THE EFFECT OF LOGISTICS AND DISTRIBUTÎON IN MANUFACTURING COMPANY

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THE EFFECT OF LOGISTICS AND DISTRIBUTÎON IN MANUFACTURING COMPANY

CHAPTER ONE

INTRODUCTION

Background of the Study

This study in chapter one reviews the background, statement of the problem, the study objectives, research hypothesis, justification and the scope of the study. The last section in the chapter covers the study limitations. The study sought to explore the influence of logistics management practice on performance of manufacturing firms in Nigeria. Before looking into the logistics management it was prudent to understand what logistics stood for. There were many ways of defining logistics however, to select the most important factors to logistics success, a solid definition was essential.

Stevenson (2009) defined logistics as ―the part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information.‖ He included the managing of all transportation material handling, warehouse inventory, order processing and distribution, third-party logistics, and reverse logistics in logistics activities (Stevenson, 2009). Logistics encompasses all of the information and material flows throughout an organization. It includes everything from the movement of a product or from a service that needs to be rendered, through to the management of incoming raw materials, production, the storing of finished goods, its delivery to the customer and after-sales service‖ (Ittmenn & King, 2010). The commonality of the recent definitions in logistics is that, it is a process  of moving and handling goods and materials, from the beginning to the end of the production, sale process and waste disposal, to satisfy customers and add business competitiveness (Tseng, Yue, & Taylor, 2005). It is ‗the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods or service-providing network to fulfill customer requests; and utilizing the network to fulfill customer requests in a timely way‘ (Tseng, at el., 2005). Simply, logistics is customer-oriented operation management and it involves the delivery of products or services for the client with assured quality and quantity. For logistics to achieve its objective as per the above definitions the art of management comes in hand and that is why this study will concentrated more on how logistics management influence firm performance.

Starting from the early 1960s, many factors, such as deregulation, competitive pressures, information technology, globalization, profit leverage, contributed to the increase of logistics science in the form we know it today (Ittmenn & King, 2010).The goal of logistics management was to optimize the number, size, and geographical arrangement of plant and warehouse facilities, select transportation methods, and control distribution costs (Mentzer, Soonhong & Bobbitt, 2004). Consequently, logistics management had done an excellent job of managing and moving inventory and the operational aspects of logistics (Mentzer, Flint, & Kent, 2004).

Th                   e importance of logistics and supply chain management to a country‘s economy had been highlighted time and again in the recent past (Ittmenn & King, 2010). A report by the Bureau of Transport  Economics (BTE) of Australia (BTE 2001) states that the performance of the logistics system had a major impact on the Australian economy: ―It affected the cost structures and revenues of Australian producers, their competitiveness in areas such as delivery times and product quality, and the responsiveness of producers to consumer requirements.‖ In addition, Tseng, Yue and Taylor (2005) stated that due to the trend of nationalization and globalization in recent decades, the importance of logistics management had been growing in various areas.

In                    a global economy, competitive and dynamic environment, logistics managements is an important strategic factor for increasing competitiveness, (Roman, Parlina & Veronika, 2013). The significance of logistics management had evolved from a more passive and cost minimization oriented activity to a key success factor for firm competitiveness (Spillin, Mcginnis & Liu, 2013). There was therefore an emerging consensus about the need for companies to handle logistics issues together with economic and business issues (Tuttle & Heap, 2008). The performance of logistics systems was typically related to delivery service, logistics cost and tied up capital. Customers increasingly expected shorter delivery times and more accurate services and logistics management was perhaps most easily conceptualized in manufacturing, since there was a physical flow of goods (Spillin, et al., 2013).

Logistics management plays a key role in the economy, and the market volume of logistics had already reached a substantial level in many economies as a result. Companies that were successful worldwide had long recognized the critical role logistics management played in creating added value (Spillin, et al., 2013). Logistics management is therefore  a critical contributor to the competitiveness of a country. The demand for products could only be satisfied through the proper and cost- effective delivery of goods and services (Ittmenn & King, 2010). In the years ahead, the significance of global logistics markets could continue to increase in response to economic and social conditions.

