Dissertation: Effect of 3PL Outsourcing on FMCG Company Performance

This dissertation investigates the effect of Third-Party Logistics (3PL) outsourcing on the performance of FMCG companies, with a specific focus on Kerry Group plc. The study begins with an introduction to 3PL outsourcing, its benefits, and its increasing adoption by companies to enhance supply chain management and gain a competitive advantage. The dissertation outlines the aim and objectives, research questions, rationale, and significance of the study, as well as the chapter structure. The literature review explores outbound and inbound logistics, the factors driving 3PL outsourcing, its impact on FMCG companies, and the issues that affect the working environment and employee performance. The research methodology chapter details the research philosophy, design, approach, strategy, data collection methods, sampling, instruments, data analysis techniques, ethical considerations, and limitations of the study. The data analysis chapter presents the findings, while the conclusion and recommendations chapter summarizes the key insights and suggests strategies to resolve issues in 3PL outsourcing for the betterment of employee performance. The study aims to identify the advantages of 3PL outsourcing that influence employee performance and provides a comprehensive analysis of the topic, including factors behind 3PL outsourcing, impact on FMCG companies, and issues affecting the working environment and employee performance, concluding with recommendations for improvement.

DISSERTATION
(Effect of 3PL outsourcing on the performance of FMCG company)

ABSTRACT
Third party logistic is the dynamic business function that assets the firms in getting
adequate time to concentrate more on their core business functions. Outsourcing partners are the
market experts and have good experience in the relevant field. They support the firms in
managing their flow of goods and services activities effectively. The paper revels impact of 3PL
outsourcing on business performance. Furthermore, study describes issues that are faced by
FMCG companies in implementing these outsourcing practices in the business unit. Current
paper discusses advantage of using third party logistic outsourcing practices for the companies.

ACKNOWLEDGEMENT
I would like to thank my professor for support, encouragement and invaluable guidance. I am
grateful 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 the
whole process in this research.
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DECLARATION
This dissertation has been prepared by myself, it is my original work. The work has been
completed under guidance of professor. This is my original work and it has not been published
anywhere.
Date Candidate signature
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Table of Contents
CHAPTER 1: INTRODUCTION....................................................................................................1
Background of the study .......................................................................................................1
Aim and objectives ................................................................................................................3
Research Questions................................................................................................................3
Rationale of the study.............................................................................................................3
Significance of the study........................................................................................................4
Chapter structure....................................................................................................................5
CHAPTER 2: LITERATURE REVIEW.........................................................................................6
Introduction............................................................................................................................6
Outbound and inbound logistics flow and conceptual framework of 3PL outsourcing.........6
Factors behind 3PL outsourcing.............................................................................................9
Impact of 3PL outsourcing on FMCG Company.................................................................11
Issues of 3PL outsourcing that affects the working environment and employee performance of
the company..........................................................................................................................13
Summary...............................................................................................................................15
CHAPTER 3: RESEARCH METHODOLOGY ..........................................................................15
Introduction..........................................................................................................................15
Research Philosophy............................................................................................................16
Research design....................................................................................................................17
Research approach................................................................................................................17
Research strategy..................................................................................................................18
Data Collection.....................................................................................................................19
Sampling...............................................................................................................................20
Research instruments............................................................................................................21
Data Analyses.......................................................................................................................22
Ethical consideration............................................................................................................22
Validity and reliability..........................................................................................................23
Research limitations.............................................................................................................23
CHAPTER 4: DATA ANALYSES ..............................................................................................24
Introduction..........................................................................................................................24

