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THE EFFECTS OF SELECTED MANAGEMENT SCIENCE TOOLS ON PERFORMANCE

OF TRANSPORT AND LOGISTICS SERVICE COMPANIES: A COMPARATIVE STUDY OF
DHL, G4S AND WELLS FARGO IN NAKURU MUNICIPALITY

OCHIENG JARED OPONDO

C12/60275/09

…………………..

A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF BACHELOR OF COMMERCE DEGREE IN
MANAGEMENT SCIENCE IN EGERTON UNIVERSITY

EGERON UNIVERSITY

NOVEMBER 2012

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CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Transportation involves the physical movement or flow of goods. The transportation system is
the physical link that connects customers, raw material, suppliers, plants, warehouses and
channel members. These are the fixed points in a logistics supply chain. The basic modes of
transportation are water, rail, motor carrier, air and pipeline (Gale, 2009). On the other hand
logistics was defined by Council of Supply Chain Management Professionals (1991) as part of
the supply chain process that plans, implements, and controls the efficient, effective forward
and reverses flow and storage of goods, services, and related information between the point of
origin and the point of consumption in order to meet customers’ requirements . Thus transport
and logistics service companies are companies which are involved in the movement of goods,
raw materials and parcels between customers, suppliers, plants and warehouses, while ensuring
efficiency in the process (Winston and Goldberg, 2004).
Transport and logistics services companies have been on the rise over the past decade. Peter
Drucker (1960) identified logistics as a growing concern within business operations. This may
be attributed to the continued need for transportation of materials as a result of the increase in
the number of manufacturing, wholesale and retail businesses and sending of parcels amongst
people. This has triggered stiff competition among the companies in this industry as each one of
the competitors jostle for customers with other industry players, with the objective of staying
ahead of competition (Fulani and Abumere, 1993)
Transport and logistics companies have thus been forced to be ever on the lookout for ways,
means and techniques which they could leverage on to wade off competition, and continue to
excel in their operations. Many companies are turning to the use of management science tools,
to help them have an edge over their competitors (Bowersox, Closs, & Cooper, 2010)
Management science tools are a collection of techniques and concepts, which have been
developed with an aim of improving the efficiency and effectiveness of operations in
organizations. Some of the management science tools which have been developed include: Justin-time concept, management information system, transportation models, sharing of capacity
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techniques, linear programming, dynamic programming, inventory models, Performance and
evaluation review technique (PERT), Critical path method amongst others.
In this study, we are going to investigate to what extent, management information system (MIS)
and transportation model(s), improves performance; efficiency in terms of saving cost reducing
the time taken in transit in terms of increasing reliability and dependability of the three selected
transport and logistics companies: DHL, Wells Fargo, and G4S.
Transportation model(s) is concerned with the movement of items between suppliers and
consumers so that the total cost of the transportation is minimized. It is hinged on finding and
following the route that will cost the least of all the possible routes and thus help to minimize on
the cost or routes that will take the shortest time possible to settle clients’ transportation services
demands.
The use of transportation model(s) to minimize the cost of shipping from a number of sources to a
number of destinations was first proposed in the 1930s. An article by Tolstoi (1930),
transportation problem was studied where a negative cycle criterion was developed and applied to
solve a large-scale transportation problem to optimality. A study by Hitchcock (1941): “The
distribution of products from several sources to numerous localities” was proposed to minimize
the cost of shipping. Koopmans (1949) independently produced the second major contribution in
a report entitled “Optimum utilization of transportation systems” (Barry, Render and Ralph M.
Stair Junior, 2002). In 1953, Charnes and Cooper developed the stepping stone method as an
algorithm for determining optimum routes. Later in 1955, Modified distribution (MODI), came
about (Barry et al., 2002).

Management Information Systems (MIS) encompass the use of computers, internet and
Database Management System (DBMS) which allows for the storage of the contacts of
customers, Customer Relationship Management (CRM) which improves communication with
customers and prompt response to their queries, Transaction Processing System (TPS) which
provides information about daily transactions in the business, Knowledge management systems
which enable organizations to better manage processes for capturing and applying knowledge and
expertise (Laudon and Laudon, 2010). Enterprise systems which are used to bridge the
communication gap between all departments and all users of information within a company.
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Decision Support System (DSS) which helps in collecting market intelligence and provide realtime data for decision making, Executive Support System (ESS) which provides all the
information needed by the top echelon of the organization to make strategic decisions regarding
the direction of the organisation. Laudon and Laudon (2010) identify five eras of MIS evolution
corresponding to five phases in the development of computing technology: mainframe and
minicomputer computing, personal computers, client/server networks, enterprise computing,
and cloud computing.
Management information systems and transportation model(s) when applied in organizations’
operations have the ability to confer myriad benefits, not the least of which are improved
efficiency, reliability and saving on cost and time. The use of these tools in organizations can be
a game changer in the industry (Laudon and Laudon, 2010; Hiller and Lieberman, 2000).
However, with the high skepticism among managers regarding the use of these tools (AIBUMA
conference, 2012),

it is critical to explore the effectiveness of these tools on improving

performance in the organizations that have adopted them and help dispel this notion regarding
their viability, by bringing to light the extent to which these tools can improve performance of
organizations
It is thus against this background that we want to investigate the effectiveness of these tools in
enhancing the performance of the three organizations in this study: DHL, Wells Fargo, and G4S.

