providers. In Gower handbook of supply chain management (pp. 487-503). Routledge.
Buyukozkan, G., Feyzioglu, O. & Ersoy, M. (2015). Evaluation of 4PL operating models: A decision making approach based on 2-additive integral, International Journal of Production Economics, 121 (5), 112-120.
Chiappinelli, O. (2020). Decentralization and public procurement performance: New evidence from Italy. Economic Inquiry, 58(2), 856-880.
Dewnarain, S., Ramkissoon, H., & Mavondo, F. (2019). Social customer relationship management: An integrated conceptual framework. Journal of Hospitality Marketing & Management, 28(2), 172-188.
Fabbe-Costes, N., Jahre, M. & Roussat, C. (2014). Supply chain integration: the role of logistics service providers, International Journal of Productivity and Performance Management, 58(1), 71- 91.
Fernando, Y., & Tew, M. M. (2016). Reverse logistics in manufacturing waste management: the missing link between environmental commitment and operational performance. International Journal of Integrated Supply Management, 10(3-4), 264-282.
Fu, H. (2017). Integration of Logistics Simulation Technology and Logistics Learning Factory in a Two-stage Teaching Method for Logistics Management Courses. International Journal of Emerging Technologies in Learning, 12(9).
Gautam, N., Ojha, M. K., Swain, P., Aggarwal, A., & Jamwal, A. (2019). Informal investigation of fourth-party and third-party logistics service providers in terms of Indian context: an AHP approach. In Advances in industrial and production engineering (pp. 405-413). Springer, Singapore.
Gruchmann, T., Pratt, N., Eiten, J., & Melkonyan, A. (2020). 4PL digital business models in sea freight logistics: The case of Freighthub. Logistics, 4(2), 10.
Haffer, R. (2018). Supply Chain Performance Measurement System Of Logistics Service Providers. A Conceptual Framework And Research Agenda. Business Logistics in Modern Management.
Herbert, K., Juliana, H., Mikkola, W., & Tage, S. (2013). Complementary theories to supply chain management. International Journal of Supply Chain Management 12(4), 284–296.
Hong, W., Xu, Z., Liu, W., Wu, L., & Pu, X. (2021). Queuing theory-based optimization research on the multi-objective transportation problem of fourth party logistics. Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering Manufacture, 235(8), 1327-1337.
Huang, M., Dong, L., Kuang, H., Jiang, Z. Z., Lee, L. H., & Wang, X. (2021). Supply chain network design considering customer psychological behavior-a 4PL perspective. Computers & Industrial Engineering, 159, 107484.
Huang, M., Tu, J., Chao, X., & Jin, D. (2019). Quality risk in logistics outsourcing: A fourth party logistics perspective. European Journal of Operational Research, 276(3), 855-879.
Kenya Association of Manufacturers, (2016). Kenya manufacturers & Exporters Directory. (11th ed.). Nairobi: Kenya Association of Manufacturers
Kenya Institute for Public Policy Research and Analysis. (2013). Kenya Economic Report. Nairobi: KIPPRA
Kersten, W., Bemeleit, B., & Blecker, T., (2016). “Managing Risks in Supply Chains: How to Build Reliable Collaboration in Logistics”, Published by Eric Schmidt, 5(8), 67-105
Ketokivi, M., & Schroeder, R. (2014). Manufacturing practices, strategic fit and performance: a routine-based view. International Journal of Operations & Production Management, 24(1/2), 171-191.
Kiprono, K. & Alexis, A. (2021). Third Party Logistics Adoption on Supply Chain Performance of Supermarkets in Eldoret Town, Kenya. Target Journals, 3 (2), 77-95. ISSN 1569- 9986.
Kiruja, A. K., & Ngugi, P. K. (2019). Influence Of Third Party Logistics Management On Performance Of Level Four and Five Hospitals In Kenya. International Journal of Social Sciences and Information Technology, Vol V Issue IV,86-102.
KNBS (2010). Kenya Manufacturing Firms Survey. Nairobi:
Kulkarni, N., Shaikh, A., Kurkure, N., & Bagul, U. (2019). A Secure Healthcare System using Blockchain Technology. International Research Journal of Engineering and Technology (IRJET), 6(12), 2395-0056.
