Lean Practices and Operational Performance of Third Party Port-Centric Logistics Firms in Kenya

Abstract

This research explored lean practices and operational performance of third-party port-centric logistics (3PL) firms in Kenya by looking at the concept from its original proponents in Toyota Production system to the current applications in services. The study tested conceptual model of the relationship between lean practices and operational performance which was moderated by general regulation. Lean concept in this study was conceptualized within four groups of issues, that is, quality management, reduction of waste, customer orientation and total-cost reduction which were also used to generate the specific objectives of this study. Port-centric logistics services business is highly regulated in Kenya and thus it was critical to find out the effect the regulatory framework had on the relationship between lean and operational performance of these firms. A survey design based on stratified sampling with a disproportionate approach consisting of 164 firms (15% of the population) was used in data collection using the 164 semi-structured questionnaires targeting 164 third party port-centric logistics firms. Response rate for this study was 75.6% (124 firms). Data analysis was carried out using moderated multiple regression (MMR) model and relationship between the variables computed. Using the data collected, test of internal consistency, validity test, reliability and normality test, were conducted, all indicating appropriateness of data. The strength of the regression model was found to be 88.2% (adjusted R2) which was considered good enough, appreciating the fact that operational performance is also affected by other factors outside the model. Null hypotheses (H01- H04) were tested and rejected with a strong statistical significance that lean practices explored in this study influenced operational performance. Moderation results indicated a statistically significant moderation effect of regulation on the relationship between lean practices and operational performance of third party port-centric logistics firms in Kenya with R2 change of 1.6% at p=0.000. The findings of this study immensely provides information and knowledge that will play a critical role in research agenda in the area of lean and operational performance, particularly in service management. The study proposes policy formulation that supports measures that boost and reinforces (without inhibiting) performance in 3PL firms. Consequently, this study provides critical information, knowledge, foundation and an elevation from where a research agenda and policy discussions can be referenced. This study recommends

policy formulation that will support measures to boost and 3PL firms’ continuous growth in terms of fundamentals and quality services for the interest of both micro and macro-economics. This will help in creating 3PL firms that are efficient, effective and with superior operational performance, first to the benefit of the customers (importers and exporters), and to the entire national economy and eastern Africa at large.