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1.2 Statement of the problem
The application of management science tools to managing organizations’ operations has been
the discourse in some of national conferences on improving efficiency in the management of
organizations (AIBUMA 2012 conference, July 12-13, held at KICC Nairobi: "Embracing the
Changing Face and Pace of Business and Management"). Nevertheless to some extent,
implementing management science tools in organizational operations and the initial cost
incurred in implementing some of these tools are conflicting objectives leading to a dilemma in
using these tools as a management strategy to improve the performance of organizations.
However previous studies conducted on the use of management science tools to improve the
performance of organizational operations have shown positive impact on the performance of the
organization (Laudon and Laudon, 2010; Fugate, Stank and Mentzer, 2009; Hunton, Lippincott
and Reck, 2003)
These management science tools do not work in isolation to cause improved performance in
transport and logistics companies. There are other factors that impinge directly on the
performance of these companies, such as security along the routes, the state of the road
networks. Poor road networks, insecurity along the roads and employee computer literacy which
could reduce the gains that the use of management science tools could have caused.
It is therefore paramount that we investigate to what extent the application of these tools has
improved the performance of transport and logistics service companies this study.

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To characterize management information systems used by the selected transport and logistics firms. To determine the influence of management information systems on cost. iii. iii.3 Objectives 1. Transportation model(s) do not have a significant influence on time. vi. Specific Objectives In respect of DHL. In respect of the first objective.1. Management information systems do not have a significant influence on cost.6 1. Specific objectives are set to: i. Main Objective To investigate the influence of applications of two selected management science tools: transport models and management information systems on the performance of transportation and logistics service companies in Nakuru municipality.3. descriptive statistics will be used. iv. descriptive statistics will be used. 1. To investigate the influence of management information systems on time. In respect of the second objective. ii. Transportation model(s) do not have a significant influence on cost. 1. ii. vi. v.4 Research hypotheses i. v.3. To characterize the transportation model(s) used by the selected transport and logistics firms.2. 6 . To investigate the influence of transportation model(s) on time. Management information systems do not have a significant influence on time. To determine the influence of transportation model(s) on cost. iv. G4S and Wells Fargo transportation and logistics service companies.

In this study four destinations common to the three destinations for the selected transport and logistics service companies will be considered. and Nairobi.6.7. The two management science tools to be investigated are: transportation model(s) and management information systems. Some respondents took more than a week to give us feedback. Kakamega. Eldoret. 1. This study will help in shedding more light on the already existing knowledge about transportation models and management information systems and their effects on performance of transportation and logistics service companies. The subject of the study will be DHL.5.7 1. namely: Kisumu. 1. Importance of the study. the time available for conducting this research was only two months. Some respondents were unwilling to give certain information about their organizations. Wells Fargo and G4S in Nakuru municipality. Delimitations of the study This research is about transport and logistics service companies in Nakuru municipality. 7 . Limitations of the study The research study was limited by time. The parameter to be investigated is performance operationalized in terms of cost and time.

According to Golden and Assad (1991). Transportation model(s) Transportation model(s) are special purpose algorithms of the linear programming. It includes review of historical literature and empirical literature which help in relating the study to the larger ongoing dialogue in the literature about the study. 8 . transportation model(s) is synonymous with vehicle routing. Finally.1.1.mbaknol.2. Routes for the vehicles are designed to minimize some objective such as cost and the total time taken.com/management-science/transportation-andassignment-models-in-operations-research/). CHAPTER TWO LITERATURE REVIEW 2.2. It highlights different authors and their perspectives in their area of research on aspects of the effects of use of transportation model(s) and management information systems on performance. define vehicle routing as the designing routes for delivery vehicles which are to operate from a single depot to supply a set of customers with known locations and known demands for a certain commodity.8 This study will be undertaken to enable those firms in transportation and logistics service industry to decide whether or not to apply the management science tools discussed to improve their performance by enhancing their dependability and reliability and reducing their operational cost and the time taken. the findings of this study will help arouse the interest of students in institutions of higher learning to pursue Management Science especially in Transportation and Logistics by researching more on the subject. Historical and Empirical literature 2. The transportation model is concerned with selecting the routes between supply and demand points in order to minimize costs of transportation subject to constraints of supply at any supply point and demand at any demand point (http://www. Beasley and Christofides (1997). 2. Introduction This chapter focuses on the relevant literature to the study in order to acquaint the researcher with results of other studies relating to this field.

and • the subject is theoretically interesting and not at all easy to solve. Homberger and Gehrig (2005) have worked on Vehicle Routing problem/Transportation models on time windows. Schabauer. beginning from one of the city that is considered as a base or starting city and returns to it. the problem first being considered in an academic paper by Dantzig and Ramser published in the late 1950's on Vehicle routing problem. Many methods have been suggested for obtaining optimized route. Larsen (2000) has worked on the dynamic factors of Vehicle Routing problem/Transportation model(s).9 Transportation model(s)/Vehicle routing subject is one that has a long history of systematic study. Montemanni. The cost of the transportation among the cities is given. Shikuta and Weishaupl (2005) have worked on to solve travelling salesman problem heuristically by the parallelization of self-organizing maps on cluster architectures. Potvin (1996) has worked on the survey of genetic algorithms in his study in which he has given simple genetic algorithms and various extensions for solving Travelling Salesman Problem (TPS). He has worked both on the random and classical problems. Rizzoli. The problem is to find the order of minimum cost route that is. ACO simulates the behavior of ant colonies in nature as they forage for food and find the most efficient routes from their nests to food sources. This approach is relevant because it provides solutions to an important problem in transportation science and the experimental results indicate that the performance of the technique is competitive with other techniques used to generate solutions to the Vehicle routing problem. passing through each city only once. the order of visiting the cities in such a way that the cost is the minimum. He has investigated the dynamics of Vehicle Routing problem/Transportation model(s) in order to improve the performances of existing algorithms as well as develop new windows. the subject has attracted a lot of attention in the academic literature for two basic reasons: • the subject appears in a large number of practical situations. Travelling Salesman Problem (TPS) is one of the most well-known difficult problems of time. A salesperson must visit n cities. In this they have designed an optical set of routes that will service the entire customers 9 . The decision making processes of ants are embedded in the artificial intelligence algorithm of a group of virtual ants which are used to provide solutions to the vehicle routing problem. Luceibello and Gambardella (2007) have focused on the Ant Colony Optimization (ACO) on the Vehicle Routing problem/Transportation model(s) and its real world application. According to Beasley and Christofides (1997).

