Warehouse Optimization and Performance of Distribution Firms in Kenya

Abstract

In Kenya, 75% of warehouses run at a capacity of less than 40% due to poor designs and layout out what this means that Distribution Firms paying at-least 40% of your cost for free to the warehouse due to underutilized assets. This study therefore sought to establish the effect of warehouse optimization on performance of distribution firms in Kenya. Specifically, it sought to establish the effect of product placement on performance of distribution firms in Kenya, to assess the effect of warehouse flow on performance of distribution firms in Kenya, to determine the effect of retrieval systems on performance of distribution firms in Kenya, to find out the effect of warehouse layout on performance of distribution firms in Kenya and to assess the moderating effect of firm size on the relationship between warehouse optimization and performance of distribution firms in Kenya. This study was anchored on institutional theory, queuing theory, technology acceptance model, the theory of Constraints (TOC) and theory of the firm. This study used both descriptive and explanatory research designs. In addition, this study employed a positivist research philosophy. The target population was based on the total of 1061 registered distribution firms in Kenya spread all over the country. The overall sample size for this study was determined using a formula by Yamane formula. Therefore, using the Yamane formula, the sample size for the study was 290 distribution firms. This study also used questionnaire to collect data relevant to this study. Quantitative data collected was analyzed using descriptive statistical techniques which are frequencies, mean, standard deviation. Inferential statistics which include Pearson correlation and the Regression Analysis Model were used to test the relationship between study variables. To test moderating effect the study used hierarchical regression model. The significance of the model was tested at 5% level of significance. Data was analysed using Statistical Package for Social Sciences (SPSS) software. The study results were presented through use of tables and figures. The returned questionnaires for the pilot test were 15 (100%). From the descriptive analysis, the study found that respondents agreed on average that product placement, warehouse flow, retrieval systems and warehouse layout affects performance of distribution firms in Kenya. From the regression findings, the study found that a unit increase in product placement would result in a increase in performance of distribution firms in Kenya. A unit increase in warehouse flow would result in a 0.813 (p=0.000) increase in performance of distribution firms in Kenya. Also, a unit increase in retrieval systems would result in a 0.725 (p=0.000) increase in performance of distribution firms in Kenya. In addition, a unit increase in warehouse layout would result in a 0.732 (p=0.000) increase in performance of distribution firms in Kenya. Finally, the study found that introduction of firm size as moderating variable has positive influence on performance of distribution firms in Kenya; it led to .093 change in R Square. The study therefore recommends that distribution firms should give priority to product placement (Screen placement, script placement and plot placement),warehouse flow (dispatching, returns and order picking), retrieval systems (information system, input system and output system) and warehouse layout (distribution Center Layout, fulfilment Center Layout and cross-Docking Facility Layout).