Effect of Reverse Logistics on Operational Performance of Liquefied Petroleum Gas Companies in Kenya

Abstract

One of the major concerns that companies have is the need to support sustainable environment. Customers’ awareness on environmentally friendly initiatives have increased over the years, driving firms to become more responsible to the environment. Governments have put in place strict regulations that demand firms to monitor the impact of their activities on the environment or face heavy penalties due to noncompliance. Stiff competition and other economic factors have also pushed companies into adopting green strategies. Reverse logistics is one of the key green strategies that emphasizes on supporting sustainable environment in the field of logistics. There are many benefits associated with reverse logistics such as reduced costs, improved customer service, reduced waste, enhanced flexibility and improved quality. In this context, the objectives of this study were: to determine the reverse logistics practices among liquefied petroleum gas companies in Kenya and to establish the effect of adoption of reverse logistics practices on operational performance of liquefied petroleum gas companies in Kenya. The study used a descriptive cross-sectional survey. The population of the study comprised of 34 liquefied petroleum gas companies in Kenya listed under the Cylinder Exchange Pool list. A census was conducted since the population was small. The study used primary data that was collected through a selfadministered questionnaire that was given to supply chain managers and operational managers in the absence of the supply chain managers. Out of 34 liquefied petroleum gas companies, 30 responded. A multiple regression analysis was used in establishing the effect of reverse logistics on operational performance of liquefied petroleum gas companies in Kenya. The findings revealed that liquefied petroleum gas companies in Kenya have adopted reverse logistics practices to appreciable levels with repackaging practices being the most adopted and recycling practices being the least adopted. Out of all the indicators, employees being trained on the adoption of reverse logistics practices ranked lowest. From the results, it was also noted that reverse logistics practices had a significant relationship with cost and quality and while the P values of the relationship between reverse logistics practices and flexibility as well as the relationship between reverse logistics practices and dependability were insignificant, a test of the correlation coefficient proved that a significant relationship exists. The relationship between reverse logistics practices and speed was found to be insignificant with remanufacturing practices being negatively related to speed. It is recommended that top management should train employees to increase awareness on reverse logistics practices and promote adoption. Similarly, the management should view reverse logistics as a way of not only improving operational performance but also social, environmental and economic performance. The study further recommends the use of joint reverse logistics to lessen the financial risks, promote information-sharing and capabilities and reduce uncertainty in the reverse supply chain.