Abstract
Outsourcing is the important use of independent specialized service providers to perform and manage activities or functions that are normally viewed as non-core - to the business. A third-party logistics (3PL) service provider is widely used as the word to describe an independent provider who oversees outsourced activities on behalf of customers whose business method they support. This Study investigated the impact of 3PL outsourcing on the performance of clothing manufacturing smes in Nigeria. Data used in this study were obtained from both primary and secondary sources. Secondary data were obtained through literature reviews of related studies while primary data were collected through a structured questionnaire which was distributed to 3PL (3PL) service providers in the Nigerian logistics industry. One hundred and fifty-four (154) questionnaires were sent to the respondents; 80 responses were evaluated and only 62 viable (complete) survey responses were extracted and used in this analysis. The survey response rate is therefore 40%. Data obtained from the research study were analyzed using descriptive statistics and exploratory factor analysis (EFA). Findings from the descriptive analysis, hierarchically indicated the extent third-party logistic outsourcing function among clothing manufacturing SMEs in Nigeria as Transportation and Delivery Service, Product Branding and Packaging, Procurement/Order processing, Warehousing, and Inventory Management. The study also revealed that the important reasons for 3PL outsourcing among clothing manufacturing SMEs in Nigeria as ranked by the respondents are ability to manage a function that is out of control, improved flexibility of operations, access to emerging technology, to lessen garment delivery time, access to resources and market that are not obtainable within, risk reduction, and to lessen operating and control costs. In addition, the descriptive findings of the ten problems associated with 3PL outsourcing among clothing manufacturing SMEs in Nigeria established that price, issue of trust, insufficient regulating systems on how certain services are delivered, cost reductions would not be achieved, and Safety issues are the top five problems associated with it. Furthermore, benefits of third-party logistic outsourcing function on Nigeria’s clothing manufacturing performance in the order of hierarchy are improve customer service, yearly growth in profits, improve competitive advantage, reduction of operational budgets, and minimizing total inventories. Lastly, there is a significant relationship between third-party logistic outsourcing functions and clothing manufacturing SMEs performance in Nigeria, the statistical analyses at 95% confidence interval revealed that transportation outsourcing is a significant variable that have impact on clothing manufacturing SMEs performance. This research recommends that training/education on logistic functions should be mandatory for the SMEs’ owners/managers on how certain services are delivered. Also, SMEs’ s owners and managers should give utmost consideration to transportation outsourcing for the betterment of the business.
Keywords: Third-party logistics (3PL), Outsourcing, Clothing manufacturing, SME’s, Performance.