Adoption of Reverse Logistics on Performance of Manufacturing Firms in Nairobi

Abstract

Globalization of corporations and the competitive pressures that follow has placed increasing pressure on the ability of firms to deliver customer adapted products quickly and on time resulting in demands on the logistics systems. Reverse logistics implementation would allow not only for savings in inventory carrying cost, transportation cost and waste disposal cost , but also for the improvement of customer loyalty and future sales. This study was designed to achieve two objectives: establish the extent to which reverse logistics had been adopted by firms and to evaluate the effect of reverse logistics adoption on financial performance of firms. The study was designed as a cross-sectional survey. From the population of 735 manufacturing firms, a sample size of 74 firms was selected from which 50 responded (response rate = 65%). Primary data was collected using structured questionnaires. Descriptive and regression analyses were used to achieve the objectives of the study and results presented in charts and tables. The study found that 96% of the firms had good infrastructure in place, 94% had well-established supply chains, 86% had put measures to ensure that reverse logistics are as smooth as forward logistics, 80% provided sufficient resources for the adoption of reverse logistics, 66% incorporated reverse logistics practices in their supply chains, 70% incorporated reverse logistics strategies in their strategic plans, and 68% agreed that their employees were aware and knowledgeable about adoption of reverse logistics. The results showed that reverse logistics had a positive and significant impact on performance of manufacturing firms, p < 0.01). The R-squared value reveals that the model explained 42.6% of the variance in performance. The study concludes that reverse logistics had been highly adopted by most of the firms surveyed and that reverse logistics had a positive and significant impact on the financial performance of manufacturing firms. The study recommends manufacturing firms in Kenya need to adopt more reverse logistics practices as this has been showed to lead to improved financial performance