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Third Party Logistic outsourcing on the performance of FMCG company

   

Added on  2020-10-04

55 Pages18190 Words45 Views
DISSERTATION(Effect of 3PL outsourcing on the performance of FMCG company)

ABSTRACTThird party logistic is the dynamic business function that assets the firms in gettingadequate time to concentrate more on their core business functions. Outsourcing partners are themarket experts and have good experience in the relevant field. They support the firms inmanaging their flow of goods and services activities effectively. The paper revels impact of 3PLoutsourcing on business performance. Furthermore, study describes issues that are faced byFMCG companies in implementing these outsourcing practices in the business unit. Currentpaper discusses advantage of using third party logistic outsourcing practices for the companies.

ACKNOWLEDGEMENTI would like to thank my professor for support, encouragement and invaluable guidance. I amgrateful to my friends and peer group those who have helped me in conducting this research.Without their moral support I could not be able to finish this thesis on time. My special thanks to my family, my parents for their support and motivations throughout thewhole process in this research. 2

DECLARATIONThis dissertation has been prepared by myself, it is my original work. The work has beencompleted under guidance of professor. This is my original work and it has not been publishedanywhere. DateCandidate signature3

Table of ContentsCHAPTER 1: INTRODUCTION....................................................................................................1Background of the study .......................................................................................................1Aim and objectives ................................................................................................................3Research Questions................................................................................................................3Rationale of the study.............................................................................................................3Significance of the study........................................................................................................4Chapter structure....................................................................................................................5CHAPTER 2: LITERATURE REVIEW.........................................................................................6Introduction............................................................................................................................6Outbound and inbound logistics flow and conceptual framework of 3PL outsourcing.........6Factors behind 3PL outsourcing.............................................................................................9Impact of 3PL outsourcing on FMCG Company.................................................................11Issues of 3PL outsourcing that affects the working environment and employee performance ofthe company..........................................................................................................................13Summary...............................................................................................................................15CHAPTER 3: RESEARCH METHODOLOGY ..........................................................................15Introduction..........................................................................................................................15Research Philosophy............................................................................................................16Research design....................................................................................................................17Research approach................................................................................................................17Research strategy..................................................................................................................18Data Collection.....................................................................................................................19Sampling...............................................................................................................................20Research instruments............................................................................................................21Data Analyses.......................................................................................................................22Ethical consideration............................................................................................................22Validity and reliability..........................................................................................................23Research limitations.............................................................................................................23CHAPTER 4: DATA ANALYSES ..............................................................................................24Introduction..........................................................................................................................24

Data analysis.........................................................................................................................24CHAPTER 5: CONCLUSION AND RECOMMENDATIONS ..................................................40Conclusion............................................................................................................................40Recommendation..................................................................................................................42REFERENCES..............................................................................................................................43APPENDIX....................................................................................................................................47

CHAPTER 1: INTRODUCTIONBackground of the study Logistics outsourcing is the concept that came into existence in 1980 with the purpose toimprove Supply Chain Management (SCM) of companies. Third Party Logistics (3PL) is relatedwith logistics and SCM activities in which firms take support of third party business in order todistribute their products and services to consumers. 3PL companies work in a direction so thatlogistics operations of other firms can be managed effectively. 3PL providers are specialised inwarehousing, transportation and packaging (What is third party logistics (3PL), 2017). In themodern competitive environment, firms are more aware with the fact that they are required toadopt third party logistics outsourcing services for gaining competitive advantage and enhancingtheir economic values. This is the model that supports in paying more attention on core businessactivities (Singh, Gunasekaran and Kumar, 2017). It assists in managing all resources well andconcentrating on key areas so that business can get developed soon. This is the beneficial toolthat helps in managing operations, warehousing and order processing so that company cangenerate more sales and more revenues as well. 3PL outsourcing is the method through whichcompanies can pay more focus on growth of the business rather than handling their daily supplychain issues (What Is Outbound Logistics?, 2015). This supports the corporations in reducingadministration expenditures to great extent. SCM is considered as one of the most important part of business unit that helps in smoothflow of goods and services. In the recent time, companies are taking support of logisticsoutsourcing methods in which they involve external partners in operations those which canmanage their supply chain well (El Meladi, Glavee-Geo and Buvik, 2017). Traditionally, theseactivities were managed by internal staff members but as it is time consuming process, thus, nowthese entities are taking assistance of outside partners to manage their supply chain logistics(Impact of logistics outsourcing on the profitability of food processing industries, 2012). Thisprocess assists in improving logistics expertise and optimisation of resources so that entity canrun its operations smoothly. It is the best tool that aids the firm in implementing the bestpractices and setting up of benchmarking. Furthermore, it helps in material flow optimisation andenhancing productivity of the corporation (Payaro and Papa, 2017). 1

There are many companies those which are operating their business globally; they aim toenhance supply chain visibility and reduce their risk. This has become possible by implementing3PL outsourcing methods. Past records show that many of the FMCG companies of Ireland haveadopted 3PL outsourcing methodology that has given them 5-8% growth annually.Approximately, two- third companies of Ireland are dependent upon the third party logisticsservices (The Impact of Strategic Outsourcing on Organizational Performance: A Case Study ofBidco Africa Limited, 2016). In the recent times, many large multinational firms are providingsupply chain solutions to these FMCG companies across the world. It involves multiple bundledservices such as transportation, warehousing, inventory management, distribution, installation,packaging, labelling, after sales services etc. many managers of the firm believe that outsourcingis the only way through which they can maintain competition and gain advantage. In the recenttime, frequently changing demand of consumers and changing market conditions have forcedorganisation to improve their operations (Patil and Wongsurawat, 2015). 3PL outsourcing re-engineered process is the best tool through which companies can satisfy needs of consumers andcan enhance revenues as well. There are many reasons of applying outsource logistics operational services. One of themajor reasons of implementing this method is that companies get sufficient free time after thatand they become able to focus more on critical operations of entity (Samgam and Shee, 2017).These 3PL outsourcing firms are specialised in this field thus, they are able to manage theseactivities well. So, entity gets more time to pay attention on core business activities. With thehelp of this, back office work load has been reduced to great extent and now, employees are ableto perform their real work effectively (Rita and Krapfel, 2015). External suppliers have moreknowledge about this field and they have better understanding about domain as well. Thus, theycan adopt innovative ideas and strategies for providing satisfactory services to consumers, thisenhances satisfaction level of consumers. It aids company in growing well and sustaining in themarket for longer duration (Verma, Koul and Pai, 2016). Current study is based on Kerry Group plc, it is Ireland based firm that operates itsbusiness in the food industry. It offers food ingredients, cheese snacks and ready meal toconsumers. In the year 2015, revenues generated by the company were 6.104 billion andoperating income of the company was 662.7 million. It has employed 24000 employeesworldwide. Present dissertation will discuss the effect of 3PL outsourcing on performance of2

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