Effects of information technology enabled logistics base stations network on operational costs of logistics companies: case of Kenya

Baojun, Wen
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Strathmore University
Logistics operational costs are among the most critical costs of general goods. The concern of every management of logistics companies is how to manage these costs. Most logistics companies have established logistics base stations network as a means of spreading and reducing the operational costs. However, these costs are still high. The focus of the research was to determine the effect of integrating information technology into operations of the logistics base stations network on the overall operational costs of Kenya based logistic companies. The specific objectives were; to establish the implication of Information Technology enabled logistics base stations on transportation and supply chain costs of Kenya based logistic firms; to investigate the implication of Information Technology enabled logistics base stations on inventory control of a logistic company in Kenya; and to determine the implication of Information Technology enabled logistics base stations on material handling costs of a logistic company in Kenya. The research was anchored on a number of theories namely; technology acceptance model theory, operations management theory and Durkheimian theory. Descriptive research design was used by researcher. Researcher targeted 1602 Kenya based logistic companies which formed study population. Stratified simple random sampling was used to determine the sample which was 160 logistic companies. Semi structured questionnaire was utilized to collect both primary and secondary data. The respondents were the logistic managers of the companies. Descriptive and inferential statistics were utilized by the researcher to carry out data analysis. Research established that there exists considerable relationship between information technologies enabled logistics base stations network and operational costs of logistics companies. The results also showed that IT enabled transport, IT enabled inventory control and IT enabled material handling significantly influenced the operational costs of Kenyan logistic firms with a P-value of 0.000. It was therefore concluded that the three variables significantly influenced the operational cost of Kenyan logistics firms. From the study findings, researcher suggests that logistic firms need to continuously improve their security to meet the global standards and always adopt to the ever changing security measures like the real time and tamper proof systems that alerts them in cases of attacks, change of routes or any suspicious activity during transportation. Also logistics companies need to invest more on the inventory management software programs that lowers cost of managing inventories. The IT based inventory management can be used in both entry and at the terminus when goods are offloaded to ensure that client gets what was intended and not swapped on the way. Further, there is need for the logistics companies to introduce customers’ notification systems that can track every stage of the transit goods so as to ensure that customers can monitor the goods and therefore reduce time taken to deliver the cargo.
A Thesis submitted in partial fulfillment of the requirements for the award of the Degree of Masters of Business Administration at Strathmore University Business School
Logistics operational costs, Information technology, Operational costs