M                    ore recently a World Bank report on logistics performance states that a competitive network of global logistics would be the backbone of international trade and the importance of efficient logistics for trade and growth would  be  widely  acknowledged:  ―Better  logistics  performance  is strongly associated with trade expansion, export  diversification, ability to attract foreign direct investments and economic growth, in other words, trade logistics matter‖ (World Bank, 2010). The World Bank acknowledged the importance of logistics performance and initiated a study to measure the logistics competitiveness of countries.

The first study was conducted in 2007 and was repeated in 2010 (World Bank 2007 and 2010). The second edition of this report, based on a new dataset for 2010, compared the logistics profiles of 155 countries. The Logistics Performance Index (LPI), which was calculated for each country, was an assessment of logistics performance (ranked on a scale of 1 to 5, with 5 being the best and 1 the worst) and was based on surveys conducted with nearly 1000 global freight forwarders and express carriers.

Africa continent was not performing well in logistics compared to other continents as the report confirmed that the top four countries were from Europe, the fifth one was from Asia however, the bottom five were all from Africa. The top five logistics performers in 2010 were (in order): Germany (4.11), Singapore (4.09), Sweden (4.08), the Netherlands (4.07) and Luxembourg (3.98), and the bottom five were Somalia (1.34), Eritrea (1.70), Sierra Leone (1.97), Namibia (2.02) and

Rwanda (2.04).

Shippers Council of Eastern Africa (SCEA) in their Annual Publication of 2013 confirmed that, a country‘s ability to trade globally could highly depend on the extent to which its international traders have access to competent and high quality logistics services. Majority of the international trader‘s respondents ranked the quality of logistics services in eastern Africa as average (SCEA, 2013). A survey done by SCEA in 2012, revealed an array of factors that were responsible for the efficiency and cost structure of Nigeria logistics chain. They included: logistics cost and efficiency indicator; time indictors related to deliver goods; truck turnaround time; complexity indictors which measured the level of complexity in undertaking trade transactions and customer perception indicators. Comparing the year 2010/2011with 2012, they came up with the following findings: Increase of 35.2 percent in shipping freight rates was realized in 2012; Aircraft operating costs increased from an average of USD 3.00 per kilogram in 2010/2011 to an average of USD 4.90 per kilogram in 2012; which reduced types of goods transported by air in the year (SCEA, 2013).

It was therefore clear that logistics management played a big role in any economy and was a critical contributor to the competitiveness of a country.

Thailand for instant had embraced new innovative technology and new management thinking to cope with the ever increasing competition from local and global players. The pressure was building up and the rest of the industries needed to catch up if they were to remain competitive (TLPS, 2010).

Efficient flow of goods and information were only possible if there was a well- developed transport and communication infrastructure (Ittman & King, 2010). In Sub-Saharan African countries, these infrastructures were, if present, poorly managed and maintenance was lacking. Consequently, inefficient transport and communication formed a major obstacle in achieving efficiently organized flows of goods and services. If farmers and manufacturers were to take advantage of reforms in agriculture and other productive systems, dependable transport and communication systems were indispensable. Such systems were of major importance for the facilitation of internal and external trade. Investments in infrastructure would improve distribution logistics, increase productivity and lower production costs (World Bank, 2010).

1.1.1  Logistics Management in Nigeria

The growing importance of logistics arose from companies becoming globalized to gain access to new markets, realize greater production efficiencies, and tap technological competencies beyond their own geographical borders (Kilasi, Juma, & Mathooko, 2013). In today’s highly competitive environment, every company aimed at gaining a share of the global market and to take advantage of higher production and sourcing efficiencies. A key determinant of firm‘s performance then was the role of the ―logistics function‖ in ensuring the smooth flow of materials, products and information throughout a company’s supply chains (Kilasi, at el., 2013). This was why in most recently, logistics had become more prominent and was recognized as a critical factor in competitive advantage.