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

CHAPTER 1: INTRODUCTION
Background of the study
Logistics outsourcing is the concept that came into existence in 1980 with the purpose to
improve Supply Chain Management (SCM) of companies. Third Party Logistics (3PL) is related
with logistics and SCM activities in which firms take support of third party business in order to
distribute their products and services to consumers. 3PL companies work in a direction so that
logistics operations of other firms can be managed effectively. 3PL providers are specialised in
warehousing, transportation and packaging (What is third party logistics (3PL), 2017). In the
modern competitive environment, firms are more aware with the fact that they are required to
adopt third party logistics outsourcing services for gaining competitive advantage and enhancing
their economic values. This is the model that supports in paying more attention on core business
activities (Singh, Gunasekaran and Kumar, 2017). It assists in managing all resources well and
concentrating on key areas so that business can get developed soon. This is the beneficial tool
that helps in managing operations, warehousing and order processing so that company can
generate more sales and more revenues as well. 3PL outsourcing is the method through which
companies can pay more focus on growth of the business rather than handling their daily supply
chain issues (What Is Outbound Logistics?, 2015). This supports the corporations in reducing
administration expenditures to great extent.
SCM is considered as one of the most important part of business unit that helps in smooth
flow of goods and services. In the recent time, companies are taking support of logistics
outsourcing methods in which they involve external partners in operations those which can
manage their supply chain well (El Meladi, Glavee-Geo and Buvik, 2017). Traditionally, these
activities were managed by internal staff members but as it is time consuming process, thus, now
these 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). This
process assists in improving logistics expertise and optimisation of resources so that entity can
run its operations smoothly. It is the best tool that aids the firm in implementing the best
practices and setting up of benchmarking. Furthermore, it helps in material flow optimisation and
enhancing productivity of the corporation (Payaro and Papa, 2017).
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There are many companies those which are operating their business globally; they aim to
enhance supply chain visibility and reduce their risk. This has become possible by implementing
3PL outsourcing methods. Past records show that many of the FMCG companies of Ireland have
adopted 3PL outsourcing methodology that has given them 5-8% growth annually.
Approximately, two- third companies of Ireland are dependent upon the third party logistics
services (The Impact of Strategic Outsourcing on Organizational Performance: A Case Study of
Bidco Africa Limited, 2016). In the recent times, many large multinational firms are providing
supply chain solutions to these FMCG companies across the world. It involves multiple bundled
services such as transportation, warehousing, inventory management, distribution, installation,
packaging, labelling, after sales services etc. many managers of the firm believe that outsourcing
is the only way through which they can maintain competition and gain advantage. In the recent
time, frequently changing demand of consumers and changing market conditions have forced
organisation 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 and
can enhance revenues as well.
There are many reasons of applying outsource logistics operational services. One of the
major reasons of implementing this method is that companies get sufficient free time after that
and 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 these
activities well. So, entity gets more time to pay attention on core business activities. With the
help of this, back office work load has been reduced to great extent and now, employees are able
to perform their real work effectively (Rita and Krapfel, 2015). External suppliers have more
knowledge about this field and they have better understanding about domain as well. Thus, they
can adopt innovative ideas and strategies for providing satisfactory services to consumers, this
enhances satisfaction level of consumers. It aids company in growing well and sustaining in the
market for longer duration (Verma, Koul and Pai, 2016).
Current study is based on Kerry Group plc, it is Ireland based firm that operates its
business in the food industry. It offers food ingredients, cheese snacks and ready meal to
consumers. In the year 2015, revenues generated by the company were 6.104 billion and
operating income of the company was 662.7 million. It has employed 24000 employees
worldwide. Present dissertation will discuss the effect of 3PL outsourcing on performance of
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FMCG companies in Ireland. It will describe vulnerability in firm outbound and inbound
logistics flow (Yoon, Yildiz and Talluri, 2016). Furthermore, it will identify the factors behind
3PL outsourcing and will explain issues of 3PL outsourcing that affects the working environment
and employee performance of the company. In addition, several strategies will be recommended
to resolve the issues in 3PL outsourcing for the betterment of employee performance of FMCG
Company.
Aim and objectives
Aim
“To identify advantages of 3PL outsourcing that influence employees towards their performance
for improving growth of FMCG: A study on Kerry Group plc”
Objectives
 To construct vulnerability in firm outbound and inbound logistics flow
 To identify the factors behind 3PL outsourcing
 To highlight the impact of 3PL outsourcing on FMCG company
 To find out the issues of 3PL outsourcing that affects the working environment and
employee performance of the company
 To recommend strategies to resolve the issues in 3PL outsourcing for the betterment of
employee performance of FMCG company
Research Questions
11 What is the structure of vulnerability in firm outbound and inbound logistics flow?11 Which are the factors behind 3PL outsourcing?11 What is the impact of 3PL outsourcing on FMCG Company?11 What are issues of 3PL outsourcing that affect the working environment and employee
performance of the company?11 Which are the recommended strategies to resolve the issues in 3PL outsourcing for the
betterment of employee performance of FMCG Company?
Rationale of the study
Impact of 3PL outsourcing on business performance topic has been provided by
university thus researcher has conducted the investigation on the same topic. The main reason of
conducting dissertation on the topic is that Kerry group Plc is recently facing issues of
decreasing sales and its consumers are not satisfied with the products' delivery and services of
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the company. FMCG Company currently is not able to access third party outsourcing method
effectively in the workplace (Daugherty, Bolumole and Schwieterman, 2017). Kerry group is
unable to maintain its structure due to which its performance is affecting badly. In such
condition, cited firm is facing huge trouble and it is unable to sustain in the market for longer
