EFFECTS OF ENTERPRISE RESOURCE PLANNING SYSTEM ON

ORGANIZATIONAL SUPPLY CHAIN PERFORMANCE IN

MANUFACTURING FIRMS IN KISUMU COUNTY.

INDEX NUMBER : 7410040553

NAME : LAVINE MUYUKA

INSTITUTION : THE KISUMU NATIONAL POLYTECHNIC

COURSE : DIPLOMA IN SUPPLIY CHAIN

MANAGEMENT

SUPERVISOR : MR. ALOICE ONYANGO

A RESEARCH PROJECT SUBMITTED TO THE KENYA NATIONAL EXAMINATION

COUNCIL FOR THE PARTIAL FULFILLMENT FOR THE AWARD OF DIPLOMA IN

SUPPLY CHAIN MANAGEMENT

EXAMINATION SERIES : NOVEMBER 2021

 DECLARATION

I hereby declare that this research project is my original work and has not been

submitted for an award of diploma in any other polytechnic.

Signature............................................... Date:..............................................

LAVINE MUYUKA

INDEX NUMBER 7410040553

SUPERVISOR

This research project has been submitted with my approval as the Polytechnic Supervisor.

Signature:......................................................... Date:..............................................

MR ALOICE ONYANGO

KISUMU NATIONAL POLYTECHNIC

DEDICATION

I dedicate my project to my mum and dad for their financial support and their

unconditional love and support made me handle life’s challenges with a greater

resilience. Special credit goes to my parents, for their visionary thinking and for

serving as an inspiration at every step of my life. They have always encouraged

and given me areas on to go ahead and never give up.

My heart is sincerely grateful for your support. God bless you and Thank you for

all your love, support and guidance.

ii
 ACNKNOWLEDGEMENT

My deepest appreciation and thanks go to my supervisor for his constructive

suggestions, right criticisms and guidance that helped me stay on course and to

finish this research project. I am also deeply indebted to my friends and course

colleagues for their contributions in various ways towards the completion of this

work.

I extend my deepest gratitude to the management and staff of the selected

manufacturing firms who helped me to administer questionnaires, and to all the

business system users who patiently bore the displeasures of completing the

questionnaires.

I finally give thanks to the almighty God for granting me great guidance, energy,

wisdom and academic intellect which enabled me to accomplish this work.

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 TABLE OF CONTENTS

Table of Contents

DECLARATION..........................................................................................................................i
DEDICATION.............................................................................................................................ii
ACNKNOWLEDGEMENT.......................................................................................................iii
TABLE OF CONTENTS.............................................................................................................4
LIST OF FIGURES.....................................................................................................................7
LIST OF TABLES.......................................................................................................................9
ABREVIATIONS AND ACRONYMS.....................................................................................10
OPERATIONAL DEFINITION OF TERMS............................................................................11
ABSTRACT...............................................................................................................................12
CHAPTER ONE: INTRODUCTION..........................................................................................1
1.1 Background to the Study...................................................................................................1
1.1.1 Enterprise Resource Planning Systems.............................................................................2
1.1.2 Organizational Performance..............................................................................................3
1.1.3 Selected manufacturing firms.............................................................................................5
1.2 Statement of the Problem..................................................................................................6
1.3 Objectives of the Study.....................................................................................................8
1.3.1 General Objective.............................................................................................................8
1.3.2 Specific Objectives...........................................................................................................8
1.4 Research Questions...........................................................................................................9
1.5 Significance of the Study..................................................................................................9
1.6 Scope of the Study..........................................................................................................11
1.7 Limitation of the study.........................................................................................................11
CHAPTER TWO: LITERATURE REVIEW............................................................................12
2.1 Introduction.....................................................................................................................12
2.2 Theoretical Review.........................................................................................................12
2.2.1 Contingency Theory........................................................................................................12
2.2.2 Balanced Scorecard.........................................................................................................12
2.3 Empirical Review............................................................................................................14
iv
2.3.1 Enterprise resource planning systems.............................................................................14
2.3.2 Indicators of quality organizational supply chain performance........................................15
2. Increased productivity..........................................................................................................15
2.3.3Relationship Between Enterprise resource planning And Organizational Supply Chain
Performance....................................................................................................................16
2.4 Summary and Research Gap...........................................................................................17
Locally, many studies recommend organizations to address the obstacles affecting proper
implementation ERP systems hence existence of a research gap on ERP system on
organizational performance.............................................................................................17
Figure2.1: Conceptual Framework............................................................................................18
2.5.1 Explanations of variables..................................................................................................18
CHAPTER THREE: RESEARCH METHODOLOGY............................................................19
3.1 Introduction.....................................................................................................................19
3.2 Research Design..............................................................................................................19
3.3 Target Population............................................................................................................19
Table3.1: Target Population.......................................................................................................20
Total 20
15 20
202 20
217 20
Source: Field data 2021..............................................................................................................20
3.4 Sampling Design and Sample Size.................................................................................20
3.4.1 Sample Design................................................................................................................20
3.4.2 Sample Size.....................................................................................................................18
3.5.1 Questionnaires.................................................................................................................19
3.6 Data Analysis and Presentation.......................................................................................19
4.8 CONCLUSION....................................................................................................................14
4.9 RECOMMENDATIONS.....................................................................................................15
The study recommends that the top management should provide the necessary resource in
terms of leadership financial support, to management may also be involve monitoring
and evaluating the implementation process trim time to time........................................15
The key performance indicator are patient part of measuring the success and failure of the
companies, it’s also allow companies owner and manager to get overview of individual
v
 department is performing at any given time. its also recommend that enterprise resource
planning can improve a company business performance by developing the most
efficient way to plan and schedule resource and optimize productivity, it can also offer
data visibility to user customer and vender allowing them to view data in real time and
improve relationship in all aspect of your business........................................................15
REFERENCES...........................................................................................................................16
1

