EFFECT OF LOGISTICS MANAGEMENT PRACTICES ON

OPERATIONAL PERFORMANCE:
THE CASE OF AH-WAN FOOD COMPLEX, ADAMA

UNITY UNIVERSITY
ADAMA CAMPUS
DEPARTMENT OF BUSINESS ADMNISTRATION
MBA PROGRAM

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF
MASTER OF BUSINESS ADMISTRATION

BY: KASIM MERGA

SEPTEMBER, 02, 2021

ADAMA, ETHIOPIA
 EFFECT OF LOGISTICS MANAGEMENT PRACTICES ON
OPERATIONAL PERFORMANCE:
THE CASE OF AH-WAN FOOD COMPLEX, ADAMA

A Thesis Proposal Submitted to Department of Business Administration in

Partial Fulfillment of the Requirements for the Award of Master Degree in
Business Administration (MBA)

By:
Kasim Merga

Instructor: Bekele Reta (Asst. P)

UNITY UNIVERSITY

FACULTY OF BUSINESS AND SOCIAL SCIENCES

DEPARTMENT OF BUSINESS ADMINISTRATION

MBA PROGRAM

SEPTEMBER, 02, 2021

ADAMA, ETHIOPIA
 Table of Contents
Contents Page
Abstract............................................................................................................................................v
1. INTRODUCTION....................................................................................................................1
1.1. Background of the Study...................................................................................................1
1.2. Background of the Organization.......................................................................................2
1.3. Statement of the Problem......................................................................................................3
1.4. Research Questions:..............................................................................................................4
1.5. Objectives of the Study.........................................................................................................4
1.5.1. General objective...........................................................................................................4
1.5.2. Specific Objectives........................................................................................................5
1.6. Significance of the Study......................................................................................................5
1.7. Scope of the Study................................................................................................................5
1.8. Definition of Basic Terms....................................................................................................5
1.9. Organization of the Study.....................................................................................................6
2. REVIEW OF RELATED LITERATURES.............................................................................7
2.1. Theoretical Review of Related Literature.............................................................................7
2.1.1. Concepts and Definition of Logistics............................................................................7
2.1.1. Logistics Management................................................................................................10
2.1.2. Logistics Management Practices.................................................................................11
2.1.2.1. Information Flow Management...............................................................................12
2.1.2.2. Transport Management............................................................................................13
2.1.2.3. Physical Distribution...............................................................................................14
2.1.2.4. Inventory Planning and Management......................................................................16
2.1.2.5. Warehousing Management......................................................................................17
2.1.3. Performance Measures................................................................................................18
2.2. Empirical Review............................................................................................................19
2.3. Conceptual Framework of the Study..............................................................................24
3. RESEARCH DESIGN AND METHODOLOGY..................................................................25
3.1. Research Approach.............................................................................................................25

iii
3.2. Research Design.................................................................................................................25
3.3. Data Type and Source.........................................................................................................25
3.4. Target Population................................................................................................................25
3.5. Sampling Technique...........................................................................................................25
3.6. Sampling Size Determination.............................................................................................26
3.7. Data Collection Instruments...............................................................................................26
3.8. Data Collection Procedure..................................................................................................27
3.9. Method of Data Analysis....................................................................................................27
3.10. Data Quality Assurance..................................................................................................27
3.11. Ethical Considerations....................................................................................................27
4. TIME AND BUDGET SCHEDULE......................................................................................28
4.1. Time Schedule....................................................................................................................28
4.2. Budget Schedule.................................................................................................................28
Reference.......................................................................................................................................29

iv
 Abstract
The purpose of the proposed study is to examine the effect of Logistics Management practices on
Operational Performance of Ah-Wan food complex Factory. To study the effect of Logistics
Management practices and Operational Performance five dimensions of LM practices i.e.
Information flow practices, Transportation Management practices, Physical Distribution
Management practices, Inventory Management practices and Warehouse management practices
are selected to be used as independent variables and Operational Performance as a
performance measures is selected to be used as dependent variable and will intend to tests the
respondents understanding perspectives on the effect of Logistics Management practices on
Operational Performance. From the total target population a sample of 145 employees or
samples intended to be taken as a sample based on Yemane (1967) sampling formula, using non
probability sampling techniques. The data will be collected through structured questionnaires
with closed ended statements questions. The Collected data will be analyzed through SPSS
version 22 by running descriptive statistics, correlation and regression to identify the
characteristics of variables under study and to investigate the relationship between the
independent variable of Logistics Management practices with Operational Performance and
their effect on the dependent variable Operational performance.

Key word: Logistics Management, Logistics Management Practices, Operational Performance

v
 1. INTRODUCTION

1.1. Background of the Study

Logistics management refers to a set of activities undertaken in an organization to promote
effective management of its logistics, (Adebayo, 2012). Logistics management organizations are
tasked with the responsibility of formulating and implementing strategies that if adopted will
lead to achievement of a sustained competitive advantage. The volatility of the business
environment, intense competition and improvements in technology has introduced dramatic
changes to the logistics management. Globalization and severe competition of supply chains has
forced manufacturing firms to look for better manufacturing methods to remain competitive.

Firms need to make solid inventory network connections that empower them to control their
market directions by reacting to fast changes in clients' worth and rival moves for them to obtain
prevalent business execution. Logistics management refers to a bit of stock system the officials
that plans, finishes and controls the beneficial, compelling forward and turn stream and farthest
point of item, benefits and related data between the purpose behind source and the inspiration
driving use so as to meet customers' essentials. According to Wescley and Ricardo (2011),
typical fundamentals of logistic activities include customer services, inventory control,
transportation and ordering. These can give companies competitive advantages.

Bosire (2011) noted that logistic management practices provide an avenue for integrating
activities in the supply chain aiming at realizing a sustained competitive advantage. The process
entails formulation of ways and means through which products and service reach the firm as well
as the consumer. In today’s operational environment, manufacturing firms are faced with
challenges of responding to the dynamic demands from customers and the heightened
competition amongst firms. This has prompted the firms to adopt ways in which to improve
quality of products and services, reduce production costs as well as adopt technologically
friendly environment that will promote production of goods that fits the prevailing demands.
Barua (2010) notes that majority of the manufacturing firms have capitalized on promoting
supply chain activities to add value to their customers. This is made effective by capitalizing on
the adoption of effective logistic management approaches in the supply chain operations of the
firms.

various empirical studies, such as Ellinger, A.E., Daugherty, P.E. and Keller, S.B. (2000), show
that logistics is a strategic vector in companies’ organization and influences their performance,

1
namely in terms of service quality and overall profitability. Schramm and Morschett, (2006),
Opines that marketing performance (sales and market share growth) and financial performance
(return on investment and profit growth) are consequences of performance of logistics activities.
It can therefore be argued that logistics activities must be ingrained in organization strategies so
that it can secure high performance. Competitive position of a business mainly results from the
evaluation of what the firm delivers with regards to value creation as compared to what other
competitors offer (Gorynia, 2004) cited in (Olaf & Grrzegorz, 2015 ). According to Nyaberi and
Mwangangi, (2014) in their study on Effects of logistics management practices on performance
of Rift Valley Bottlers Limited in Kenya found that logistics management practices contributes
to increase in profit, sales volume, service delivery, production levels and quality of product
which denotes organizational performance. Thus, the management of logistics activities has
become a valuable way of securing competitive advantage and improving organizational
performance (Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S., and Rao, S. S. (2006)).

