Determinants of Outsourcing as a Competitive Strategy in Supply Chain Management of Manufacturing Companies in Kenya (A Case Study of East African Breweries Limited)

Abstract

Outsourcing has become a very vital business strategy in the current world. Due to the effects of globalization and increased cost of production in Kenya, many companies are finding it important to innovate on ways which can reduce cost of operation and growth their profit margins This study sought to investigate the factors affecting outsourcing as a competitive strategy in manufacturing organizations in Kenya. The study adopted a descriptive design. The target population comprised of management and supervisory staffs currently employed at East African Breweries Limited. Stratified sampling technique was used to select the sample. The target population was stratified through top/senior management level, middle level and low management level. From each stratum the study used simple random sampling to select 45 respondents. Primary and secondary data was used in the study. Primary data was gathered directly from respondents through questionnaires while secondary data involved the collection and analysis of published material and information from other sources such as annual reports, published data. The researcher personally administered the questionnaires to each respondent. Before actual data collection, the researchers carried out a pilot study to pretest and validate the questionnaire. The researchers selected a pilot group of 10 individuals from the target population at East African Breweries Limited (EABL) to test the reliability of the research instrument. Lastly, the completely filled questionnaires containing data from the respondents were first be edited then coded to facilitate statistical analysis. Quantitative data collected was analyzed by the use of descriptive statistics. These included frequency distribution tables and measures of central tendency (the mean), measures of variability (standard deviation) and measures of relative frequencies among others. The analyzed data was presented in tables and charts. Outsourcing strategy is adopted by companies so as to be more cost effective in its operations, the needed for the company to improve the quality of the services, and to acquire the expertise required. Through outsourcing the company is able to improve on service delivery and efficiency, improve responsiveness to needs of clients and improve company focus. The study recommends that management of EABL in Kenya should adopt outsourcing as a strategic initiative to enhance competitiveness, performance and responsiveness of the various processes. The study also recommends that further study should be carried out to investigate how outsourcing affects other organizations in different lines of business since this study focused on the manufacturing line.