Warehouse Automation Strategies and Performance of Distribution Firms in Nairobi City, Kenya

Abstract

Purpose: Despite the rapid growth of the logistics sector in Nairobi, distribution firms continue to deal with serious operational inefficiencies that threaten their long-term viability. The core of the problem lies in reliance on manual and semi-manual processes that are ill-equipped to handle the 15% annual surge in e-commerce volumes recorded between 2020 and 2023. The general objective of this study is to investigate the effect of warehouse automation strategies on the performance of distribution firms in Nairobi City, Kenya. Specifically, the study sought to examine the effect of warehouse management systems on the performance of distribution firms in Nairobi City, Kenya and to evaluate the influence of data analytics on the performance of distribution firms in Nairobi City, Kenya.

Methodology: This study was guided by Systems Theory and Organizational Information Processing Theory. This study used a descriptive research design. The unit of analysis was 158 registered distribution firms in Nairobi City County, Kenya. The target respondents were employees in logistics firms with experience in warehouse automation strategies. This study therefore targeted finance managers, supply chain managers and logistics managers. The total target population was therefore 474 respondents. Using Krejcie and Morgan sample size determination formula a representative sample was obtained. The 212 respondents were chosen with the help of stratified random sampling technique.

Findings: Pearson correlation analysis revealed very strong positive and significant relationships between firm performance and both warehouse management systems (r = 0.864, p < 0.001) and data analytics (r = 0.853, p = 0.001). Multiple regression confirmed that the two predictors jointly explained 63.9% of the variance in performance (R² = 0.639, F = 147.95, p = 0.002), with warehouse management systems (β = 0.354, p < 0.001) and data analytics (β = 0.343, p = 0.001) each exerting a significant positive effect. The study concludes that warehouse management systems and data analytics have positive and significant effect on performance of distribution firms in Nairobi City, Kenya.

Unique Contribution to Theory, Practice and Policy: Based on the study findings, the study recommends that distribution firms in Nairobi City should strengthen warehouse management systems by investing in real-time tracking, automated put-away and pick-list generation, and regular employee training to improve inventory visibility and operational efficiency. In addition, they should also enhance the use of data analytics tools for accurate demand forecasting, identification of bottlenecks, and predictive maintenance to support timely decision-making and overall performance improvement.