duration. This is the common issue which is faced by many other manufacture companies as
well. It is essential to avoid structural faults in business for enhancing business performance
(Yang and et.al., 2016). Thus, researcher has chosen this topic so that rout cause of these issues
can be identified and advantage of the 3PL outsourcing can be explained that can help
corporations in their growth and development. Furthermore, scholar has interest in the supply
chain management and related activities thus, researcher has chosen this subject so that
individual can prepare a good research paper on the subject matter. There are huge data available
on the third party logistics outsourcing and its impact on business performance. That is
supportive part for the researcher and help in completing the investigation in an effective
manner. Hence, investigator has chosen this topic so that individual can utilise these details well
and can prepare an effective thesis (Bolumole, Grawe and Daugherty, 2016).
Significance of the study
This study will be beneficial for Kerry Group plc because by this way, it will be able to
understand its loopholes in the logistics practices and it will be able to implement 3PL
outsourcing practices effectively in the workplace (Zhang, Pan and Zhang, 2016). This
investigation will shed light on the activities that can support company in gaining competitive
advantage. Thus, it will be helpful for Kerry group in expanding its operations across the world
and improving its business performance. That will be beneficial in understanding the advantage
and issues which are associated with third party outsourcing so that entity can implement this
strategy in the workplace effectively (Samgam and Shee, 2017). This will help the entire food
industry in its growth and development. By this way, corporations which are operating in this
sector will be able to utilise this concept effectively in the organisation. This will support the
industry leaders in considering potential benefits that can be gained by adopting 3PL outsourcing
corporate strategy. Furthermore, it will be beneficial for other researchers because they will get
the brief idea about outsourcing activity and its benefits for the growth of the business unit. This
will support them in conducting further research on the same topic (Etokudoh, Boolaky and
Gungaphul, 2017).
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In addition, study establishes link between outsourcing drivers and hits impact on
business performance. That will support the outsourcing firms as well in understanding their
importance and providing more effective supply chain solutions to the consumers so that they
can grow well and can earn high reputation in the market (Fountain, 2016).
Chapter structure Chapter 1 Introduction: This would be the first section in which brief overview of the
topic will be given. In this chapter, researcher will frame aim and objectives and will
define rationale of conducting this investigation. Significance of the topic will be
explained in this introductory part. Chapter 2 Literature Review: It would be the next part in which scholar will review
literature of other authors on the same topic. This will help in developing understanding
of the researcher and will support in competing the study in effective manner. (Wang and
et.al, 2018) Chapter 3 Research Methodology: This is the next part in which tools and techniques of
research will be applied so that investigation can be completed in an effective manner. In
this section scholar will involve research philosophy, approach, design, data collection
methods, data analyses methods, sampling, ethical consideration. Suitable methods will
be applied that can help in reaching to the results and completion of research effectively. Chapter 4 Data Analyses: This would be fourth chapter in which scholar will analyse the
data. Entire study will be qualitative in nature thus researcher will use thematic analyses
tool for analysing the details significantly. Data that have been collected through
interview technique will be analysed in this chapter. This will support the researcher in
finding accurate results about impact on 3PL outsourcing on business performance of
FMCG Company in Ireland (Gunasekaran and et.al, 2015).
 Chapter 5 Conclusion and Recommendation: It is the last chapter in which entire study
will be summarized by the researcher. Results found through literature review and data
analyses chapters will be concluded in this section and finally researcher will give
necessary solution to resolve the issues in 3PL outsourcing for the betterment of
employee performance of FMCG Company.
CHAPTER 2: LITERATURE REVIEW
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Introduction
Literature review is the element that helps the scholar in developing understanding about
the topic and conducting the investigation in an effective manner. In this chapter, researcher
reviews the literature of other authors and understands the conceptual framework. Here,
researcher will review literature of other scholars on inbound and outbound logistics and
conceptual framework of 3PL outsourcing. Furthermore, it will review on factors behind
selection of 3PL outsourcing methods and its impact on business performance of FMCG
companies in Ireland (Impact of logistics outsourcing on the profitability of food processing
industries, 2012).
Outbound and inbound logistics flow and conceptual framework of 3PL outsourcing
As per the view of Jain and Hazra, (2017) logistics outsourcing is the strategic
application in which companies take support of outside partners for performing their logistics
activities. In the traditional time all employees of the business were responsible to handle the
supply chain activities of business and resources as well. But over a period of time, competition
has been increased to great extent and now companies are required to involve expertise of this
field in the business those are called as outside partners those who can provide best supply chain
solutions to the consumers and can satisfy needs of clients as well. Salanta and Popa, (2015)
argued that supply chain and inbound outbound logistics have become the essential part of the
business unit, this supports the firms in gaining success and gaining competitive advantage.
Supply chain management has become the key driver in the success and growth of business unit.
Transaction cost theory is the useful framework that helps in analysing the logistic outsourcing
operational activities (The Impact of Strategic Outsourcing on Organizational Performance: A
Case Study of Bidco Africa Limited, 2016). Outsourcing is the activity in which one company
take support of other firm in order to perform their logistics operations effectively. It is the best
technique that supports the entities in reducing their cost and improving their operational
efficiency (Piecyk and Björklund, 2015).
According to Petryk, (2016) 3PL outsourcing is the activity to optimise capacity of the
corporation and utilise resources of the firm effectively. In the recent era, outsourcing is applied
by the firm as strategic tool for the growth of firm and its financial stability. It is the process
through which companies can involve logistics experts in the business in order to manage
essential tasks and get time to concentrate more on core business activities. That is considered as
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