Logistics management had received much attention over the past decade from practitioners and government (Tilokavichai, et al., 2012). Realizing the importance of sustainability in logistics management was critical for competitive advantage because operational performance had a positive impact on company‘s financial performance (Tilokavichai, et al., 2012). Since logistics management consisted of many activities including customer service, orders processing, inventory management, transportation, storage, packaging, demand and forecasting, production planning, purchasing and procurement, facility location, and distribution that were supported by enormous information flow every organization wanted to impress the efficiency on its formation. This could only be achieved when, logistics performance is managed in order to ensure sustainability of the firm (Tilokavichai, et  al., 2012).

Nigeria‘s logistics performance had deteriorated in recent years. From an overall global ranking of 76th in 2007, it was then 122ndout of 155 countries on the Logistics Performance Index (World Bank 2013). Although international shipments, infrastructure and logistics competence had improved marginally since 2007, customs, track & trace and timeliness had all declined significantly over the period (World Bank 2012). While the time to import goods, as well as the number of documents necessary, were comparable to the average in sub-Saharan Africa, the cost to import was significantly higher. Low logistics efficiency was a key concern and business risk for companies importing to or exporting from Nigeria as well as the logistics service providers involved (Nigeria Shipping Council, (KSC, 2013).

Despite having made significant progress in infrastructure development in recent years, Nigeria‘s transport infrastructure was inadequate to meet the country‘s needs. The country‘s infrastructure indicators looked relatively good compared to other low-income countries in Africa, but they remained below the levels found in Africa‘s middle-income economies, like Egypt or Nigeria (World Bank 2012). Bringing Nigeria‘s infrastructure up to the level of the region‘s middle-income countries boosted annual growth by more than three percentage points. Nigeria‘s development plans included significant improvements to roads, railways, seaports, airports, water and sanitation, as the country attempts to increase its competitiveness in the global market (KSC 2013). Road and rail connections with neighboring countries were still limited, but Nigeria could be an important regional hub for air transport, railways, and ports in the years to come.

Accordingly, Shippers Council of Eastern Africa (SCEA) in their Annual Publication of 2013 confirmed that, a country‘s ability to trade globally highly depended on the extent to which its international traders had access to competent and high quality logistics services. Majority of the international trader‘s respondents ranked the quality of logistics services in eastern Africa as average (SCEA, 2013).

A survey done by SCEA in 2012, revealed an array of factors that were responsible for the efficiency and cost structure of Nigeria logistics chain. They included: logistics cost and efficiency indicator; time indictors related to deliver goods; truck turnaround time; complexity indictors which measured the level of complexity in undertaking  trade transactions and customer perception indicators. Comparing the year 2010/2011with 2012, they came up with the following findings: Increase of 35.2 percent in shipping freight rates was realized in 2012; Aircraft operating costs increased from an average of USD 3.00 per kilogram in 2010/2011 to an average of USD 4.90 per kilogram in 2012; which reduced types of goods transported by air on year in review (SCEA, 2013).

The Logistics performance index: Overall (1=low to 5=high) in Nigeria was last reported at 2.59 in 2010, according to a World Bank report published in 2012. Logistics Performance Index overall score reflected perceptions of a country’s logistics based on efficiency of customs clearance process, quality of trade- and transport-related infrastructure, ease of arranging competitively priced shipments, quality of logistics services, ability to track and trace consignments, and frequency with which shipments reach the consignee within the scheduled time (World Bank, 2012).

Such performance was considered a drawback to trade flow because importers and exporters incur extra costs as a result of the need to mitigate the effects of unreliable supply chains. According to findings from the survey Nigeria was ranked 99thoverall behind its main EAC partners Uganda and Tanzania who managed positions 66thand 95threspectively based on a special logistics performance index (LPI). In the survey Nigeria posted a score of 2.59 points compared to the 2.82 and 2.60 points realized by Uganda and Tanzania respectively (World Bank, 2012). This index showed how low Nigeria was in terms of logistics performance and a need for further research to come up with the ways on how to improve the situation.