Note here that in any particular case not all of these restrictions may apply however in thinking generically about the problem it is useful to list all restrictions that can potentially apply (Beasley. Vehicles 10 . Mitrovic-Minic and Krishnamurti (2006) have worked on to find the lower and the upper bound required for the number of vehicles to serve all the location for multiple salesman problem with time windows. Duruiswamy.10 with constraints being taken care of properly.1.1.1. Researchers on Vehicle Routing problem/Transportation models have proved that Vehicle Routing problem/Transportation model(s) are a NP-complete combinatorial optimization problem.2. Dhanalaksmi and Parthian (2009) reviewed a Mathematical structure of Vehicle Routing problem/Transportation model(s). We can classify these restrictions to a certain extent as relating either to the vehicles or to the customers. They have introduced two types of precedence graphs namely the Start time precedence graphs and the End time precedent graphs. 2. They have theorized that if an algorithm is guaranteed to find the optimal Solution in a polynomial time for the VRP. then efficient algorithms could also be found for all other NPcomplete problems. The bounds are generated by covering the precedence graphs with minimum number of parts. They wrote that it is a graph where cities are the nodes of the graph.1. Their objective function minimizes both the total distance and the number of salesmen being used. The connection between pairs of cities are called edges and each edge has a cost or distance associated with it. Practical Problem for a transportation model In their journal. Carter and Ragsdel (2006) have developed a new approach to solve travelling sales problem in which the method proposes set of chromosomes and related operators for the travelling salesman problem and compares theoretical properties and computational performance of the proposed techniques. 1997).1. Nallusamy. The bounds which are tight and loss are compared and closeness of such instances was discussed. “International Journal of Engineering Science and Technology”. The vehicle routing problem as encountered in practice involves many restrictions on the routes that delivery vehicles can follow. 2.2.

g. post office vans) There are trips by the same vehicle longer than one day (i.1. Each customer has a set of vehicles which cannot be used for delivery (access restrictions). Each vehicle has a total working time from departure to arrival back at the depot. Three basic objectives can be distinguished: 11 .1. 2. Typically this might happen due to driver/vehicle unavailability 2.1. typically to comply with legal restrictions on driver working hours.1. Each vehicle has a cost associated with its use for deliveries. e. Other factors Multiple trips by the same vehicle on a single day. Each customer has a priority for delivery (if the vehicles cannot deliver to all the customers). Customers Each customer has a certain quantity which has to be delivered. with overnight stops). Each vehicle has a time period within which it must leave the depot.g.3.4. where the vehicle returns to the depot and then goes out again (e.1. Each customer has an associated visit time (drop time). Each customer has a number of time periods during which delivery (and/or collection) can occur (time windows).2.usually weight and/or volume) on the goods carried.2. 2.11 Each vehicle has a limit (capacity .1.2. Each vehicle has a number of time periods during which it does nothing (driver rest periods). tankers delivering to petrol (gasoline) stations are volume limited.e. There are Compartmentalized vehicles with many different types of product to deliver. buses have a limit on the number of people legally allowed on board. typically to ensure that space is available for incoming vehicles to resupply the depot. The objectives of this design In the design of vehicle routes to meet the above requirements there are a number of objectives that could be adopted.2. etc.

Minimize some combination of number of vehicles used and total distance (or time) travelled. E. The network diagram can be illustrated as shown below: (J. 2010). and the third objective above corresponds to the minimization of total cost (the sum of fixed plus variable cost). The cost of vehicles in the vehicle fleet is often regarded as a fixed cost so that the first objective above corresponds to the minimization of fixed costs. Minimize the total distance (or time) travelled (this typically corresponds to variable cost) iii. Christofides. technologies and procedures used by management 12 . and their associated drivers. Minimize the number of vehicles used (vehicles. which cover the application of people. are often a fixed cost) ii. Management information systems A management information system (MIS) provides information that is needed to manage organizations efficiently and effectively (Laudon and Laudon. Management information systems are regarded as a subset of the overall internal controls procedures in business. the second objective above corresponds to the minimization of the running (or variable) costs.12 i. documents. 1997) 2. Beasley and N.2.2.

