The Outsourcing of Logistical Activities: the Case of Guinness Ghana Breweries Limited

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THE OUTSOURCING OF LOGISTICAL ACTIVITIES:
THE CASE OF GUINNESS GHANA BREWERIES LIMITED

BY: CEPHAS THYWILL KOMLA DZOGBEWU

SUPERVISOR: EVA WITTBOM

MASTER’S THESIS IN BUSINESS ADMINISTRATION,
MBA PROGRAMME

MAY 2010

ABSTRACT
The study has revealed that Guinness Ghana Breweries Limited has been outsourcing it logistics activities more than four years. The rationale behind the outsourcing activities is to cut down cost and enjoy first class service from specialist using the most suitable, quick and reliable technology. The company has actually increased its revenue margin consistently for the past four years and has enjoyed other benefits like: timely delivery and overall quality improvement. Its logistics service providers have also enjoyed benefits like: consistent profit growth rate, transformation of superiority into competitive pricing through economics of scale, improvements of staff skills through efficient training and continuous exposure to new technologies and best practices in the industry. The main problem encountered by the logistics service providers is that they are not been paid on time. It also came to light that Guinness Ghana Breweries Limited have build a very good business relationship with its service providers which have enable it to maintain good logistics service providers and switch to a new one if the need arise.

It was discovered that outsourcing logistics activities which is a contractual service has become relatively stable in the developed countries while it is a rapidly growing and emerging in developing countries like Ghana. It was noted that the most obvious reason behind outsourcing logistics activities is to provide very effective means of reducing costs, better services, improving operating efficiency, flexibility and getting access to new suitable technologies easily at a lower cost. Outsourcing, therefore, has increasingly becomes an important strategy that can significantly assist organizations to leverage their skills and resources to achieve greater competitiveness. However, there are risks of becoming over dependent on service providers.

ACKNOWLEDGEMENT

I thank the almighty God for making this thesis a success. For His profound love and guidance are insatiable. Thank you Lord.

I would like to give special thanks to my thesis supervisor, EVA WITTBOM, who offered tireless guidance and contribution throughout this work.

My heartfelt acknowledgement is made to the ten key personnel at Guinness Ghana Breweries Limited for permitting me to use their organization for my studies and giving me relevant information for my work. I also thank all the logistics service providers for willing filling all the questionnaires and giving me every necessary data for the work.

I am indebted to those who have given their invaluable assistance and suggestions in the development of this thesis, especially Mr. Edem Donkor a PhD. student in the Department of Physics, KNUST- Kumasi, Ghana.

Lastly, I would like to thank my parents for their support and encouragement through the studies.

TABLE OF CONTENTS
TITLE PAGEi
ABSTRACTii
ACKNOWLEDGEMENTiii
TABLE OF CONTENTSiv-vii
LIST OF TABLES vii
LIST OF FIGURESvii
CHAPTER ONE INTRODUCTION 1-5
1.1 General introduction1-2

1.2 Background of Guinness Ghana Breweries Limited3

1.3 Objective of the study3

1.4 Justification of the study4

1.5 Scope of work and methodology4

1.6 Organization of the study5

CHAPTER TWO LITERATURE REVIEW6-18
2.1 Definition and Explanation of Outsourcing 6-7
2.2 Definition and Explanation of Logistics7-8
2.3 Outsourcing Logistics Activates8-10
2.4 Advantages of Outsourcing Logistics Activities10-11 2.5 Disadvantages of Outsourcing Logistics...
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