1.1.2  Manufacturing Firms in Nigeria

Most of manufacturing investment in the 1960s went into heavily protected import- substituting industries, such as footwear, leather, rubber, petroleum, industrial chemicals, paints, soft drinks, cement and metal products (Bigsten, Arne, Peter Kimuyu & MånsSöderbom, 2010). While import substitution ensured domestic availability of products previously imported, it distorted industrial development in Nigeria by encouraging the creation of excess capacity, low technical efficiency and subsequent inability to penetrate external markets (Bigsten, et al., 2001). At the beginning of the 1970s Nigeria faced a foreign exchange crisis, and the government tightened administrative controls of the economy further by means of higher tariffs, stricter import licensing procedures and widespread price controls,( Bigsten, et el., 2010).

These interventions reduced export incentives, and the share of manufacturing exports shrank from 40% of the value of manufacturing output in  1964 to about 10% in the mid-1980s. In spite of the poor export performance, manufacturing in Nigeria increased its share of Gross Domestic Product (GDP) during the 1970s, (Bigsten, et al., 2010). There was at the same time a rapid expansion of informal manufacturing production of mainly simple consumer goods and services for low-income households. Informality resulted from efforts to avoid high compliance costs and low opportunity costs for self- employment due to a mismatch between high labour force growth rates and formal sector employment opportunities, (Bigsten, et al., 2010). In 1983 Nigeria entered the Preferential Trade Area (PTA) of Eastern and Southern Africa, and in 1993 the Common Market for Eastern and Southern Africa (COMESA) was established (RoK,1994). All those called for expansion of manufacturing industries in Nigeria.

Nigeria had a large manufacturing sector serving both the local market and exports to the East African region. This sector had been growing since the late 1990s and into the new century. The Nigeria manufacturing produces were relatively diverse and they included: transformation of agricultural raw materials, particularly of coffee and tea; meat and  fruit canning; wheat flour and cornmeal; milling and sugar refining. Electronics production, vehicle assemblies, publishing, and soda ash processing are all significant parts of the sector Nigeria National Bureau of Statistics (KNBS, 2010). Nigeria also manufactured chemicals, textiles, ceramics, machinery, metal products batteries, plastics, cement, soft drinks, cigarettes, aluminum steel future and leather goods among others Nigeria Association of Manufacturers (KAM, 2012).

According to Awino (2011) manufacturing was an important sector in Nigeria and it made a substantial contribution to the country‘s economic development. The sector, which was dominated by subsidiaries of multi-national corporations, contributed approximately 13% of the Gross Domestic Product (GDP) in 2004(RoK, 2007). Improved power supply, increased supply of agricultural products for agro processing, favorable tax reforms and tax incentives, more vigorous export promotion and liberal trade incentives took advantage of the expanded market outlets through AGOA, COMESA and East African Community (EAC) arrangements, all resulted in a modest expansion in the sector of 1.4% in 2004 as compared to 1.2% in 2003 (RoK, 2008).

Nigeria recognized the importance of the manufacturing sector for long-term economic development. Indeed, the growth targeted for manufacturing stated by the government in its Vision 2030 document were ambitious and required rapidly increasing investment levels, eventually reaching levels above 30% of GDP (RoK, 2007). The raised levels of poverty coupled with the general slowdown of the economy had continued to inhibit growth in the demand of locally manufactured goods, as effective demand continued to shift more in favor of relatively cheaper imported manufactured items (Bigsten, et al., 2010). In addition, the high cost of inputs as a result of poor infrastructure had led to high prices of locally manufactured products thereby limiting their competitiveness in the regional markets and hampering the sector’s capacity utilization. However, the recent introduction of the EAC Customs Union provided Nigeria‘s manufacturing sector, the most developed within the region, and a greater opportunity for growth by taking advantage of the enlarged market size, economies of scale, and increased intraregional trade (RoK, 2007)