The wheat flour industry in Ethiopia is currently growing investment and the demand for the
product is increasing highly and as a result there are new entrant of investors to this investment
sector and the existing ones are also engaged in the expansion of the production to further food
complexes such as production of biscuit, macaroni and spaghetti parallel with the production of
the flour. Wheat flour is both industrial as well as consumer goods. Increased application of
wheat flour for industrially processing of food products such as spaghetti and macaroni would
also have great bearing of future wheat flour demand. It is also applied for bread making, cakes
and biscuits and porridge at household level. The byproduct bran is used as animal feed
preparation (Sutton and Kellow, 2010). Therefore, based on empirical evidence discussed above
it is important to study effect of logistics management practices on operational performance with
reference to Ah-wan food complex factory operating in Adama city by assessing how the
company logistics management is effective in improving operations performance to satisfy the
need or demand in the market for this industry.

1.2. Background of the Organization

Ah-Wan Food Complex PLC is renowned and established Pasta/Macaroni manufacturing facility
based in Oromia region with professional working environment owned by the TWO Brothers-
AH-WAN Private limited company Food Safety Management System/ISO 22000:2005/

2
Certified Company by ISO QAR, Certificate of Competency for Food Manufacturing facilities
By Food, Medicine and Health care Authority of Ethiopia. We have two different manufacturing
sectors. We produce wheat flour, pasta, and macaroni on our Food Processing Industry. And we
produce plastic, pp bags and pp mat.
Vision

Being the most well known brand business organization by producing the leading and
selective products of flour, pasta, macaroni, and as well as packaging materials of plastic
bags, pp bags and pp mats amongst competitive manufacturers in Ethiopia.
Mission

Producing quality and safe products of pasta & macaroni, PP bag, PP mat and plastic bags
using modern technology of our era, professional man power and quality input based on
market need for fulfilling customer satisfaction. Playing major role on Agricultural
Transformation policy achievement of Ethiopia reducing joblessness by creating mass job
opportunity for our society and community.
Our company in general plays great role on achieving country's sustainable development
goals by fulfilling all our social responsibility. 
Values

Dependable quality and food safety

We strive for excellence Swift delivery
We stand for caring and protecting the environment
We stand for justice on all working process
Strengthening innovative work fulfilling every social responsibility

1.3. Statement of the Problem

Logistics play a pivotal role in supporting organization as they strive for more efficient
management system as in the business practices. Inefficient management system together with
the inefficient internal management would disable the organization to react the demand of
customers with the lowest price at the shortest feasible time frame including the quality level
which doesn’t meet the customer expectation and would like the organization to the competitive
disadvantage situation against the rivals (Cozzolino, 2012).

3
In logistics management, inappropriate use of logistics activities added unnecessary cost and
process for the industry. For instance, improper application of transport, warehouse, and
inventory control and logistics information related problems are the basic problem that faces
different organization (Rahul & Altekar, 2005).

Mukolwe & Wanyoike (2015) assessed how logistics management practices used in logistics
affect the operational efficiency in Mumias Sugar Company. The finding of the study reveals
that transportation management and practice used for physical distribution are similar with the
flow of raw materials and goods that is cost effective which impacts positively operational
efficiency. Furthermore, the finding of Dolven (2002) and Kerr (2005), shows that in adequate
logistics activities tied with lack of skilled workers and management blamed for the high level of
loss, damage and deterioration of stocks experienced.

Lwiki et al. (2013) did research on inventory management practice of sugar manufacturing firm
in Kenya. Based on eight Sugar Manufacturing firms in Kenya and conclude that the
accomplishment of sugar manufacturing firms was consequently due to the inventory
management practice applied.

According to Fekadu (2013) conducted the study on logistics practice in Ethiopia. The finding of
the study shows that Ethiopian logistics system is poor practices and lack of coordination of
goods transport, inadequate fleet freight vehicles in numbers and damage and quality
deterioration of goods while handling, transporting and storage. Even though there is study done
by Fekadu (2013) on Ethiopian logistics practice, he did not give prominence specifically on
logistics activities like inventory and warehousing. Therefore, the proposed study will intend to
fill the existing gap in literature by assessing the effects of logistics activities on the operational
performance of Ah-Wan Biscuit Factory.

1.4. Research Questions:

The following research questions will be answered in the proposed study:

1) What are the existing Logistics Management practices in Ah-Wan Biscuit Factory?
2) What is the relationship between Logistics Management practices and Operational
performance of Ah-Wan Biscuit Factory?

4
 3) What is the effect of Logistics Management practices on Operational performance of Ah-
Wan Biscuit Factory?
1.5. Objectives of the Study
1.5.1. General objective

The general objective the study is to examine effect of Logistics Management practices on
Operational performance of Ah-Wan Biscuit Factory.

1.5.2. Specific Objectives

 To determine existing Logistics Management practices of Ah-Wan Biscuit Factory.
 To examine the relationship between Logistics Management practices and Operational
performance.
 To evaluate effect of Logistics Management practices on Operational performance.
1.6. Significance of the Study

The study will have significant importance in strengthening the existing knowledge and
understanding of logistics management practices and operational performance by examining and
empirically testing the relationship between logistics management and operational performance
for the case of Ah-Wan Biscuit Factory located in Adama city. The study will also provide some
insight or recommendations to Ah-Wan Biscuit Factory, to evaluate and improve their logistics
management practice based on the study findings. Finally, the proposed study can serve as an
additional reference to others researchers who are interested in the area of logistics management
and operational performance.

1.7. Scope of the Study

Logistics management encompasses vast areas of managerial practices. However, it is difficult

and unmanageable to conduct the proposed study in all areas that summarizes Logistics
management in terms of time, finance, and research manageability. Therefore, the scope of the

5
study will be delimited to examine the effect of Logistics management practices on operational
performance. To manage the research flow only Ah-Wan Biscuit Factory, located in Adama city
will be subjects of the study, through assessing how the company interacts with its down streams
of the supply chains or customers (distributors and retailers). The subject scope of this study also
delimited to the company’s customers around Adama.

