Outsourcing and supply chain performance of Kenya medical supplies agency

Abstract

This study aimed at determining the relationship between outsourcing and supply chain performance in the Kenya Medical Supplies Agency. The task specifically included determining the influence of outsourcing on supply chain performance efficiency at Kenya Medical Supplies Agency; determining the relationship between outsourcing and supply chain performance at Kenya Medical Supplies Agency and establishing the challenges of outsourcing in Kenya Medical Supplies Agency. The study adopted a descriptive survey research design. The study targeted 109 respondents out of all 450 employees of KEMSA. The research employed a structured questionnaire to collect data from the respondents. The findings reveal that outsourcing influences supply chain performance at KEMSA to a large extent. The findings reveal to a great extent that under production costs the organization through outsourcing has: eliminated costly delays, increased the organizations’ overall financial performance, experienced reduction of cost and operational expenses and has saved a lot on distribution costs. The findings reveal that to a great extent on quality improvement the organization through outsourcing has: built long term relationship with suppliers to enhance its value addition, eliminated waste through loss of drugs and achieved all time shelf availability. The findings further revealed that to a great extent under strategic supplier partnership practices the organization through outsourcing has: built long term relationship and encouraged mutual planning aimed at improving supply chain performance, built long term relationship with its suppliers to improve its strategic and operational capacity, become more competitive, flexible and efficient in its operations, and been able to exchange information on demand and proper management of inventory levels. The study findings also revealed that to a great extent under collaboration and lean procurement practices the organization through outsourcing has: responded to short term change in demand, reduced lead time and achieved flexibility, achieved faster delivery and flexibility, and increased access to timely information for decision making. The study findings also revealed that to a great extent on core competence and continuous development the organization through outsourcing has: reduced inventory levels and stock out number, been able to reduce customer demand uncertainty and develop efficient customer response, and improved customer service by delivering quality and valid drugs in time. The study findings reveal to a very great extent that; loss of learning opportunities from the outsourced activity, cost implications, confidentiality issues and dilution of organizations culture are challenges of outsourcing. The study concludes that production costs, quality improvement, strategic supplier partnership, collaboration and lean procurement practices, and core competence and continuous development have a significant relationship with supply chain performance in Kenya Medical Supplies Agency. The study recommends that there is need for KEMSA management to address challenges the organization faces during outsourcing.