Globalization had a critical impact on manufacturing, both locally and internationally. Through broadening the marketplace and increasing competition, globalization led customers to place greater demands on manufacturers to increase quality, serviceability and flexibility, while maintaining competitive costs (Laosirihongthong & Dangayach, 2005). One of the ways of improving efficiency on manufacturing firms was to improve logistics performance. That is why if manufacturing firms needed to become efficient and flexible in their manufacturing methods, they needed different strategies to manage the flow of goods from the point of production to the end user, (Awino, 2011).

In Nigeria, the importance of logistics management continued to grow with Fast Moving Consumer Goods Companies opting for this mode to deliver their products across the country and beyond and not so much on other manufacturing sectors (Njamb & Katuse, 2013). More so, majority of those firms adopted third part logistics (3PL) in their business and did not care much to have improved inter logistics management. According to Njambi and Katuse (2013) then, in an era of shrinking product life cycles, proliferation of product lines, shifting distribution chains and rapidly changing technological advancement, use of logistics had become an essential ingredient for organizations in gaining competitive advantage. This was so since logistics management balances two basic objectives: Quality of Service and Low Cost of doing business as every other firms objective lies on quality service and minimum production cost.

Bosire (2011) researched on the Impact of logistics outsourcing on lead time and customer service among supermarkets in Nairobi and found a direct effect with the lead times of product delivery on that delivery time had tremendously reduced. Kangaru (2011) while researching on challenges of business outsourcing at the Nigeria Power and Lightning found out that third party logistics providers were ahead of manufacturing companies that operated logistics departments on quality implementation and improvement issues in logistics services. A study done by Magutu, et al., (2012), indicated that, 78.9% of the large manufacturing firms in Nigeria had outsourced transport management while 89.5% of the firms had outsourced warehouse management. 50% of the firms had outsourced information management and inventory handling management while 73.7% of the firms had outsourced material handling management.

These results showed how manufacturing firms in Nigeria had engaged on logistics services through outsourcing from logistics services providers. However these various studies had not extensively delved into logistics management practices in relation to the performance of manufacturing firms. In fact, realizing the importance of sustainability in logistics management and achieving logistics performance could have improved on firm performance in Nigeria (SCEA, 2013).

1.2  Statement of Problem

 In many emerging economies especially in Asia, manufacturing industry had been the economic growth engine and was the major tradable sector in those economies (Tsai, 2004). However Nigeria‘s manufacturing industrial sector enjoyed modest growth rates averaging 4  percent over the last decade (KAM 2012). In the year 2000 manufacturing sector was the second largest sub sector of the economy after agriculture (RoK, 2008) but in 2010, it was in the fourth place behind agriculture, wholesale and retail trade, transport and communication (World Bank 2012). As a result, the sector had seen a reduction in its contribution to GDP from 13.6 percent in the early 90‘s to 9.2percent in 2012, (RoK, 2013). Nigeria Vision 2030 emphasizes the need for appropriate manufacturing strategy for efficient and sustainable practices as a way of making the country globally competitive and a prosperous nation (RoK, 2007). Nevertheless, most manufacturing firms in Nigeria operate at a technical efficiency of about 59 percent compared to their counterparts in Malaysia that average about 74 percent ((Achuora, Guyo, Arasa, Odhiambo, 2015)) raising doubts about the sector‘s capacity to meet the goals of Vision 2030 (RoK, 2007).