1.8. Definition of Basic Terms

Performance-is the act of performing a task, an action, a play and something doing task. It is
also refers to an act of performing or execution of accomplishment, operation of function,
usually will regard to effectiveness a formal exhibition of skill or talents capability to achieve
desired results.

Operation performance: - is defined as the manufacturer’s performance in serving its

customers, that is, how the manufacturer performs for a key customer in areas of quality,
flexibility, delivery, and so forth

Logistics: is the responsibility to design and administer systems to control movement and
positioning of raw materials, work-in process, and finished inventories at the minimum total cost
(Bowersox, Closs, & Cooper, 2007).

Logistics management: is the process of strategically managing the procurement, movement

and storage of materials, parts and finished inventory (and the related information flows) through
the organization and its marketing channels in such a way that current and future profitability are
maximized through the cost-effective fulfillment of orders (Christopher, Logistics & Supply
Chain Management, 2011)

1.9. Organization of the Study

The research will in tended to be organized into five chapters: 1 st Chapter will contain the
introductory part dealing with back ground of the study, the statement of the problem, objectives
of the study, scope of the study, significance of the study and definition of basic terms. The 2 nd

6
chapter focuses on the theoretical review and empirical review taken from different sources. The
3rd chapter presents the research methodology of the study. The 4 th chapter presents data analysis,
presentation and interpretation of the study and finally, the 5 th chapter presents the summary of
major findings, conclusion, recommendations and limitation & suggestion for future researches.

2. REVIEW OF RELATED LITERATURES

2.1. Theoretical Review of Related Literature
2.1.1. Concepts and Definition of Logistics

Logistics has evolved from a mere classic transport function to a strategic, cross-functional, and
global discipline (Grant et al., 2006). Supplying production material to factories and distributing
finished goods to warehouses and shops are prerequisites of highly fragmented value chains in
global economies today. The increasing impact of logistics on a company’s success and
economic growth underlines the importance of future planning in this field. Supplying the
world’s population with food, daily goods, books, educational material, and medicine has
become one of the key issues in fostering economic prosperity in developing and emerging
countries, especially in rural areas (A. Carallo, 2013).

7
Additionally, the professionalization of logistics management, as well as the strong conviction
that logistics contributes to economic wealth and costs savings, have changed the way logistics-
related aspects are viewed. Disaster relief, humanitarian aid, and refugee camp supplies are some
important areas which are handled by professional logistics nowadays. Consequently, the overall
importance of logistics is increasing. Thus, innovative and up-to-date methods are needed to
cope with new challenges in the field (Berghaus, 2015).

Since logistics advanced from 1950s, due to the trend of nationalization and globalization in
recent decades, the importance of logistics management has been growing in various areas. For
industries, logistics helps to optimize the existing production and distribution processes based on
the same resources through management techniques for promoting the efficiency and
competitiveness of enterprises (Alessandro Vitale, 2014).

Logistics can be defined as the process of planning, implementing and controlling procedures for
the efficient and effective transportation and storage of goods including services and related
information from the point of origin to the point of consumption for the purpose of conforming
to customer requirements and includes inbound, outbound, internal and external movements
(Lambert & Stock, 2008). It comprises the management of raw materials flow to finished goods
through an organization. Logistics means planning and organizing activities that ensure that
resources are in place so that the process can be effectuated accordingly in efficient and effective
manner (Mellat-Parast and Spillan, 2014). Similarly, According to the Council of Logistics
Management (CLM) “Logistics is the process of planning, implementing and controlling the
efficient and effective flow of goods, services and related information from point of origin to
point of consumption in order to meet customer requirements”.

It is also defined as part of supply chain that plans, implements, controls the efficient and
effective forward and reverse flow, storage of goods, services and related information between
the points of origin and the point of consumption in order to meet customer’s requirement
(Vitasek, 2007). Logistics activities and processes are fundamental elements that a company’s
supply chain capabilities and competences are based upon. The close relationship between
logistics and customer service, and its effect on a firm’s competitiveness dictate that companies
handle their logistics function prudently so as to achieve its full potential as a source of
competitive advantage. The main functions of logistics managers involve organizing and

8
planning of inventory, purchasing, transportation, warehousing activities. The logistic activities
can be divided in two categories (Lambert and Burduroglo, 2000):

 Inbound Logistics, that refers to the activities connected with the procurement of
material, handling, storage and transportation; and
 Outbound Logistics, that refers to the activities connected with the collection,
maintenance and distribution or delivery of the product to the final consumer.
Logistics is the responsibility to design and administer systems to control movement and
positioning of raw materials, work-in process, and finished inventories at the minimum total cost
(Bowersox, Closs, & Cooper, 2007). Thus, 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).

To conclude, 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, Yue, & Taylor, 2005).

The role logistics system can play also in reducing the environmental impact of industries has
not been extensively researched. It is especially important to understand the relationship between
operational effectiveness and environmental aspects. Both result from a number of decisions
taken within the firm concerning both strategic and operative levels (Aronsson and Huge Brodin,
2006). Moreover, Logistics purposes may lead to increased levels of performance for the
adopting firm and that complimentary firm resources may affect the degree of performance
(Hazen and Byrd, 2012).

Logistics generates value through the accommodation of clients’ delivery requests. Thus,
logistics performance should indicate the organization’s ability to deliver goods and services
when required at acceptable cost in the quantities required by customers (Zelbst et al., 2008).

9
Logistics performance can be viewed as a subset of the broader concept of organizational output
(Duong and Paché, 2016). The most traditional logistics performance is based on the creation of
time and place utility, while the attributes of an organization’s product or service offering that
lead to utility creation through logistics activities, which are reflected in seven-R formula. It
refers to the organization’s ability to deliver the right amount of the right product at the right
place at the right time in the right condition at the right price with the right information (Lee et
al., 2016).

Logistics performance is defined as the degree of efficiency, effectiveness, and differentiation

linked with the accomplishment of logistics activities (Mentzer et al., 2004). The logistics
function as a whole should strive to reduce the ratio of resources utilized against derived results
(efficiency), accomplish pre-defined goals (effectiveness), and gain superiority in comparison
with competitors (differentiation) (Tuan, 2017).

Accordingly, logistics is strategically important in many industries as it is central to achieving

competitive advantage (Kenyon and Meixell, 2007). However, companies must respond to
changing customer needs, and logistics flexibility is an important part of the response (Zhang et
al., 2005). Each company must develop or create its own logistical values that will be
incorporated into the product, or its value in use. For customers despite the shape of the product,
it is important that it will be accessible to them in the required time. There are six reverse
logistics capabilities that have impact on companies’ performance: logistics information
management, close-loop capability, supply chain integration, supply chain coordination,
conformity capability, and institutional incentives (Vlachos, 2016).

