Evaluating the Impact of Outsourcing Transport Logistics on Organisational Performance: The Study of Six Alcoholic Beverage Producing Companies in Ghana

Abstract

The importance of outsourcing to the development of firms cannot be overemphasized. Outsourcing reduces cost and increases profitability. The study evaluated the impact of outsourcing transport logistics on organizational performance. The study used the following objectives: To find out the reasons for outsourcing transport logistics in alcoholic beverage producing companies, to identify the challenges associated with outsourcing and to assess the impact of outsourcing on the profitability of the organization. The study used six alcoholic beverage producing companies in Ghana and adopted mixed research approach. A sample size of 100 was used. The study was analyzed through the effect model using Stata version 12.  30 observations were analyzed to evaluate the impact of outsourcing transport logistics on organizational performance.  Among the findings, the reasons for outsourcing were identified as follows: improving the company’s focus; accessing world class capabilities; helping companies to free resources for other purposes; sharing and minimizing risk; infusing cash into organizations; and helping to reduce and control operating cost of companies. Challenges of outsourcing transport logistics were identified as: loss of control; dissatisfied customers; leakage of confidential information; staff retrenchment and; high switching cost. The study revealed that lower transport cost leads to increased profitability of selected alcoholic beverage producing companies in Ghana. Larger firms can outsource their transportation since by outsourcing, the transport cost become lower. Asset tangibility has a negative coefficient. Based on the above, the study recommended the following: There should be agreement on certain particular quality standards with third party service providers; management should not outsource to service providers engaged in multiple contracts; and staff should be reassigned to other tasks when their function is outsourced.

Keywords:  Outsourcing Transport, Logistics, Organisational Performance

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