While all the previous studies had tended to focus more on the developed world (McKinnon, Edwards, Piecyk & Palmer, 2009; Sanchez-Rodrigues, Cowburn, Potter, Naim & Whiteing, 2009). Evidence showed that cultural, social, economic and environmental aspects of each country did influence the link between logistics management and performance (Miguel & Brito, 2011; Kaufmann & Carter, 2006). Keebler & Plank, (2009) agreed that the findings of US firm could not represent the universe of companies nor could findings be generalized to other countries. Furthermore, first world such as Europe, America and part of Asia had more developed infrastructure and business structures that easily supported the implementation of logistics as opposed to developing countries. The effort to achieve generalization of the causal relationship between logistics management and performance of manufacturing firms called for empirical confirmation in diverse environments, especially developing economies such as Nigeria. This study therefore intended to empirically examine how transport management, inventory management, ordered process management and information flow management influenced performance of manufacturing firms in the Nigerian setting.

1.3  General Objective

 The purpose of this study was to examine the influence of logistics management on performance of manufacturing firms in Nigeria.

Specific Objectives

  1. To analyze the influence of transport management on performance of manufacturing firm in Nigeria
  2. To evaluate the influence of inventory management on performance of manufacturing firm in Nigeria
  3. To explore the influence of order process management on performance of manufacturing firm in Nigeria
  4. To establish the influence of information flow management on performance of manufacturing firm in Nigeria
  5. To evaluate the moderating effect of logistics information system on the influence of logistics management on performance of manufacturing firm in Nigeria

 

1.4  Hypotheses

 

  1. H0: Transport management does not significantly influence manufacturing firm performance

 

  1. H0: Inventory management does not significantly influence manufacturing firm performance

 

  1. H0: Order process  management does not significantly influence manufacturing firm performance

 

  1. H0: Information flow management does not significantly influence manufacturing firm performance

 

  1. H0: Logistics information system does not significantly moderate the influence of logistics management on manufacturing firm performance

1.5  Justification

 According to Spillin, et al., (2013), Logistics management is a supply chain management component that is used to meet customer demands through the planning, control and implementation of the effective movement and storage of related information, goods and services from origin to destination. Logistics management therefore plays an important role of adding competitive advantage to a firm in customer support and business excellence (Buyukozkan, at el., 2008).Low logistics efficiency is a key concern and business risk for companies importing to or exporting from Nigeria as well as the logistics service providers involved (KSC, 2013). The Government of Nigeria has always been committed to developing a mixed economy where both public and private sector companies are present (RoK, 2007). Public participation in manufacturing sector is much smaller than the private sector and is still decreasing due to government‘s change of policy;  the emphasis is now being given to privatization of the industrial sector. Due to this, effective logistics services have become a critical issue for government in order to improve companies‘ performance in Nigeria. This calls for inclusion of logistics management on government‘s policies for the government to achieve vision 2030 on manufacturing sector (RoK, 2007). Specifically the finding of this study is expected to benefit the following stakeholders;

1.5.1    Government

To the government, the study may provide greater insight into the relationship between logistics management and performance of manufacturing sector. This may aid in formulation of policies and regulations that can help improve efficiencies and effectiveness in the sector and improved manufacturing sector could increase national GDP and by extension increase job creation. Improved logistics management possibly will boast flow of trade and reduction of cost in exports creating export incentives, improved prices of goods and services, and reliable supply chain.

1.5.2    Manufacturing Firms

Manufacturing firms may benefit from the study as they could better understand the underlying logistics factors influencing performance of their firms and they maybe better placed to deal with hurdles that impede successful logistics management. Efficient and effective logistics will provide base for manufacturing firm growth, increased productivity, reduced cost of production, improved distribution, quality products, and increase customer satisfaction. Based on these observations, this study may perhaps propose some future directions in order to make Nigerian logistics competitive with world-class logistics best strategies.

1.5.3    Logistics Sector

Logistics sector in Nigeria includes logistics service providers, transporter, warehouse management service providers, and distribution sector and any other service provide who contributes in making sure that goods and services are available to the customer from suppliers when required and at the right time. This study could act as an eye opener to these logistics providers by empirically showing them the importance of logistics information systems and the benefits of a well-managed logistics has it may create efficiency on customs clearance process, quality of trade- and transport-related infrastructure, ease of arranging competitively priced shipments, quality of logistics services, ability to track and trace consignments, and frequency with which shipments reach the consignee within the scheduled time (World Bank, 2012).

