Effect of Logistics Practices on Operational Performance: A Case Study of Arjo Didesa Sugar Factory, Oromia, Ethiopia

Abstract

The purpose of this study was to investigate the effect of logistics practice on operational performance of the Arjo Didesa Sugar Factory. Therefore, explanatory research design with both qualitative and quantitative approach was used in order to explain the effect of logistics practices on operational performance. The sample of 219 respondents from Arjo Didesa sugar factory working in factory operation and supply and facility management was taken for the study and out of these, data were obtained from 186 respondents. A stratified random sampling technique was employed; in which the target population is stratified and then, sample was randomly selected from each stratum. In addition to these techniques, purposive sampling was applied for the interview of the managers of respective department. Here, both primary and secondary sources of data were used for addressing the stated research questions according to their nature. Structured questionnaire and semi-structured interview were used to gather data. Mean is employed in order to summarize and describe quantitative information. Regression analysis was used to analyze the effect of logistics practices on the operational performance and correlation analysis was also used to determine the relationship between variables. The findings of the study revealed that transportation and inventory management have high significant positive effect on operational performance even though procurement practice, information flow and warehousing have positive significant effect on operational performance. In order to improve operational performance of the factory, researcher recommend to Arjo Didesa sugar factory to upgrade investment on infrastructure for transportation of raw materials within factory. Researcher also initiated to provide recommendation on using principle of economic order quantity that enable effective inventory management.

Keywords: Logistics, Logistics practices, Operational performance, and Sugar Factory.

DOI: 10.7176/IEL/11-1-01

Publication date:May 31^st 2021