Third-Party warehouse layout and operation Optimization: a case study of Bollore Africa Logistics ltd Nairobi

Abstract

The third party warehouse practice in Kenya is increasingly growing as firms in Kenya adopt new management philosophies such as Just In Time (JIT), lean, agile, cross docking, e - commerce and globalization. Third party warehouses are therefore looking for ways to optimize operations so that to add value to the customers as well as maintain competitive advantage. The objectives of the study were: To establish the storage optimization strategies currently employed by third party warehouses in Nairobi; to investigate the relationship between warehouse storage strategies and the level of optimization and to investigate the challenges therein. A case study was carried out in Bollore Africa logistics limited Nairobi where a response rate of 75% was achieved. The analysis was carried out using descriptive statistics, ratios and correlation analysis. The research found that majority of the warehouses used random storage, mechanical devices and casual labour to optimize their operations. The research also found a strong positive relationship between level of optimization and storage system adopted. Research further found that the warehouse adopting random s torage system had higher space utilization than those using dedicated or class based storage system. Similarly, labour productivity was found to be low in warehouses using random storage compared to those with dedicated or class based storage system. The r esearch concluded that the random storage guarantee high level of storage space utilization as opposed to the use of class based and dedicated storage design while the dedicated and class based system guarantee high level of labour productivity compared to random storage. The research therefore recommended that third party warehouse should decide on the two trade - offs; Time and space, depending on their constraints and adopt the storage strategy that offers the highest optimization. The study was however co nducted on a short span of time and data collected on one organization. The study recommended that further study should be done on a time series approach as well as in other organisations and findings compared to validate the findings