Reverse Logistics Practices and the Performance of Large Manufacturing Firms in Kenya

Abstract

In a world of scarce resources and disposal capacities, recovery of used products and materials is key to supporting a growing population at an increasing level of consumption. There are pressures on organizations to act responsibly in terms of the protection of the environment and create value for all stakeholders. There is a rising global interest in reverse logistics. It is therefore prudent to consider reverse logistics practices as a key competence in large manufacturing firms as has been realized by some developed economies. Kenya Vision 2030 identifies the manufacturing sector as one of the key drivers for realizing a sustained annual GDP. However, growth in manufacturing firms has created an emergence of problems such as; scarcity of resources, pollution, waste accumulation and environmental damage in recent years. Manufacturing waste is a resource that can be harnessed to create wealth, employment and reduce pollution of the environment. Manufacturing firms have the opportunity to increase their profit margins and minimize loss through efficiently handling returns via reverse logistics. In this connection, the study aims at examining reverse logistics practices and the performance of large manufacturing firms in Kenya. This research was anchored on theories relevant to specific objectives of the study which include: product disposition practice, recycling practice; reverse product flow practice, end-of-life management practice and the moderating effect of firm resources on the relationship between reverse logistics and large manufacturing firm’s performance in Kenya. The study adopted the descriptive research design and used purposive sampling method to pick the sample. The target population was 240 firms, whereby 129 firms responded representing response rate of 89 percent. Primary data was collected using questionnaires which were dropped and picked later. Multiple linear regression model was used to show the hypothesized relationships between variables while content analysis was used to analyze qualitative data. Purposive sampling was used as it allowed the choice of subjects who are most advantageously placed to provide required information in relation to the study objectives. The data was quantitatively analyzed based on research objectives. The quantitative data was analyzed through descriptive statistics and inferential analysis by use of statistical package for social sciences (SPSS) software. Both correlation and regression analysis were done. The results for the effect of Reverse Logistics Practices and firm performance were assessed using Pearson correlation coefficient. The output indicated that Reverse Logistics practices had a strong positive relationship with firm performance (r = .837, p < 0.05). Upon introduction of the interaction term the regression model was significant for all the variables (F value=53.071, p<0.05) inferring that Firm Resources, significantly moderates the relationship between Reverse logistics Practices and the performance of large manufacturing firms in Kenya. On the basis of these statistics, the study concluded that there is significant positive relationship between all the specific Reverse Logistics Practices and firm performance. The study therefore recommended that manufacturing firms should introduce these practices in their operations and make use of them because of the benefits associated with them.