Lau, K.H. & Zhang, J. (2016). Drivers and Obstacles of Outsourcing Practices in China. International Journal of Physical Distribution & Logistics Management 36 (10), 776-792
Lee, M., Rho, H., & Lee, S. (2013). Impact of Malcolm Baldrige National Quality Award criteria on organizational quality performance. International Journal of Production Research, 41(9), 2003–2020.
Lieb, R., & Butner, K. (2013). The North American Third-Party Logistics Industry in 2016: The Provider CEO perspective. Transportation Journal, 46 (3), 40-52
Liker, J. K., and Choi, T.Y., (2014). Building deeper supplier relationships. Harvard Business Review. 82 (12), 104-113
Liu, C., & Lyons, A. (2011). An analysis of third-party logistics performance and service provision. Transportation Research Part E: Logistics and Transportation Review 34(47), 547-570.
Maditati, D. R., Kummer, S., Munim, Z. H., & Schramm, H. J. (2022). Comparing outsourcing-outlook of manufacturing firms and logistics service providers in India and DACH countries. Journal of Global Operations and Strategic Sourcing.
Mehmann, J., & Teuteberg, F. (2016). The fourth-party logistics service provider approach to support sustainable development goals in transportation–a case study of the German agricultural bulk logistics sector. Journal of Cleaner Production, 126, 382-393.
Musau, E. G., Namusonge, G., Makokha, E. N., & Ngeno, J. (2017). The effect of transport management on organizational performance among textile manufacturing firms in Kenya. International Journal of Academic Research in Business and Social Sciences, 7(11), 1015-1031.
Mutuku, A. K., & Moronge, M. (2020). Influence of Reverse Logistics on Performance of Food and Beverage Manufacturing Firms in Kenya. International Journal of Supply Chain and Logistics, 4(2), 129-151.
Ngonela, W., Mwaniki, C., & Namusonge, G. (2014). Drivers of Logistics Outsourcing Practices in Tea Processing Firms in Bomet County. IOSR Journal of Economics and Finance, 4(1), 47-57
Novack, R.A. & Thomas, D.J. (2014). The challenges of implementing the perfect order concept, Transportation Journal, 21 (12), 121-34
Qian, X., Fang, S. C., Yin, M., Huang, M., & Li, X. (2021). Selecting green third party logistics providers for a loss-averse fourth party logistics provider in a multiattribute reverse auction. Information Sciences, 548, 357-377.
Radicic, D. (2019). Effectiveness of public procurement of innovation versus supply-side innovation measures in manufacturing and service sectors. Science and Public Policy, 46(5), 732-746.
Rao, K., & Young, R. R. (2015). Global Supply Chains: Factors influencing outsourcing of logistics functions. International Journal of Physical Distribution & Logistics Management, 24 (6), 11-19.
Ristovska, N., Kozuharov, S., & Petkovski, V. (2017). The impact of logistics management practices on company’s performance. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(1), 245-252.
Sahay, S. & Mohan, R. (2016). 3PL practices: an Indian perspective. International Journal of Physical Distribution & Logistics Management 36 (9), 666-689.
Schramm, H. J., Czaja, C. N., Dittrich, M., & Mentschel, M. (2019). Current advancements of and future developments for fourth party logistics in a digital future. Logistics, 3(1), 7.
Shale, N. (2015). Role Of Fourth Party Logistics Service Providers On Supply Chain Performance In Distribution Firms In Kenya: A Case Of Accelers Global Limited . Academic Journal of Social Sciences and Education, 3(3). Retrieved from https://ajsse.org/index.php/1/article/view/129
Tao, Y., Chew, E. P., Lee, L. H., & Shi, Y. (2017). A column generation approach for the route planning problem in fourth party logistics. Journal of the Operational Research Society, 68(2), 165-181.
Tukamuhabwa, B. R., Mutebi, H., & Kwagala, R. (2021). Supply chain agility in third-party logistics providers: its relationship with institutional and cultural geographical traits in a developing country. Journal of Economic and Administrative Sciences.
Wang, H., Huang, M., Feng, X., & Zhou, Y. (2022). Contract design for the fourth party logistics considering tardiness risk. International Journal of Industrial Engineering Computations, 13(1), 13-30.