Knowledge workers are those who promote the creation of new knowledge and integrate it into the organization.g. Knowledge management systems (KMS) enable organizations to better manage processes for capturing and applying knowledge and expertise (Laudon and Laudon. results collected in a logistics operations context prove the existence of a strong positive relationship between a KMS process and operational and organizational performance. The model was empirically tested through structural equation modeling on a sample of 329 Slovenian and Croatian companies with 50 or more employees. Stank and Mentzer (2009). Vuksic and Stemberger in their research: The impact of Knowledge management systems on organizational performance. 2. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. expert systems. Knowledge management systems Knowledge management system is an integral part of the overall information system of an organization. service or business-wide strategy. distribute and apply knowledge. Enterprise Resource Planning (ERP) systems are one of the most significant of the technological advances to emerge during the last decade.2. Most of the other systems have been recognized for many years. Enterprise systems Enterprise systems (also known as enterprise resource planning (ERP) systems) are used to bridge the communication gap between all departments and all users of information within a company. in terms of making well informed decisions.2. which enabled them to cut on their operation costs. Knowledge management systems decision support systems. store. and executive information 2. ERP provide 13 .2. to enable it leverage it for strategic benefits. but this one may be thought of as relatively new.1.13 accountants to solve business problems costing a product. 2010). According to Chung (2008).2. e. They concluded that Knowledge management systems enables an organization to capture. Academically. This view is further proved by Rasula.2. According to Fugate. the term is commonly used to refer to the group of information management method tied to the automation or support of human decision making.

and sales prospects. creating highly efficient sales strategies. 2000.2. As ERPs evolved. and win new clients. Bergström and Stehn.14 organizations with a set of incorporated application modules that cover most business functions (Davenport. Herold.2. interacting with suppliers. Hall and Wailes . and Willcocks 2003. Lippincott and Reck. the adoption of ERP systems was clearly one of the most significant factors in organizational evolution. attract. 2004. these days accounting for about 30% of all major evolution activities in organizations (Davenport. providing customer service. sales and marketing. but also those for marketing. 14 . The overall goals are to find. 2005). manufacturing.3. Customer relationship management system. customer service. 2002). and technical support. 2007). entice former clients to return. Olson (2004) defined ERP as an industry term for a broad set of activities supported by multimodule application software that helps a manufacturer or other business manage the important parts of its daily operations. lowering administration rates. clients. Gefen and Ragowsky.Grant. automate. Yen and Sheu. purchasing parts. and reduce the costs of marketing and client service (http://en. Other studies show that ERP implementation has a massive effect on organizational performance (Hall. including product planning. 2005). 2004. service and retain those the company already has. and logistics (Shanks. maintaining inventories. 2003. and synchronize business processes—principally sales activities. and decreasing direct and indirect labor expenses (Hunton. and tracking orders. human resource management.org/wiki/Customer_relationship_management). 2000). Fedor and Caldwell. Dery . 2. It involves using technology to organize. with reducing procurement charges. Customer relationship management (CRM) is a widely implemented model for managing a company’s interactions with customers. they have become more sophisticated in terms integrating a series of modules in different business functions such as finance and accounting. During the last decade. Waxer (2006) defined ERP as a broad term for any software application that integrates all business processes and data into a single system. among other things.wikipedia. Seddon. The implementation of ERP has been credited. IT.

training. 2. Transaction processing systems keep track of basic activities and transactions of organization (e. reliability and consistency. Narayandas. LaValle. Mittal. Characteristics of a TPS include performance. The data are very detailed at this level. and employee record keeping. 2010).15 Customer relationship management (CRM) is increasingly important to firms as they seek to improve their profits through longer-term relationships with customers.4. 15 . Ramani. many have invested heavily in information technology (IT) assets to better manage their interactions with customers before. cash deposits.g. material movement control. its customers and collaborating firms. 2006). transaction processing systems is used at the operational level of an organisation in order processing. TPS combine data in various ways to fulfill the hundreds of information needs a company requires to be successful. during and after purchase (Bohling. payroll. Transaction processing systems A transaction process system (TPS) is an information processing system for business transactions involving collection. According to Payne and Frow (2005) CRM represents a strategy for creating value for both the firm and its customers through the appropriate use of technology. sales receipts. Hence. CRM brings together people. This strategy requires focus. modification and retrieval of all transaction data. and investment in new technology and software to aid in the development of value adding CRM systems (Day and Van den Bulte 2001). and Varadarajan. data and customer knowledge.2. accounts payable. It serves operational managers by helping them to answer to routine questions and to track the flow of transactions through the organization (Laudon and Laudon. According to Laudon and Laudon (2010). In recent years. and payroll). Bowman.2. technology and organizational capabilities to ensure connectivity between the company.

16 2. Time: (i) Reliability 2.3.Transportation models Performance 1. Cost 2. MIS (ii) Dependability (i) State of the road networks (ii) Security on the roads (iii) Employee IT literacy 16 . Conceptual Framework Dependent variable Independent variable Selected management science tools 1.

the actual sample size is calculated as follows: na = Where n is 30% of the population (which is a good representation of the population and confidence level = 95% 17 . 3. wells Fargo and DHL which have population of 35. Target Population The study focused on DHL.1 .2. Wells Fargo and G4S companies. 3. At 95% confidence level.3. 40 and 20 employees respectively. 1999). This is because. with respect to variables or conditions in a situation (Mugenda and Mugenda. Wells Fargo and G4S transport and logistics service companies in Nakuru Municipality. The study population was respective employees of DHL. Descriptive research is used to obtain information concerning the current status of the phenomena to describe what exists.Research design The research adopted descriptive approach.17 Moderating variable Source: Researcher. CHAPTER THREE RESEARCH METHODOLOGY 3. Employees to be interviewed include the functional managers and lower level employees. A target population is the total collection of elements about which one wishes to make some inferences (Mugenda and Mugenda. 1999). the study aim to describe the effect of transportation model(s) and Management information systems on performance of the selected transport and logistics service companies. Sampling Design and size Random sampling was used to select an initial sample sizes from G4S.