To conclude, in the past the goals of logistics were connected primarily to cost effectiveness.
Nowadays, besides cost effectiveness, attention is paid also to fast lead times and developing
customer service. As a result of costs, the price is still an important factor in competition, but in
addition companies want shorten delivery times, increase the speed of distribution and reaction,
make sure that the delivery arrives on time. Logistics is not just “save money” action; it is an
important part of customer oriented service strategy. (Sakki 2003 p.25: cited by Koykka 2010).
2.1.1. Logistics Management
Logistics management is treated as a part of the supply chain management that deals with
management of goods in an efficient way. It is the management process that integrates the
movement of goods, services, information and capital, right from the sourcing of raw material, to

10
the consumer (Springinklee and Wallenburg, 2012). Accordingly, The Supply Chain
Management Professionals, (2007) defined logistics management as that part of Supply Chain
Management that plans, implements, and controls the efficient, effectively forward and reverses
the flow and storage of goods, services and related information from the point of origin and the
point of consumption in order to meet customers’ demands. The fact that logistics is a unifying
link intra organizationally between the production and marketing function and inter
organizationally between suppliers and customers cannot be gain said (Green, Whitten, &
Anthony, 2008).Autry, Zacharia, and Lamb, (2008) contends that logistics must focus on the
coordination, collaboration of activities, logistics social responsibility, and strategic distribution
planning, technology and information systems. These altogether are the fulcrum of customer-
firm-supplier relationship management which improves customer satisfaction and operational
performance and in consequence impacts on organization performance.

In addition, Logistics management is the process of strategically managing the procurement,

movement and storage of materials, parts and finished inventory (and the related information
flows) through the organization and its marketing channels in such a way that current and future
profitability are maximized through the cost-effective fulfillment of orders (Christopher,
Logistics & Supply Chain Management, 2011). Therefore, the logistics management process
begins with raw material accumulation to the final stage of delivering goods to the destination.
By adhering to customer needs and industry standards, logistics management facilitates process
strategy, planning and implementation. Logistics management needs new pattern of thinking
based on entropic thinking and nonlinear thinking which bring together the capacity of
developing strategies and approaching complex problems (Bolisani and Bratianu, 2017;
Bratianu, 2007).

Logistics Management has the mission of getting the right goods or services to the right place, at
the right time, and in the desired condition at the lowest cost and highest return on investment
but with real satisfaction of customers. Logistics has become a part of a company’s strategic
planning, management and controlling. Every company must develop their strategy and logistics
competitiveness factors from their own point of view Haapanen 2005 p15 (cited by Koykka

2010). Therefore, The goal of the logistics management is to provide the right product with the
right quality at the right time in the right place at the right price to the ultimate customer

11
(Mentzer et al., 2004). Thus, Logistics management has been defined as a high priority for
contemporary organizations. The success of logistics management is determined through the
combination of efficiency, effectiveness and differentiation (Fugate et al., 2010). Eventually,
supply chain management measures through procrastination affect price/cost, product’s quality,
innovation (Mamad & Chahdi, 2013).

2.1.2. Logistics Management Practices

Manufacturing companies are constantly faced with the challenges of keeping track of inventory
and ensuring that their products are successfully delivered to the customers. This workflow
generally involves various forms of logistics, each of which functions a little differently.
Logistics practices can be divided as key activities and support activities (Ballou, 2007) as cited
in (Serdaris et al., 2014). Key Activities are central to the operation of every firm, involve
transportation, inventory management, customer service, information flows, and order
management. Support practices include warehousing, materials handling, purchasing, packaging,
cooperation with production/operation management, and maintenance of information systems.
The logistics system consists of the following components: Customer service, Inventory
management, Transportation, Storage and materials handling, Packaging, Information
processing, Demand forecasting, Production planning, Purchasing, Facility location and other
activities for a specific organization could include tasks such as after-sales parts and service
support, maintenance functions, return goods handling and recycling operations (Reddy and
Jayam, 2016).

According to Reddy and Jayam (2016), clearly any one organization is unlikely to require all
these specific tasks to be accomplished. For example, a service firm such as an airline might
combine elements from the information processing, maintenance, demand forecasting, customer
service, and purchasing functions into a logistics system designed to reach its customers. On the
other hand, a manufacturer of consumer goods may draw from transportation, inventory
management, storage, materials handling and packaging in addition to customer service,
purchasing and demand forecasting for their logistics support.

The various forms of Logistics Management according to (Ristovska, Kozuharov, & Petkovski,
2017) are:

12
 2.1.2.1. Information Flow Management
According to Harisson and van Hoell (2002) information flow was defined as the flow of data in
different directions with variable contents between various data base (department) within a
company. Before, the information flow within the logistics had become vital since it enabled
chains to respond on real time and accurate data (Harisson& van Hoell, 2008). Firms then,
looked at information flow as an asset, since it was not possible to have efficient and reliable
materials flow without it ( (Mattsson & Lemmink, 2002) (Stevenson & Spring, 2009) concurred
that, the flow of accurate and real time information in logistics was considered very important to
the flow of materials.

Bowersox, Closs, & Cooper, (2010) named four reasons why timely and accurate information
flow had become more critical for effective logistics systems' design and operations: Customers
perceived information about order status, product availability, delivery schedule, shipment
tracking, and invoices as necessary elements of total customer service. With the goal of reducing
total supply chain assets, managers realized that information could be used to reduce inventory
and human resource requirements; Information flow increased flexibility with regard to how,
when, and where resources may be utilized to gain strategic advantage; Enhanced information
transfer and exchange capability utilizing the internet was changing between buyers and sellers
and redefining the channel relationships (Somuyiwa & Adewoye, 2010).

This information explosion had enabled logistics to become an important weapon in the firm's
arsenal to add value to the bottom line (Closs, et al., 2005). Information sharing was a key to
success of logistics performance (Whipple, Lambert, Vermeersch., 2002). Sharing of information
on transfer; exchange of information indicating the level and position of inventory; sales data and
information on the forecasting; information about the status of orders, production schedules and
delivery capacity, and firm performance measures had become essential to all firms (Wardaya, et
al., 2013). Product and delivery lead times are shortened making products available on time to
customers (Tachizawa and Ginemez, 2005).Access to information enables channel members to
plan how much to stock for a given period of time (Fasanghari, Roudsari and Kamal, 2008). In
order for information sharing to take place, chain partners should have a collaborative potential
and IT infrastructure (Shore and Venkatachalam, 2003).

However, this information flow can only be successful when firms impress on information
technology use. Information technology provides the capacity to see data that is private in a

13
system of cooperation and monitor the development of products, where information is passing in
every process in the supply chain (Simatupang & Sridharan, 2002).