Wang, H., Huang, M., Ip, W. H., & Wang, X. (2021). Network design for maximizing service satisfaction of suppliers and customers under limited budget for industry innovator fourth-party logistics. Computers & Industrial Engineering, 158, 107404.
Wang, L., Guo, Y., & Zeng, X. (2021). Green Procurement and Manufacturing, Innovation Orientation and Operational Performance: A Firm Level Panel Data Analysis. In 2021 IEEE 6th International Conference on Computer and Communication Systems (ICCCS) (pp. 59-64). IEEE.
Wardaya, M.S., Hadiwidjoyo, D., & Surachman, E., (2013). Improving Competitiveness of the National Industry of Logistics Service Providers through Collaboration from the Perspective of Consumer Goods Manufacturing Companies in East Jav: International Journal of Business and Management Invention 2 (5), 27-38
World Bank (2013). Reducing Supply Chain Barriers Could Increase Global GDP Up To 6 Times More Than Removing All Import Tariffs Report”, Switzerland
Zeng, S.X., & Wan, T.W. (2008). Competitive priorities of manufacturing firms for internalization: an empirical research: Measuring Business Excellence 12(3), 44-55.
Zhang, Y., Li, X., Wang, L., Zhao, X., & Gao, J. (2022). Financing capital-constrained third party logistic firms: fourth party logistic driven financing mode vs. private lending driven financing mode. International Journal of Production Research, 60(9), 2963-2982.
Aggarwal, R., & Singh, S. P. (2019). An integrated NPV-based supply chain configuration with third-party logistics services. Journal of Revenue and Pricing Management, 18(5), 367-375.
Ahmed, R. R., & Zhang, X. (2021). Multi-stage network-based two-type cost minimization for the reverse logistics management of inert construction waste. Waste Management, 120, 805-819.
Alavi, M., & Carlson, P. (2012). A review of MIS research and disciplinary development: Journal of Management Information Systems, 8 (4), 45–62.
Alnahhal, M., Tabash, M. I., & Ahrens, D. (2021). Optimal selection of third-party logistics providers using integer programming: A case study of a furniture company storage and distribution. Annals of Operations Research, 302(1), 1-22.
Aloo, B. A., & Ongwae, G. J. (2021). Relationship Between Fourth Party Logistics Services And Performance Of Manufacturing Firms In Kenya. International Research Journal of Business and Strategic Management, 2(1).
Aydın, S., Yörükoğlu, M., & Kabak, M. (2022). Fourth party logistics firm assessment using a novel neutrosophic MCDM. Journal of Intelligent & Fuzzy Systems, 42(1), 529-539.
Bedeman, M., & Gattorna, J. L. (2017). 4 Third-and Fourth-party logistics service providers. In Gower handbook of supply chain management (pp. 487-503). Routledge.
Buyukozkan, G., Feyzioglu, O. & Ersoy, M. (2015). Evaluation of 4PL operating models: A decision making approach based on 2-additive integral, International Journal of Production Economics, 121 (5), 112-120.
Chiappinelli, O. (2020). Decentralization and public procurement performance: New evidence from Italy. Economic Inquiry, 58(2), 856-880.
Dewnarain, S., Ramkissoon, H., & Mavondo, F. (2019). Social customer relationship management: An integrated conceptual framework. Journal of Hospitality Marketing & Management, 28(2), 172-188.
Fabbe-Costes, N., Jahre, M. & Roussat, C. (2014). Supply chain integration: the role of logistics service providers, International Journal of Productivity and Performance Management, 58(1), 71- 91.
Fernando, Y., & Tew, M. M. (2016). Reverse logistics in manufacturing waste management: the missing link between environmental commitment and operational performance. International Journal of Integrated Supply Management, 10(3-4), 264-282.
Fu, H. (2017). Integration of Logistics Simulation Technology and Logistics Learning Factory in a Two-stage Teaching Method for Logistics Management Courses. International Journal of Emerging Technologies in Learning, 12(9).
Gautam, N., Ojha, M. K., Swain, P., Aggarwal, A., & Jamwal, A. (2019). Informal investigation of fourth-party and third-party logistics service providers in terms of Indian context: an AHP approach. In Advances in industrial and production engineering (pp. 405-413). Springer, Singapore.