18 Sample size for Wells Fargo: n = 30% of 40 = 12 = 12 employees na = = Sample size of DHL: n = 30% of 20 = 6 employees na = n ==30% of 35 = 6 employees = 10 employees Sample size for G4S: na = 18 .

3.19 3.2.5. State of the road network: This was measured in terms the extra amounts in shillings. saved on transportation of goods when transportation model(s) are used. Data Collection 3. in shillings. Data collection method Preliminary data was obtained through a well-structured questionnaire with both closed and openended questions which we prepared and administered. Reliability: This was measured in terms of the number of hours taken to deliver before the deadline and the number of hours saved in service delivery in a day.1. This will also be quantified in terms of amounts. spent on fuel and repairs when bad road stretches are plied. saved on quarterly basis when management information system (s) is used in operations.5. 19 .5. Dependability: This was measured in terms of the number of times that timely deliveries of goods and services are made. Quantification of variables Costs: Cost was measured in terms of amount in shillings.

G4S Eldoret Kisumu KEY 20 . Employee IT literacy: This was rated in terms of the efficiency of employees in handling computer hardware and software in operations. This will be rated using a likert scale of 1 to 5 as shown: 5 represent “Very efficient” 4 represent “Efficient” 3 represent “No impact” 2 represent “Inefficient” 1 represents “Very inefficient” The network for the selected routes plied by the companies of interest is as shown below: Nairobi Nakuru i. DHL ii. Wells Fargo iii.20 Security on the roads: This was measured in terms the value of goods lost as a result of insecurity along the routes plied.

21 DHL G4S Wells Fargo Source: Researcher 3. A t-test for two samples was used to compare the impact of the selected Management Science tools on any two firms.µ) 2 n −1 Source: (Siegel. 2002) 21 . Data Analysis and Presentation Descriptive statistics was used to analyze the data. The formula is as follows Source: (Siegel.6. 2002) Standard deviation (s) = x .

22 CHAPTER FOUR DATA ANALYSIS AND PRESENTATION OF THE FINDINGS 4. Response rate Table 1: DHL RESPONSES NUMBER OF PERCENTAGE (%) RESPONDENTS Expected Responses 6 100 Received Responses 3 50 Source: Research Data (2012) Table 2: WELLS FARGO RESPONSES NUMBER OF PERCENTAGE (%) RESPONDENTS Expected Responses 12 100 Received Responses 6 50 Table 3: G4S RESPONSES NUMBER OF PERCENTAGE (%) RESPONDENTS Expected Responses 10 100 Received Responses 8 80 22 .1.

most respondents were female. Table 5: Age of Respondents 23 . Presentation of Findings Table 4: Gender representation of Respondents Male Female DHL 1 2 Wells Fargo 3 3 G4S 5 3 Total 9 8 Figure 1: Gender representation of Respondents 6 5 4 Male 3 Female 2 1 0 DHL G4S Wells Fargo Source: Research Data 2012 In DHL. while G4S and Wells Fargo recorded a higher number of male respondents.2.23 4.

Wells Fargo showed a distribution of respondents’ ages of between 20 and 37 years.24 Company 20-24 25-29 30-34 35 and above DHL 2 1 - - Wells Fargo 1 3 1 1 G4S - 6 1 1 Total 3 10 2 2 Figure 2: Age of Respondents Source: Research Data (2012) All respondents from DHL were below 30 years. Table 6: Respondents Level of Education Company Certificate Diploma Degree DHL - 1 2 Wells Fargo 2 3 1 G4S 3 4 1 24 . G4S showed respondents of ages between 25 and 35 years.

2.25 Total 5 8 4 Figure 3: Respondents level of Education 4.5 4 3.5 3 2. Transportation model(s) Table 7: The duration of application of transportation model(s) COMPANY DURATION IN YEARS DHL 3 WELLS FARGO 8 25 . Wells Fargo had respondents with nearly normally distributed level of Education. Most respondents from G4S had attained certificate level of Education.1.5 0 DHL Wells Fargo G4S Source: Research Data (2012) DHL had only degree and diploma holders respondents.5 Certificate Diploma 2 Degree 1.5 1 0. 4.

58 0.5 0. Table 9: Wells Fargo (x- 2 2-1.26 G4S 10 Source: Research data (2012) 4.58 0.1764 1 1-1.25 -0.0064 x ) (x- x ) Mean=0.1764 2 2-1.0064 0.3364 0.0800 Source: Research data (2012) DHL exceeds the deadline set by customers by an average of 15 minutes with a standard deviation of 4.25 0.1664 2 2-1.17 0.42 0.5-1.25 0.33 0.58 0.08 1.42 0.8 minutes.08 0.1764 2 2-1. This can be attributed the moderating variables such as the state of the roads.58 0.1. Means and standard deviations of number of hours by which the firms exceed deadline Table 8: DHL (x- 0.58 0.25 (x- )2 X in hours x 0.33-0.1764 x ) (x- x ) (x- )2 X in hours x 26 .58 -1.17-0.25 0 0 0.42 0.58 0.25-0.42 0.2.1.0128 Standard Deviation= 0.08 0.