2.1.2.2. Transport Management

Transportation can be defined as the act of moving goods or people from an origin to a required
destination. It also includes the creation of time and place utilities. Transportation plays a key
role in the supply chain, because without the efficient movement of finished goods and raw
materials the entire system would not be able to work at its full potential (Randall et al., 2010).
Transportation plays a key role in the supply chain, because without the efficient movement of
finished goods and raw materials the entire system would not be able to work at its full potential
(Green, Whitten, & Anthony, 2008). The modes of transportation can be divided into five: rail,
road, air, water and pipeline. Intermodal freight transport involves the transportation of freight in
an intermodal container or vehicle, using multiple modes of transportation (rail, ship, air, water
and truck), without any handling of the freight itself when changing modes. The method reduces
cargo handling, and so improves security, reduces damages and losses, and allows freight to be
transported faster (Cavinato et al., 2007).The goal for any business owner is to minimize
transportation costs while also meeting demand for products.

Transport management is the planning, controlling and decision making on operational area of
logistics that geographically moved and positioned inventory (Bowersox, Closs, & Cooper,
2010). Because of its fundamental importance and visible cost, transportation had traditionally
received considerable managerial attention and almost all enterprises, big and small, had
managers responsible for transportation (Bowersox, et al., 2010). Transportation occupied one-
third to two thirds of the amount in the logistics costs hence transport management influenced
the performance of logistics system immensely (Bowersox, et al., 2010). Transporting is required
in the whole production procedures, from manufacturing to delivery to the final consumers and
returns. Only a good management and coordination between each component would bring the
benefits of logistics to a maximum. A good transport management in logistics activities could
provide better logistics efficiency, reduce operation cost, and promote service quality on firms
(Bowersox, et al., 2010).

From the logistical system point of view, three factors were fundamental to transportation
performance: cost, speed, and consistency (Bowersox, et al., 2010). The cost of transport is the
payment for shipment between two geographical locations and the expenses related to

14
maintaining on-transit inventory. Logistical systems utilized transportation that minimized total
system cost (Bowersox, et al., 2010). According to Bowersox, (2010) speed of transportation
was the time required to complete a specific movement. Speed and cost of transportation were
related in two ways. First, transport firms capable of offering faster delivery typically charged
higher rates for their services. Second, the faster the transportation service was, the shorter the
time interval during which inventory were on transit and the higher the charges (Bowersox, et al.,
2010). Thus, a critical aspect of selecting the most desirable method of transportation to a firm is
to balance speed and cost of service.

2.1.2.3. Physical Distribution

Distribution is an integral part of the marketing mix. With the right distribution strategy in place
that is with the right mode of delivery the right speed of delivery to the appropriate place of
purchase, customer satisfaction can be significantly increased. Failure to deliver these practical
points will result in the loss of orders and income to the company and long-term customer loyalty
will decline (Drummond and Ensor 2001).

Physical distribution is a whole process that concern also materials and finished product, a
physical movement of goods from the manufacturers to intermediaries and finally to the ultimate
consumer. Distribution accomplishes this by providing time and place utility, in other words,
availability and its goals are like any other marketing goals: consumer’s satisfaction and profit
for the firms (Muhscina, 2008). There are various routes that products or services use after their
production until they are purchased and used by end users. These channels are referred to as
distribution channels or marketing channels. Therefore, distribution channels are all those
organizations that a product has to go through between its production and consumption (Kotler et
al, 2006). Distribution channel management is very critical for the firms when they decide to
enter one or more markets.

15
 Figure 2.1: Major Channels of Distribution

Source: Etzel et al. (2004)

There are 3 degrees of intensity of distribution namely; selective, intensive and exclusive
distributions with their application relying on the nature of the product and market type (Etzel et
al, 2004).

According to (Etzel et al, 2004), A firm with intensive distribution policy seeks to achieve a wide
distribution for its products. This in essence means that the firm will make use of as many outlets
as possible perhaps a combination of both direct and indirect methods of distribution are likely to
be out into use. Such intensive distribution aims the product at the mass marketing and the
distribution strategies implemented tend to carry the product to all the nooks and corners of the
market. With selective distribution however, not every outlet or channel will be utilized. The
firm will rather rely on a few outlets to handle the products. The firm may resort to this method if
the product involved is of a durable nature and requires an after-sales service or it is associated
with certain prestige. Exclusive distribution entails the granting of exclusive rights to a single

16
seller in with a particular territory or area to sell the company’s products such a right therefore
provides that the firm supplies all the necessary tools including promotional device to the seller.
The seller in turn undertaken to handle only the Firm’s middlemen all stand to gain from such
arrangement. The middlemen get larger commission because his mark-up is high; he also
commands the prestige of such a role. The firm on the other hand, is free from the burden of
having to handle completely the marketing of its products and it is in the better position to fight
off competition.
2.1.2.4. Inventory Planning and Management
The overall objective of Inventory Planning and Management is to determine and maintain the
lowest inventory levels possible that will meet the customer service policy requirements
stipulated in the CSP. Inventory is the stock of any item or resource used in the organization. An
inventory system is the set of policies and controls that monitor levels of inventory and
determine what levels should be maintained, when stock should be replenished, and how large
orders should be. Inventory control is the supply of goods and offerings at the proper time with
the right time and amount (Ogbo, 2011). Adeyemi and Salami (2010) state that the main purpose
of inventory management is to have what is needed, and to reduce the quantity of instances
production and services operations are interrupted by using issues of stock outages. According to
Vergin (2012), organizations use inventory management practices such as automatic
replenishment, ABC inventory model, just-in time (JIT) inventory, economic order quantity
(EOQ) and vendor managed inventory. In addition, the use of inventory management has also
helped organizations become competitive in the market. Use of information technology to
manage inventory enables an organization to become more efficiency and cut cost (Kithinji,
2015).

Therefore, Inventory management is a strategic area in logistics operation and has an impact of
efficiency and effectiveness of the overall supply chain system. Whilst inventories provide some
security against fluctuations in the level of customer demand, there is concern that they may
reduce the ability of supply chains to respond to changes in the nature of demand. Inventories in
the international supply chains may therefore act as a buffer against one risk whilst increasing
another type of risk. Etienne (2005) lists factors such as speed to the market for new products,
responsiveness to market niches, and feedback time for quality issues. Harrison and Van (2008)
have put forward inventory reduction strategies such as: reduction of production lead times,

17
product postponement, total cycle time, compression, centralization of inventory and the virtual
warehousing concept. Managing all kinds of assets in an organization can be viewed as an
inventory problem.

Successful inventory management involves creating a purchasing plan that will ensure that items
are available when they are needed (but that neither too much nor too little is purchased) and
keeping track of existing inventory and its use. Two common inventory-management strategies
are the just-in-time method, where companies plan to receive items as they are needed rather
than maintaining high inventory levels, and materials requirement planning, which schedules
material deliveries based on sales forecasts, Christopher 2007.