Gruchmann, T., Pratt, N., Eiten, J., & Melkonyan, A. (2020). 4PL digital business models in sea freight logistics: The case of Freighthub. Logistics, 4(2), 10.
Haffer, R. (2018). Supply Chain Performance Measurement System Of Logistics Service Providers. A Conceptual Framework And Research Agenda. Business Logistics in Modern Management.
Herbert, K., Juliana, H., Mikkola, W., & Tage, S. (2013). Complementary theories to supply chain management. International Journal of Supply Chain Management 12(4), 284–296.
Hong, W., Xu, Z., Liu, W., Wu, L., & Pu, X. (2021). Queuing theory-based optimization research on the multi-objective transportation problem of fourth party logistics. Proceedings of the Institution of Mechanical Engineers, Part B: Journal of Engineering Manufacture, 235(8), 1327-1337.
Huang, M., Dong, L., Kuang, H., Jiang, Z. Z., Lee, L. H., & Wang, X. (2021). Supply chain network design considering customer psychological behavior-a 4PL perspective. Computers & Industrial Engineering, 159, 107484.
Huang, M., Tu, J., Chao, X., & Jin, D. (2019). Quality risk in logistics outsourcing: A fourth party logistics perspective. European Journal of Operational Research, 276(3), 855-879.
Kenya Association of Manufacturers, (2016). Kenya manufacturers & Exporters Directory. (11th ed.). Nairobi: Kenya Association of Manufacturers
Kenya Institute for Public Policy Research and Analysis. (2013). Kenya Economic Report. Nairobi: KIPPRA
Kersten, W., Bemeleit, B., & Blecker, T., (2016). “Managing Risks in Supply Chains: How to Build Reliable Collaboration in Logistics”, Published by Eric Schmidt, 5(8), 67-105
Ketokivi, M., & Schroeder, R. (2014). Manufacturing practices, strategic fit and performance: a routine-based view. International Journal of Operations & Production Management, 24(1/2), 171-191.
Kiprono, K. & Alexis, A. (2021). Third Party Logistics Adoption on Supply Chain Performance of Supermarkets in Eldoret Town, Kenya. Target Journals, 3 (2), 77-95. ISSN 1569- 9986.
Kiruja, A. K., & Ngugi, P. K. (2019). Influence Of Third Party Logistics Management On Performance Of Level Four and Five Hospitals In Kenya. International Journal of Social Sciences and Information Technology, Vol V Issue IV,86-102.
KNBS (2010). Kenya Manufacturing Firms Survey. Nairobi:
Kulkarni, N., Shaikh, A., Kurkure, N., & Bagul, U. (2019). A Secure Healthcare System using Blockchain Technology. International Research Journal of Engineering and Technology (IRJET), 6(12), 2395-0056.
Lau, K.H. & Zhang, J. (2016). Drivers and Obstacles of Outsourcing Practices in China. International Journal of Physical Distribution & Logistics Management 36 (10), 776-792
Lee, M., Rho, H., & Lee, S. (2013). Impact of Malcolm Baldrige National Quality Award criteria on organizational quality performance. International Journal of Production Research, 41(9), 2003–2020.
Lieb, R., & Butner, K. (2013). The North American Third-Party Logistics Industry in 2016: The Provider CEO perspective. Transportation Journal, 46 (3), 40-52
Liker, J. K., and Choi, T.Y., (2014). Building deeper supplier relationships. Harvard Business Review. 82 (12), 104-113
Liu, C., & Lyons, A. (2011). An analysis of third-party logistics performance and service provision. Transportation Research Part E: Logistics and Transportation Review 34(47), 547-570.
Maditati, D. R., Kummer, S., Munim, Z. H., & Schramm, H. J. (2022). Comparing outsourcing-outlook of manufacturing firms and logistics service providers in India and DACH countries. Journal of Global Operations and Strategic Sourcing.
Mehmann, J., & Teuteberg, F. (2016). The fourth-party logistics service provider approach to support sustainable development goals in transportation–a case study of the German agricultural bulk logistics sector. Journal of Cleaner Production, 126, 382-393.