0009 0.22 0.0009 0.97 0.97 0.03 0.97 1 1-0.97 0.2209 1.8 minutes with a standard deviation of 39.75- -0.5 0.0009 1 1-0.97 -0.0009 27 . This can be attributed the moderating variables such as the state of the roads.9 minutes.6646 Source: Research data (2012) Wells Fargo exceeds the deadline set by customers by an average of 1hour 34. Table 9: G4S X in hours (x- x ) (x- x (x- ) )2 x 1 1-0.58 2.0484 0.75 0.53 0.03 0.27 Mean=1.47 0.03 0.5-0.5 1.2809 1 1-0.03 0.5-0.2084 Standard Deviation= 0.97 0.97 0.

4.1.2. Comparative analysis of cost saved 4.6667 13611.03 Mean=0.1.5547 Standard Deviation= 0.76889 28 .0009 0.97 0.2. This can be attributed the moderating variables such as the state of the roads.2815 Source: Research Data (2012) G4S exceeds the deadline set by customers by an average of 58.1189 400 250 650 - 17777.2.97 0.2 minutes with a standard deviation of 16.000’ )2 ‘000’ 600 300 900 116.1 Means and standard deviations of cost saved by the firms when they used transportation model(s) Table 10: DHL Cost Saved Total To Kisumu in ‘000’ To Eldoret in ‘000’ (X) (x- x ) (x- x ‘000’ ‘000.28 1 1-0.9 minutes.2.

08 Source: Research data (2012) DHL saves an average of ksh.78889 783.30 with a standard deviation of Ksh.67668 Standard Deviation= 171.08.29 133.6667 27777.06when they use transportation model(s).998.3333 450 350 800 MEAN 166. Table 11: Wells Fargo Cost Saved Total (x) (x- x ) (x- To Kisumu in To Eldoret ‘000’ in ‘000’ 150 80 230 15 225 140 70 210 -5 25 120 100 220 5 25 130 90 220 5 25 x )2 29 . 171.783333.998.3333 59166.

0625 95 60 155 -3.0625 80 70 150 -8.30 Source: Research data (2012) Wells Fargo saves an average of ksh.75 76.5625 100 65 165 6.000 with a standard deviation of ksh.25 39.0625 90 70 160 1. Table 12: G4S Cost Saved Total (x) (x- x ) (x- x )2 To Kisumu in To Eldoret ‘000’ in ‘000’ 80 70 150 -8.30 100 80 180 -35 1225 150 80 230 15 225 MEAN 215 1750 Standard Deviation= Ksh 18708.25 1.215.30 when they use transportation model(s).5625 100 65 165 6.75 76.25 1.25 39.5625 90 70 160 1.18708.5625 30 .75 14.

1587500 with a standard deviation of ksh.75 6.70 x 2 = 215000 n2 =6 S2=18708.2.6408.30 31 . hence t-test is used. 4. Two.05 n=n1+n2 = 6+8 =14. t-test for the difference in cost saved: Between G4S and Wells Fargo: Ho: There is no significant difference between the cost saved by G4S and that saved by Wells Fargo when they use transportation model(s) H1: There is a significant difference between the cost saved by G4S and that saved by Wells Fargo when they use transportation model(s) Significance level= 5%=0.025 = ±2.2.0625 287.70 when they use transportation model(s).2.5 Standard Deviation= 6408.tail test t0.1.70 Source: Research data G4S saves an average of ksh.179 x1 = 158750 n1 = 8 S1=6408.25 39.31 100 65 165 MEAN 158.

179 x1 = 158750 n1 = 8 S1=6408.tail test t0.179 Decision: We reject the null hypothesis. hence t-test is used.06) Rejection region -2.215000) tc = (6408. Conclusion: There is a significant difference between the cost saved by G4S and that saved by Wells Fargo when they use transportation model(s) Between G4S and DHL: Ho: There is no significant difference between the cost saved by G4S and that saved by DHL when they use transportation model(s) H1: There is a significant difference between the cost saved by G4S and that saved by DHL when they use transportation model(s).06069356 Rejection region (-7.179 2.30) 2 + 8 6 tc = -7.025 = ±2. Two.70) 2 (18708. Significance level= 5%=0.05 n=n1+n2 = 8+3 =11.32 (158750 .7 32 .

783333.179 Decision: We reject the null hypothesis.179 2. Two.7) 2 (171998.08 (158750 .288) Rejection region -2. Conclusion: There is a significant difference between the cost saved by G4S and that saved by DHL when they use transportation model(s).tail test t0.08) 2 + 8 3 = -6.33 x 2 = 783333.08 33 .3 n2 =3 S2= 171998.3) tc = (6408.025 = ±2.3 n2 =3 S1= 171998.179 x1 =783333. Between DHL and Wells Fargo: Ho: There is no significant difference between the cost saved by DHL and that saved by Wells Fargo when they use transportation model(s) H1: There is a significant difference between the cost saved by DHL and that saved by Wells Fargo when they use transportation model(s) Significance level= 5%=0.05 n=n1+n2 = 3+6 =9.288 Rejection region (-6. hence t-test is used.

30 Total 253.333.666.333.3) 2 + 3 6 =5.215000) tc = (171998.08) 2 (18708.30 20.30 Eldoret Figure 4 34 .333.70 Repair: 47500 24.70 18.333.179 2.625 48.706) -2.000 113.3 .000 60.125 165.500 21.000 53. Conclusion: There is a significant difference between the cost saved by DHL and that saved by Wells Fargo when they use transportation model(s).179 Decision: We reject the null hypothesis.30 Repair: 105.166. Extra average cost incurred by the companies in the following poor road stretches Table 13 Total-Kisumu: Burnt forest- G4S Wells Fargo DHL Fuel: 70.000 32.3 (783333.706 Rejection region Rejection region(5.000 Fuel: 30.34 x 2 = 215000 n2 =6 S2=18708.