1.5.4  Academic Field

The study could also benefit the academic community as it may contribute to the increasing body of literature on logistics. It may possibly provide a framework of logistics management dimensions which may be used as a test base for further research. Due to the limited study on logistics in researcher’s knowledge that has been carried out in developing world, the researchers in the field may be interested in reviewing the findings of this project and more so those based in Nigeria. The research also may present avenues for continuing theoretical and empirical research investigations in the field of logistics, in particular logistics management. In general, this research would contribute towards a theoretical and practical improvement of logistics adoption, implementation and upgrade in diverse cultural and business setting, based on a Nigerian case study.

1.6  Scope of the Study

The study focused on manufacturing firms that were registered with KNBS. According to KNBS (2010), there were 1,604 manufacturing firms in Nigeria that were classified into various segments and located across the country. This was the entire aggregation of respondents that met the designated set of criteria (Kothari, 2004). It was limited to evaluating influence of logistics management on firm performance among the selected firms. The respondents of the study were top and middle managers in the  department of logistics in  selected manufacturing firms in Nigeria.

The study considered only four core aspects of logistics management which  included: transport management, inventory management, order process management and information flow management. These variables were most favorable to use because according to Ballou (2004), logistics management activities are classified into two, core and supporting. The core activities take place in every logistics chain of a firm while supporting activities vary from company to company (Njambi & Katuse, 2013). In essence, these functions combine to create a system solution for integrated logistics (Bowersox, Closs & Cooper, 2010). The support functionality of logistics warehousing, materials handling, and packaging—also represents an integral part of a logistics operating solution. However, these functions did not have the independent status of those previously discussed (Bowersox, et al., (2010). Warehousing, materials handling, and packaging were all an integral part of other logistics areas (Bowersox, et al., 2010).

Logistics information system was the moderating variable and the researcher considered its seven factors that were: load planning system (LPS); terminal management system (TeMS); vendor selection system; warehouse management system (WMS); financial management system; electronic Customer Relationship Management; and transportation management system (TMS) (Shi et al.2011) as they influenced the performance of logistics management directly.

 

1.7  Limitations of the Study

 

The study faced a number of limitations as it employed descriptive and explanatory research design which allowed for both observational data and formulating a problem for more precise investigations. Therefore the finding of the study was based on the observed population and developing hypothesis from operational point of view. However, the researcher had clearly defined what he wanted to measure and had an inbuilt flexibility when designing research questions to come up with more precise meaning in order to gather relevant data.

As it is with all self-report surveys, this one has limitations. Only a single respondent from each firm did the evaluations. While that respondent was in most cases a senior person in the supply chain/logistics division, they represent only a single perception of a member within the firm and is not necessarily indicative of other firm member‘s perceptions. The sample frame, while slightly broader than a single professional association, is still primarily from organizations that do  not necessarily represent the universe of companies/logistics-supply chain employees in Nigeria, and are not representative of what happens in other parts of the world.

This study‘s sample was drawn from all manufacturing firms in Nigeria; therefore, the conclusions inferred can only be generalized to the population of manufacturing firms in Nigeria and must exclude other categories of firms like service and hospitality industry. Another limitation acknowledges that firm performance may be affected not only by logistics management, but also by various other variables not considered in this study. Logistics management needs to be integrated with other functional areas of the firm such as marketing, finance, or operations to better support firm performance (Shang, K.-C., & Marlow, P. B. 2005).

Therefore, to project firm performance solely based on logistics management may skew any attempted generalization. Furthermore, all participants responded within a particular time frame and were only given a single opportunity to respond. Therefore, it cannot be reliably established whether such data would hold true over time, especially in an unstable business environment. In particular, different firms have distinct strategic goals in the short-term, such as customer satisfaction, market share, growth, financial performance and many more. However, a pilot study was administered in order to test for feasibility, validity and reliability of the research instruments.

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