LOGISTICS COST AND FINANCIAL PERFORMANCE OF SELECTED QUOTED MANUFACTURING FIRMS IN NIGERIA

Abstract

The study examined the impact of logistics cost on the financial performance of quoted manufacturing firms in Nigeria using panel secondary data from the year 2015 to 2019. Specifically, the study investigates how the cost of ordering raw material, cost of processing orders, cost of holding inventory (warehouse) and cost of delivery orders (finished products) influence the performance of quoted manufacturing firms in Nigeria. In doing this, the longitudinal research design was adopted. Data were collected from 10 (ten) of the sample quoted manufacturing firms within the period of the year 2015 to 2019 financial year, making 50 observations. The data were subjected to a panel regression method with fixed and random effects. From the analysis, it was discovered that the cost of ordering raw material and cost of holding inventory (warehouse) had significant negative relationship with the performance of quoted manufacturing firms in Nigeria, while the cost of processing orders and cost of delivery orders had no significant relationship with the performance of quoted manufacturing firms in Nigeria. Based on the findings, the study recommended that management of the concerned manufacturing firms should comprehensively address costs of ordering raw materials and costs of holding inventory (warehouse) by sourcing raw material in local market except such raw materials are not available locally (Nigeria), use costeffective means to transport raw material as well as ensure finished products are delivered directly to wholesalers without holding them.