666.500 18.30 Total 78.750 86.625 59.70 35000 Figure 5. Table 14 G4S Wells Fargo DHL Nakuru-Kisumu 55.166.333.666.70 Nakuru-Eldoret 23125 27. 35 .70 16.35 Average extra cost incurred by the companiesalong poor raod stretches DHL 21% G4S 48% Wells Fargo 31% Average value of goods lost as a result of insecurity along the roads plied.

1.36 Average value of goods lost as a result of insecurity along the roadsplied.2. Management Information Systems 4.2.2. Wells Fargo 18% G4S 39% DHL 43% 4.2. Duration for which the MIS tools have been put to use by the firms in years Table 15 Information G4S DHL Wells Fargo 5 3 4 5 3 1 3 3 2 Systems Transaction Processing System Knowledge management System Customer relationship System 36 .

37 Database 15 3 8 Management System 4. Table 17: Wells Fargo X in ‘000’ ksh (x- 400 400-425 -25 625 450 450-425 25 625 500 500-425 75 5625 450 450-425 25 625 350 350-425 -75 5625 400 400-425 -25 625 x Mean=425 ) (x- x ) (x- x )2 13750 Standard Deviation= 52440.2. Means and standard deviations of cost saved when MIS is used in the operations Table 16: DHL X in ‘000’ ksh (x- 450 450-450 0 0 400 400-450 -50 2500 500 500-450 50 2500 x ) (x- x ) Mean=450 (x- x ) 5000 Standard Deviation= Ksh 50000 Source: Research data (2012) DHL saves an average of ksh.2.2. 450. 50000 when they use MIS.40 37 .000 with a standard deviation of ksh.

52440.000 with a standard deviation of ksh.25 450 450-512. Table 18: G4S (x- 500 500-512.3.5 156.2.5 12656. 38 .5 -12. 425.5 (x- )2 X in ‘000’ ksh x 48.5 3906.30 Source: Research Data (2012) G4S saves an average of ksh.5 137.5 -62.25 400 400-512. t-test for the difference in cost saved when MIS is used operations: Between G4S and Wells Fargo: Ho: There is no significant difference between the cost saved by G4S and that saved by Wells Fargo when they use MIS in their operations.25 x ) (x- x ) Mean=512. 521500 with a standard deviation of ksh.5 -112.750 Standard Deviation=83452.25 500 500-512.38 Source: Research data (2012) Wells Fargo saves an average of ksh.5 -12.5 -12.2.25 650 650-512.5 156. .30 when they use MIS.25 600 600-512.25 500 500-512.40 when they use MIS. 4.5 18906.5 -12.5 156.25 500 500-512. 83452.5 12656.5 112.5 156.

179 Decision: We reject the null hypothesis.179 2.3) 2 (52440.05 n=n1+n2 = 6+8 =14. Between G4S and DHL: 39 .40) 2 + 8 6 tc = 2.400 Rejection region (2.025 = ±2.tail test t0.30 x 2 = 425000 n2 =6 S2=52440.400) Rejection region -2.179 x1 = 512500 n1 = 8 S1=83452. Conclusion: There is a significant difference between the cost saved by G4S and that saved by Wells Fargo when they MIS in their operations.40 (512500 − 425000) tc = (83452. Two.39 H1: There is a significant difference between the cost saved by G4S and that saved by Wells Fargo when they use MIS in their operations. hence t-test is used. Significance level= 5%=0.

179 Rejection region 2.514 -2. hence t-test is used. H1: There is a significant difference between the cost saved by G4S and that saved by DHL when they use MIS in their operations.179 Decision: We accept the null hypothesis.40 Ho: There is no significant difference between the cost saved by G4S and that saved by DHL when they use MIS in their operations. Significance level= 5%=0.30 S2= 50000 (512500 .514 Rejection region Acceptance region 1.179 x1 = 512500 n1 = 8 x 2 = 450000 n2 =3 S1=83452.tail test t0. Conclusion: There is no significant difference between the cost saved by G4S and that saved by DHL when they use MIS in their operations.450000) tc = (83452. Two. 40 .025 = ±2.30) 2 (50000) 2 + 8 3 = 1.05 n=n1+n2 = 8+3 =11.

2.7689 3 3-2.4489 2 2-2.33 0.33 (x- )2 X in hours x 0.33 0.33 1.8165 41 .4.4489 Mean=2.4489 x ) (x- x ) Mean=2.67 0. Table 9: Wells Fargo (x- 2 2-2. Means and standard deviations of time saved when MIS is used operations: Table 8: DHL (x- 2 2-2.67 -0.3334 Standard Deviation= 0.33 -0.2.67 x ) (x- x ) (x- )2 X in hours x 3.1089 2 2-2.5774 Source: Research data (2012) DHL saves an average of 2hours 19.6667 Standard Deviation= 0.67 -0.67 0.67 1.1089 2 2-2.6 minutes when they use MIS.1089 4 4-2.8minutes with a standard deviation of 34.33 0.1089 3 3-2.67 0.67 0.67 0.33 0.33 0.41 4.67 -0.4489 3 3-2.33 -0.67 0.

