Outsourcing of distribution logistics within the Supply chain of East African breweries limited

Abstract

Outsourcing has been adopted widely in the world as a strategy to gain competitive advantage. Companies are increasingly seeking outside firms to perform activities previously conducted in-house in order to achieve time, process and cost advantages. Such outsourcing makes sense for firms that lack the necessary economies of scale, skills or technology to perform certain functions quickly and efficiently. Additionally, many firms seek third-party providers in order to focus on their own competencies. It is not because they are incapable. As much as outsourcing has been reported as a success story, the way in which it has been implemented seems to be of key importance. Organizations are thus focusing on outsourcing as a management strategy to delegate major non-core functions to specialized service providers. Outsourcing therefore represents a significant shift in the way organizations manage and staff their business support activities. This case study sought to determine the outsourcing of distribution logistics used to gain competitive advantage at East African Breweries. The objectives of the study were twofold. The first was to establish the factors that led to the outsourcing decision. The second was to establish how the outsourcing decision was implemented. The researcher carried out personal interviews with two senior managers at East African Breweries and one senior manager at Tibbett and Britten. The questionnaire was used as an interview guide -. According to the findings of the study, East African Breweries had a greater drive towards outsourcing of its distribution logistics as a strategy to cut costs in order to pursue the core business activities. The study clearly revealed that the outsourcing of distribution logistics was successfully implemented in a phased approach and in some cases it was a "sudden event". It was a big task for the executives interviewed to recollect the details of what transpired during the outsourcing process due to change of roles from time to time. Research should be undertaken on how a service provider proposes value to clients who are either not interested in or do not know about outsourcing relationships.