2.1.2.5. Warehousing Management

A warehouse is a commercial building for buffering and storage of goods or an intermediate area
for storing of raw materials or products until they are needed for production or consumption
Chua and Teo 2008 (cited by Haung Min study 2010). Warehousing refers to the activities
involving storage of goods on a large-scale in a systematic and orderly manner and making them
available conveniently when needed. In other words, warehousing means holding or preserving
goods in huge quantities from the time of their purchase or production till their actual use or sale.

Being an essential component of logistics, is a key aspect of modern supply chains and plays a
critical role in the success or failure of business today Frazelle 2002a. (Cited by Haung Min
study 2010)

According to Tompkins et al., (2003) the typical warehouse functional areas and flows as;
receiving, staging for cross-docking, reserve, forward and shipping. Receiving, transfer and put
away, order picking, cross-docking, and shipping. Order picking is the most labor-intensive and
costly activity of most warehouses. The most common order picking system is picker-to-parts
systems, in which the order pickers walks or drives along the aisle to pick items (De Koster
(2004). Therefore, Warehousing is an important part of a firm’s logistics system that stores
products (raw materials, parts, goods-in-process and finished goods) at and between points of
origin and points of consumption. Warehousing can be provided by either warehouses or
distribution centers (Murphy & Wood, 2008).

18
Warehouse layout is also important in achieve greater efficiencies. Minimizing travel time
between picking locations can greatly improve productivity. However, to achieve this increase in
efficiency, companies must develop processes to regularly monitor picking travel times and
storage locations. Warehouse layout is one important factor affecting the order picking process.
An important decision for many firms is the criteria for locating the warehouse facilities. Cost
factors are prevalent in the decision making models. Resources such as skilled labor are also
emphasized in some of the models. Another dominant factor is what might be named as
accessibility, meaning infrastructure and availability of transportation modes (Melachrinoudis, et
al, 2000). Alberto (2000) also emphasizes time and reliability related considerations. This
includes the proximity of customers manufacturing facilities and suppliers.

2.1.3. Performance Measures

Performance measurement is defined as “a metric to quantify the efficiency and effectiveness of
operations” and most organizations tend to measure based on “hard” rather on “soft” data,
ignoring non-financial measures such as quality, market share, customer satisfaction, human
resources, innovation and learning (Suni et al. 2007, 53).

Performance Measurement System (PMS) can be defined as “a balanced and dynamic system
that enables support of decision-making processes by gathering, elaborating and analyzing
information” and the SCPMS is also defined as “the reporting process that gives feedback to
employees on the outcome of actions” as well as “a set of metrics used to quantify the efficiency
and effectiveness of action” (Kazemkhanlou et al., 2014, 274).

The main goal of SCPM models and frameworks is to support management by measuring
business performance as well as analyzing and improving business operational efficiency
(Kurien et al., 2011, 20) but with the little guidance available in the literature for the actual
selection and implementation of Supply Chain Performance Measurement System the process of
choosing appropriate performance measures is difficult (Kurien et al., 2011, 19). The hundreds
of performance measures available for and used by different organizations in different industries
can be broadly categorized into quality, financial, time, product flexibility, overall performance,
and innovation (Elrod et al., 2013, 39). Examples provided by Elrod et al. (2013, 41) for cost
measures are: Financial, Distribution, Information Processing, Inventory, Total, Manufacturing,
Inventory Obsolesce, Finished Goods Inventory, ROI, Warehouse, Incentive and Intangible
Costs. The examples for quality measures are: Perceived Value of the Product, Buyer-Supplier

19
Relationship, Shipment Errors, Accuracy, and Number of Faulty Notes In-voiced (Elrod et al.,
2013, 44). Examples provided for time measures are: Order Lead Time, Customer Order Path,
Effectiveness of Scheduling the Techniques, Product Development Cycle Time, Product
Lateness Time, Average Lateness Time, Average Earliness Time, and Manufacturing Lead Time
(Elrod et al., 2013, 45). Flexibility measures listed by Elrod et al. (2013, 46) include: Range of
Products and Services, Capacity Utilization, Volume Flexibility, Plant Volume Flexibility,
Delivery Flexibility, Labor Flexibility, Modification Flexibility, and Expansion Flexibility.

There is no consensus among researchers concerning the best measures of SC performance

(Ibrahim &Ogunyemi, 2012; Flynn et al., 2010). Jeong and Hong (2007) measured SC
performance in terms of delivery reliability, responsiveness, flexibility, cost, and efficiency.
Sezen (2008) used flexibility, output, and resource performance to measure SC performance. Lee
et al. (2007) measured SC performance using cost-containment and reliability measures.
Vanichchinchai and Igel (2009) used the variables of cost, flexibility, relationship, and
responsiveness to measure SC performance. Ibrahim and Ogunyemi (2012) measured SC
performance using SC flexibility and SC efficiency. Some authors used one construct to measure
SC performance (i.e., Sundram et al., 2011; Gunasekaran et al., 2004; Elmuti, 2002). Efficiency
and effectiveness aspects have been widely used in the literature to measure SC performance
(Lee et al., 2007; Ibrahim &Ogunyemi, 2012; Li et al., 2006). Gunasekaran et al. (2004) argued
that flexibility is the most important and critical variable to measure SC effectiveness.

For this study the measures of effectiveness will be used to measure SC performance. Efficiency
is usually reflected by using cost and inventory turnover measures (Gunasekaran et al., 2004; Lee
et al., 2007). Effectiveness is reflected by using flexibility performance, delivery performance,
customer responsiveness, and time to market (Li et al., 2004; Lee et al., 2007; Ibrahim
&Ogunyemi, 2012).

According to Coyle, Bardi and Langley (2003:102), the new supply chain environment for
customer service has resulted in much more rigorous standards of performance. The performance
measures are now stated from the point of view of the customer:

a) Orders received on time

b) Orders received complete

20
 c) Orders received damage free
d) Orders filled accurately
e) Orders billed accurately.

The on time delivery measure is even more demanding today because buyers often give
appointment times for warehouse and / or store deliveries on the outbound side of logistics. For
example, the move to just-in-time manufacturing has necessitated the establishment of
sometimes very narrow delivery time ‘windows’ for vendors. Overall, marking deliveries on
time is very much more difficult currently and will be even tougher in the future.

2.2. Empirical Review

Mwangangi (2016) conducted a research on influence of logistics management on performance
of manufacturing firms in Kenya. Findings revealed that transport management; inventory
management; order process management, and information flow influences firm performance.
Nuahn (2017) investigated the impact of logistics and transportation practices on performance of
Kenya Cooperative Creameries. The findings revealed that there exists а strong positive
relationship between transportation and performance at KCC.