Musau, E. G., Namusonge, G., Makokha, E. N., & Ngeno, J. (2017). The effect of transport management on organizational performance among textile manufacturing firms in Kenya. International Journal of Academic Research in Business and Social Sciences, 7(11), 1015-1031.
Mutuku, A. K., & Moronge, M. (2020). Influence of Reverse Logistics on Performance of Food and Beverage Manufacturing Firms in Kenya. International Journal of Supply Chain and Logistics, 4(2), 129-151.
Ngonela, W., Mwaniki, C., & Namusonge, G. (2014). Drivers of Logistics Outsourcing Practices in Tea Processing Firms in Bomet County. IOSR Journal of Economics and Finance, 4(1), 47-57
Novack, R.A. & Thomas, D.J. (2014). The challenges of implementing the perfect order concept, Transportation Journal, 21 (12), 121-34
Qian, X., Fang, S. C., Yin, M., Huang, M., & Li, X. (2021). Selecting green third party logistics providers for a loss-averse fourth party logistics provider in a multiattribute reverse auction. Information Sciences, 548, 357-377.
Radicic, D. (2019). Effectiveness of public procurement of innovation versus supply-side innovation measures in manufacturing and service sectors. Science and Public Policy, 46(5), 732-746.
Rao, K., & Young, R. R. (2015). Global Supply Chains: Factors influencing outsourcing of logistics functions. International Journal of Physical Distribution & Logistics Management, 24 (6), 11-19.
Ristovska, N., Kozuharov, S., & Petkovski, V. (2017). The impact of logistics management practices on company’s performance. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(1), 245-252.
Sahay, S. & Mohan, R. (2016). 3PL practices: an Indian perspective. International Journal of Physical Distribution & Logistics Management 36 (9), 666-689.
Schramm, H. J., Czaja, C. N., Dittrich, M., & Mentschel, M. (2019). Current advancements of and future developments for fourth party logistics in a digital future. Logistics, 3(1), 7.
Shale, N. (2015). Role Of Fourth Party Logistics Service Providers On Supply Chain Performance In Distribution Firms In Kenya: A Case Of Accelers Global Limited . Academic Journal of Social Sciences and Education, 3(3). Retrieved from https://ajsse.org/index.php/1/article/view/129
Tao, Y., Chew, E. P., Lee, L. H., & Shi, Y. (2017). A column generation approach for the route planning problem in fourth party logistics. Journal of the Operational Research Society, 68(2), 165-181.
Tukamuhabwa, B. R., Mutebi, H., & Kwagala, R. (2021). Supply chain agility in third-party logistics providers: its relationship with institutional and cultural geographical traits in a developing country. Journal of Economic and Administrative Sciences.
Wang, H., Huang, M., Feng, X., & Zhou, Y. (2022). Contract design for the fourth party logistics considering tardiness risk. International Journal of Industrial Engineering Computations, 13(1), 13-30.
Wang, H., Huang, M., Ip, W. H., & Wang, X. (2021). Network design for maximizing service satisfaction of suppliers and customers under limited budget for industry innovator fourth-party logistics. Computers & Industrial Engineering, 158, 107404.
Wang, L., Guo, Y., & Zeng, X. (2021). Green Procurement and Manufacturing, Innovation Orientation and Operational Performance: A Firm Level Panel Data Analysis. In 2021 IEEE 6th International Conference on Computer and Communication Systems (ICCCS) (pp. 59-64). IEEE.
Wardaya, M.S., Hadiwidjoyo, D., & Surachman, E., (2013). Improving Competitiveness of the National Industry of Logistics Service Providers through Collaboration from the Perspective of Consumer Goods Manufacturing Companies in East Jav: International Journal of Business and Management Invention 2 (5), 27-38
World Bank (2013). Reducing Supply Chain Barriers Could Increase Global GDP Up To 6 Times More Than Removing All Import Tariffs Report”, Switzerland
Zeng, S.X., & Wan, T.W. (2008). Competitive priorities of manufacturing firms for internalization: an empirical research: Measuring Business Excellence 12(3), 44-55.
Zhang, Y., Li, X., Wang, L., Zhao, X., & Gao, J. (2022). Financing capital-constrained third party logistic firms: fourth party logistic driven financing mode vs. private lending driven financing mode. International Journal of Production Research, 60(9), 2963-2982.