LOGISTICS OPTIMIZATION AND PERFORMANCE OF PHARMACEUTICAL FIRMS IN NAIROBI CITY COUNTY, KENYA

Abstract

Logistics optimization is critical for enhancing the efficiency and competitiveness of firms, particularly in the pharmaceutical sector, where timely delivery and cost control are essential. This study examined the effect of logistics optimization on the performance of pharmaceutical firms in Nairobi City County, Kenya. The study focused on two key dimensions of logistics optimization: delivery fulfillment, and route optimization. The dependent variable was the performance of pharmaceutical firms, measured in terms of operational efficiency, customer satisfaction, profitability, and competitive advantage. The study adopted a cross-sectional research design, allowing data to be collected at a single point in time to examine relationships among variables. The target population comprised all pharmaceutical firms in Nairobi City County, as listed by the Kenya Association of Pharmaceutical Industry (KAPI), totalling 154 firms. Respondents included logistics managers, supply chain officers, and operations managers, resulting in a total target population of 462 individuals. A stratified random sampling method was used to ensure representation across manufacturing and importing firms, and a sample size of 210 respondents was determined using Krejcie and Morgan’s formula. Primary data was collected through a semi-structured questionnaire, which included both closed-ended and open-ended questions. Closed-ended questions utilized a 5-point Likert scale to measure respondents' perceptions, while open-ended questions allowed for detailed feedback on logistics practices. The questionnaire was pre-tested in a pilot study involving 21 respondents to ensure validity and reliability. Content validity was assessed through expert judgment, and reliability was established using Cronbach’s Alpha, with an acceptable threshold of 0.7. Data analysis was conducted using the Statistical Package for Social Sciences (SPSS) version 28. Descriptive statistics such as frequencies, percentages, and means were used to summarize data. Inferential statistics, including Pearson correlation and multiple regression analysis, were employed to test the relationships between logistics optimization variables and firm performance. The regression model tested the combined and individual effects of delivery fulfillment, and route optimization on performance. The findings revealed significant positive contributions of all variables to firm performance: delivery fulfillment (B = 0.398, p < 0.05), and route optimization (B = 0.423, p < 0.05). Route optimization emerged as the most impactful predictor. The study concludes that logistics optimization enhances operational efficiency, profitability, and customer satisfaction. Recommendations include adopting advanced technologies for forecasting and route optimization, leveraging collaborative partnerships for cost reduction, and integrating customer feedback into delivery processes to enhance service quality and competitiveness. These strategies will ensure sustained logistics efficiency and improved organizational performance.

Key Words: Logistics Optimization, Delivery Fulfillment, Route Optimization, Performance, Pharmaceutical Firms