Musau, Namusonge, Makokha and Ngeno (2017) conducted a research on the effect of transport
management on organizational performance among textile manufacturing firms in Kenya. Target
population was 169 employees. Stratified and simple random sampling methods were used to
select а sample of 139 employees. It was concluded that transport management influences
performance of supply chain. The study recommended that the organization must come up with
new strategies such as; scheduling, route planning, fleet management, and vehicle tracking.
Through this, the organization will be able to become more competitive.

Kimulu (2014) conducted a research on logistics outsourcing and performance of commercial

banks in Kenya. Target population was 43 commercial banks in Kenya. The study conducted а
census. Primary data was collected using standard questionnaire. The findings revealed that route
optimization had been achieved and fleet tracking tools increased vehicle visibility to large
extent while vehicle scheduling improved to a moderate extent. Njoroge and Kabare (2016)
investigated the role of fleet management on supply chain performance in logistics firms based in
Nairobi Industrial Area, Kenya. Cross sectional survey research design was used. The study
targeted 20 logistics firms in the industrial area. Simple random sampling was used to select 65

21
respondents. It was recommended that logistic firms should invest heavily in ICT such as;
installation of onboard vehicle communication systems, vehicle safety technology and fleet
management systems.

Ontita (2016) conducted a research on inventory management approaches and performance of

textile manufacturing firms in Kenya. Finding revealed that inventory management approaches
used manufacturing companies include; information technology, lean inventory system and
strategic supplier partnership. It was also revealed that there was a strong positive correlation
between the inventory management practices and operational performance of the textile
manufacturing firms. According to Womack and Jones (2003), lean inventory system is the
process of reduced level of inventories. Brigham and Gapenski, (2013) posit that reducing the
level of inventory will enable organizations get higher profits. This is because the organization
will be able to reduce storage cost, handling cost and waste. Eroglu and Hofer (2011) conducted
a research on lean, leaner, too lean? Inventory-Performance Link Revisited. Findings revealed
that inventory management has а significant and positive influence on performance of
companies.

Fugate, Mentzer and Stank (2010) conducted a study on logistics performance and its influence
on firm performance in USA on 150 firms. The study revealed that increase in logistics
efficiency, effectiveness, and differentiation decreased expenses, inventory, cash requirements
and increased inventory availability, timely delivery, on-time and damage-free deliveries, line-
item fill rates and sales which improved net margin and asset turnover, which improved return on
assets and overall firm performance.

Liu and Luo, (2008) examined the effect of logistics capabilities on performance in
manufacturing firms in China. The study based on a survey of 1000 manufacturing firms in
central south, south and central china regions. By exploratory and confirmatory factor analyses,
the scale of manufacturing firm’s logistics capabilities is obtained. The results show that logistics
capabilities can be conceptualized as a three dimensional construct: process capability, flexibility
capability and information integration capability.

Mansidão and Coelho, 2014:4 conducted an empirical analysis on data obtained by mail survey
from executives to define and further measure performance with respect to logistics that resulted
in identifying length of promised order cycle times for base-line/in-stock products,
manufacturer’s performance in meeting promised delivery dates, fill rate on base-line/in-stock

22
items, advance notice on shipping delays, accuracy of manufacturer in forecasting and
committing to estimated shipping dates on contract/project orders, manufacturer's adherence to
special shipping instructions, accuracy in filling orders as appropriate measures for logistical
performance. The study basically dealt with soft measures of logistics performance that can be
characterized with their focus on customer satisfaction. In light of a perspective that dictates the
very existence of an ideal logistics service is for identifying the requirement of the customer it
serves and ultimately ensuring an excelled customer satisfaction, the attention given to such
measures that align with logistics customer service is appropriate and is believed to be highly
applicable in a pragmatic manner for an ideal manufacturing business entities. In other words,
such soft measures have a significance importance in capturing the logistical performance
aspects of firms.

Srivastava (2006) investigated the state of logistics and supply chain practices in India. He found
that, while Indian managers are well aware of the need to develop supplier partnerships, integrate
and coordinate the flow of goods from supplier’s supplier to ultimate customer, and share
information among supply chain partners, the infrastructure necessary to facilitate such seamless
integration is as yet unavailable. There is pressure in emerging markets to rapidly adopt logistics
and supply chain integration practices in an effort to compete globally.

Fugate, Mentzer and Stank (2010) conducted a study on logistics performance and its influence
on firm performance in USA on 150 firms. The study revealed that increase in logistics
efficiency, effectiveness, and differentiation decreased expenses, inventory, cash requirements
and increased inventory availability, timely delivery, on-time and damage-free deliveries, line-
item fill rates and sales which improved net margin and asset turnover, which improved return on
assets and overall firm performance.

Bwari et al. (2016) conducted a study on supply chain in East African Breweries Limited. The
study adopted descriptive research design. The study targeted all the 1653 employees in EABL.
From each stratum, the study took a 10% sample to give a sample size of 165 respondents. The
study found out that inventory control, distribution management, transportation management
influenced supply chain performance to a great extent but warehousing management services
influenced supply chain performance to a moderate extent. The study however did not
investigate the relationship that existed between the research variables.

23
Wathe (2016) investigated the influence of logistics being the independent variables, on the
performance of manufacturing firms being the dependent variable. The study used both
descriptive and explanatory research designs. A semi-structured questionnaire was administered
through e-mail survey and hand delivery. The study found out there is a positive relationship
between logistics and the performance of manufacturing companies in Kenya.

Sezen (2005:351) argued that logistics performance can be evaluated by considering logistics
costs, customer satisfaction, product availability in the market, conforming to the promised
delivery dates and quantities, flexibility in all logistics activities, and efficiency in inventory
management. Besides, Fugate et. al (2010:14) were conceptualizing logistics performance as
multidimensional construct that consisted of logistics differentiation, logistics efficiency and
logistics effectiveness. To put it in other words, it seems that the most holistic study that
objectively accounted the vital aspects of logistics performance is that made by Fugate et. al
(2010) where the authors constructed logistics performance in terms of the dimensions of
logistics effectiveness, logistics efficiency and logistics differentiation.

The study by Fekadu (2013) on the logistics practices of Ethiopian found that the density and
quality of transport infrastructure is very low, the main freight transport companies lack capacity
in terms of skilled human resource, management skills and number of fleets of vehicles, the
main/big companies are government owned that will result in inefficiency, the efficiency of
customs authority is very low and this causes a lot of delays at check points, and the number of
days required to get foreign currency from national bank is also very long.

The research done by Fasika, Klaus and Marcus (2014) on selected 12 types of Ethiopian
manufacturing industries, on the characteristics of supply chain and logistics found that
customer’s comments and complaints collection were done mostly with help of data log
manually and the level of practice of customer service is very less. They also found that although
the companies have to set rules for effective negotiation procedure, procurement department’s
officers who were directly participating in purchasing cannot follow all rules because the
marketing situations are highly variable and dynamic especially with raw material price.