µ) (x.94 0. 42 .06 1.0036 5 5-3.8 minutes when they use MIS.5 4.0036 Mean=3.94 0.5.8634 Source: Research Data (2012) G4S saves an average of 3hours 56.42 Source: Research data (2012) Wells Fargo saves an average of 2hours 40.2.94 1.1236 3 3-3.94 1.2.94 0.06 1.94 0. t-test for the difference in time saved when MIS is used in operations: Between G4S and Wells Fargo: Ho: There is no significant difference between the time saved by G4S and that saved by Wells Fargo when they use MIS in their operations.5-3.94 0.4minutes with a standard deviation of 51.8836 3 3-3.1236 5 5-3.94 -0.3136 4 4-3.2188 Standard Deviation= 0.94 0.94 -0.µ)2 3 3-3.94 -0.94 5.56 0.2minutes with a standard deviation of 49 minutes when they use Table 9: G4S X in hours (x-µ) (x.8836 4.06 0.8836 4 4-3. 4.06 0.

hence t-test is used.179 x1 = 3.179 Decision: We reject the null hypothesis. 43 .025 = ±2. Between G4S and DHL: Ho: There is no significant difference between the time saved by G4S and that saved by DHL when they use MIS in their operations.179 2. Two.67) tc = (0.67 n2 =6 S1=0.8165 (3.8634 S2=0.8634) 2 (0.05 n=n1+n2 = 6+8 =14.94 n1 = 8 x 2 = 2. Significance level= 5%=0.94 .810 Rejection region (2.tail test t0.43 H1: There is a significant difference between the time saved by G4S and that saved by Wells Fargo when they use MIS in their operations.810) Rejection region -2. Conclusion: There is a significant difference between the time saved by G4S and that saved by Wells Fargo when they MIS in their operations.8165) 2 + 8 6 tc = 2.2.

Significance level= 5%=0. Two.562 Rejection region Rejection region (3. Conclusion: There is a significant difference between the time saved by G4S and that saved by DHL when they use MIS in their operations.94 − 2. hence t-test is used.33 n2 =3 S1=0.5774 (3.5774) 2 + 8 3 = 3.tail test t0.8634 S2= 0.94 n1 = 8 x 2 = 2.179 Decision: We reject the null hypothesis. 44 .44 H1: There is a significant difference between the time saved by G4S and that saved by DHL when they use MIS in their operations.8634) 2 (0.33) tc = (0.179 2.179 x1 = 3.025 = ±2.562) -2.05 n=n1+n2 = 8+3 =11.

6.45 4.2. Representation of the effect of employees’ IT literacy on their efficiency in operations: DHL G4S Wells Fargo Very Efficient 1 5 3 Efficient 2 3 3 Table 6 CHAPTER FIVE 45 .2.

6 minutes when they use MIS.1587500 with a standard deviation of ksh. Wells Fargo saves an average of ksh. Wells Fargo saves an average of 2hours 40.70 and DHL worth Ksh 35000 The use of transportation model(s) should save time.2 minutes with a standard deviation of 16. 425. DHL saves an average of ksh. 171.70. insecurity along the routes. 78.000 with a standard deviation of ksh. 83452.8 minutes with a standard deviation of 39.2. DHL saves an average of ksh.000 with a standard deviation of ksh.46 CONCLUSIONS AND RECOMMENDATIONS 5.1. 450.30 5.783333. we found out that the effects of moderating variable: poor state of the road network.215.998. It was also found that the use of Management Information System(s) in operations. 52440.666. significantly reduces time and cost incurred.8minutes with a standard deviation of 34.9 minutes. while G4S saves an average of ksh.8 minutes. these gains could have been more. However. Wells Fargo fails to meet the deadline by an average of 1hour 34. 50000.9 minutes.000 with a standard deviation of ksh.08 when they use transportation model(s). Summary of Major Findings From this research study it was established that the use of transportation model(s) in determining shortest routes. G4S fails to meet the deadline by an average of 58. in our study. DHL saves an average of 2hours 19.2minutes with a standard deviation of 49 minutes. cancels the gains that could have been realized. 521500 with a standard deviation of ksh. were it not for the effects of moderating variable.18708.30. while G4S saves an average of 3hours 56.40. DHL loses on average goods worth Ksh. reduces transportation cost significantly.4minutes with a standard deviation of 51. Findings of research hypothesis 46 .750.30 with a standard deviation of Ksh.6408. DHL fails to meet the deadline by an average of 15 minutes with a standard deviation of 4.8 minutes. while G4S saves an average of ksh. Wells Fargo saves an average of ksh. Wells Fargo loses on average goods worth Ksh 86. However.

significantly reduces operation time. The use of Management information systems. significantly reduces operation cost. it is evident that the use of the selected Management Science tools: Management information systems and transportation model(s) have a positive impact on the performance of the studied firms. All the three firms studied use time-window transportation model. 5. iii. in our study. The use of transportation model(s) reduces the transportation time. Customer relationship Management. However. 5. v. A replication of the current study should be done on other similar firms to establish if similar results will be achieved of the findings.3. The use of Management information systems. Conclusion In light of this research. iv. the poor state of the roads.4. Enterprise system. The use of transportation model(s) significantly reduces the transportation cost. the gains are cancelled by significant effect of the moderating variable. vi.47 i. Recommendations Based on the research findings.5. to be carried with regard to other Management Science tools. Database Management System and Knowledge Management System. it is evident that the use of the selected Management Science tools: Management information systems and transportation model(s) improves performance in transportation and logistics firms and therefore other firms in the industry should employ them in their operations. 5. ii. All the three firms use the following information systems: Transaction processing system. Suggestions for further study The research wishes to make some proposals for further research based on the findings of the study. 47 .

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