24
 2.3. Conceptual Framework of the Study
The conceptual framework shown in Figure 2.2 is developed based on the literature review. The
conceptual framework will illustrate the linkage between Logistics management practices and
Operation performance.

Independent Variables Dependant Variables

Logistics Management Practices

Information Flow Management

Operational
Transportation Management performance:
 Product Quality
Physical Distribution Management  Reduced Cost
 Responsiveness
Inventory Planning & Management  Customer
Satisfaction
Warehouse Management

Figure 2.2.shows the relationship between independent and dependant variables

Source: (compiled by the researcher, 2021)

25
 3. RESEARCH DESIGN AND METHODOLOGY
3.1. Research Approach
The research approach is quantitative research approach; it is a means for testing objective
theories by examining the relationship among variables. These variables, in turn, will be
measured, typically on instruments, so that numbered data will be analyzed using statistical
procedures.
3.2. Research Design
A research design influences the choice of analysis and sampling technique to use. It refers to the
overall strategy chosen to integrate the different components of the study in a coherent and
logical manner (Brown, 2006). Therefore, Explanatory studies and descriptive survey designs are
appropriate and will be intended to be used for the proposed study, which allows the researcher
for the gathering of information, summarize, present and interpret it for the purpose of
clarification (Creswell, (2003). The design will allow the researcher to draw conclusions on the
effect of Logistics Management practices on Operational performance.
3.3. Data Type and Source

In the proposed study primary sources of data will be utilized through Questionnaires. The
questionnaires will be distributed to employees of the Ah-Wan Biscuit Factory located in Adama
city.

26
3.4. Target Population

To collect data about the practices of logistics management practices operational performance of
Ah-Wan Biscuit Factory the researcher intends to target employees of Ah-Wan Biscuit Factory
operating in Adama city. Total Employees of Ah-Wan Biscuit Factory are 227 including
secretaries, guards and other insignificant for the proposed study. Therefore, target population of
the study will be 227.
3.5. Sampling Technique

For the purpose the of proposed study, the researcher will intend to use non probability sampling
technique since the total population of the study is heterogeneous in type purposive sampling
technique will be preferred. Therefore, the information required for the proposed study involves
selection of respondents who have enough awareness about the factory’ logistics management
practices and Operational performance; purposive sampling technique will use to have the right
peoples from every concerned section in the organization. In this case respondents from
operation (production), Logistics and supply chain management, marketing and sales,
Procurement and Facility, Warehouse, ICT, Quality, Research & Development department of
Ah-Wan Biscuit Factory will be considered in the sample.
3.6. Sampling Size Determination
Alreck & Settle (2005) noted that the choice of sample size is made after considering statistical
precision, practical issues and availability of resources. According to Malhotra & Peterson
(2006) there is no a single and precise way to determine the size of sample; hence there are a
number of inadequacy for deciding on sample size. The larger the sampling size of a research,
the more accurate the data generated. The researcher used Yamane’s (1967) formula to
determine the sample size for the study based on a 95% desired confidence level and a 5%
desired level of precision. Accordingly

N
n=
1+ N (e) ²

Where n is the sample size, N is the population size, and e is the level of precision. By using this
formula at 95% confidence level and 5% level of precision the sample size were obtained as
follows:

27
 227
n= =144.82≈ 145
1+227 (0.05)²

From the total target population of the study, 145 respondents will be considered as sample size
of the proposed study excluding secretaries, guards, other supportive staffs whom they are
insignificant for the study and, through considering the heterogeneity of sample respondents on
the basis of different units/ departments within the organization.
3.7. Data Collection Instruments

The researcher will intends to collect the data through structured questionnaires with closed
Likert type statement. The Likert type scale, commonly used in business research will be applied
because it allows participants to provide their perceptions and opinions both in terms of direction
(positive or negative) and intensity (degree of agreement or disagreement). The questionnaire
will be utilized with a five point likert scale namely Strongly disagree (SD), Disagree (D),
Neutral (N), Agree (A) and Strongly Agree (SA) which will be assigned scores of between 1 and
5. The closed ended questions and Likert type statements enabled the researcher to collect
quantitative data.
3.8. Data Collection Procedure

Before collecting the data, the instruments of the data will be prepared carefully and permission
of the selected firm will be taken. Then the objectives of the study will be explained to subjects.
Based on their willingness to participate in filling questionnaire the questionnaires will be
distributed.
3.9. Method of Data Analysis

After the data collection, both descriptive and inferential statistical techniques will be employed
to analyze the data. Descriptive analytical technique will be used with the aid of Statistical
Package for Social Sciences (SPSS) version 22. In order to describe the characteristics of the
study variables mean, standard deviation, frequencies, and percentages are intended to be used to
analyze and present the collected data in the proposed study. And also, the collected data will be
analyzed by Regression analysis and correlation analysis because it helps to investigate the
relationship between the independent variable of Logistics Management practices and
Operational performance and its effect on the dependent variables Operational performance.

28
3.10. Data Quality Assurance
In order to cross check its completeness the researcher will use Logistics Management literature
and empirical review of the previous researches on the area of the study. However, according to
the research texts, in survey based research, before the questioners are administrated, it is
important to validate the scales used for reliability and validity. The researcher will intend to use
a pre pilot and pilot survey to test the questioner validity and reliability on current survey
situations. In order to test face validity the questionnaire will be given to the research adviser,
academicians and employees from selected department of the factory in order to gain their
comment. Then, based on the observation of feedback of the academicians and respondents, the
redundant and ambiguous items will be either modified or eliminated.
3.11. Ethical Considerations
A formal letter will be written from Unity University Adama campus, Department of Business
Administration to concerned authorities of the Ah-Wan Biscuit Factory. The data collection will
start after getting consent from the parties mentioned above. In addition to this, name of the
respondents (selected for the sample) will not be included to maintain confidentiality.

4. TIME AND BUDGET SCHEDULE

4.1. Time Schedule
S.No Activities Duration
1 Proposal development and defense Week one , week two and week three
2 Data collection Week three, four, five
3 Data analysis Week six, seven, and nine
4 Writing thesis submitting to advisor Week ten and eleven
5 Writing final thesis Week twelve and week thirtieth
6 Thesis defense Week fifteen
The above table (activities) will be conducted from July/2021 to Oct 2021.

4.2. Budget Schedule

Miscellaneous Expense

S.No Purpose Cost

1 Photocopy service 3500
2 Thesis binding 1400

29
 3 Internet service and others 2100
4 Restaurant (Cafe) 1000
5 Stationary materials 2600
6 Transport Expense 1500
Total 0

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