vi
 LIST OF FIGURES

Figure 2.1: Conceptual Framework

.......................................................................................................................................................

27

Figure4.1:Respondents’Gender

.......................................................................................................................................................

37

Figure4.2: Work Experience

.......................................................................................................................................................

39

Figure4.3: Organizational Performance in manufacturing firms

.......................................................................................................................................................

48

7
8
 LIST OF TABLES

Table 3.1: Target Population.........................................................................................................29

Table 3.2: Sample Size..................................................................................................................30

Table 3.3: Reliability Test Results.................................................................................................33

Table 4.1: Response Rate...............................................................................................................36

Table 4.3: Level of Education........................................................................................................38

Table 4.4: Financial Integration.....................................................................................................40

Table 4.5: Human Resource Management Integration..................................................................42

Table 4.6: Procurement Integration and Organizational Performance..........................................44

Table 4.7: Procurement Integration and Organizational Performance..........................................46

Table 4.8: Correlation Analysis.....................................................................................................49

Table 4.9: Results of Multiple Regressions...................................................................................51

Table 4.10: Determination of Coefficient......................................................................................53

9
 ABREVIATIONS AND ACRONYMS

ADC Agricultural Development Authority

AIS Accounting Information Systems

ANOVA Analysis of Variance

BSC Balanced Score Card

CEO Chief Executive Officer

CT Contingency Theory

DAC Development Assistance Committee

ERP Enterprise Resource Planning

GDP Gross Domestic Product

HRM Human Resource Management

IS Information Systems

ISO International Standard Organization

IT Information Technology

MRP Material Requirement Planning

OECD Organization for Economic Cooperation and Development

SPSS Statistical Package for Social Sciences

ST Stakeholder Theory

10
 OPERATIONAL DEFINITION OF TERMS

Enterprise Resource Planning Process by which a company (often a manufacturer)

Manages and integrates the important parts

of its business .An ERP management

information system integrates areas such as

planning, purchasing, inventory, sales,

marketing, finance and human resources.

Financial Integration Phenomenon in which financial markets in neighboring,

Regional and/or global economies

are closely linked together

Procurement Integration Purchasing process that controls quantity, quality,

sourcing

And timing to ensure the best

possible total cost of ownership.

11
 ABSTRACT

Enterprise resource planning (ERP) is one of the major business systems that assist
Organization to manage their resource effectively.
In the era of information Technology, ERP system has become the necessary tool
to operate business efficiently. The purpose of study was to investigate effect of
enterprise resource planning system on procurement efficiency in determine the
effect of system control of enterprise resource planning on procurement efficiency
in selected manufacturing firm in Kisumu, The objective of the study were To
determine the type of enterprise resource planning system. To determine indicators
organization supply chain performance and to determine the relation between
enterprise resources planning system and organization supply chain performance.
The study was carried out in two manufacturing organization which were randomly
sample in Kisumu County. The organizations are united Miller's and Equator
bottlers. The study adopted a quantities description research design and use
questionnaires as the Main data collection instrument. The target population was
all managers, senior and junior clerks in the procurement production and finance
department respectively. Data was analyzed by statistical packages for social
science was presented in form frequency table bar chats and bar graph .From the
study findings concluded that there are various type of ERP system use in the two
manufacturing firm, the Organization gives the employee efficiency work which
enhance accountability that ERP system reduce cost in the Organization supply
chain performance. The study concluded that the ERP system has come out to be
the best tool in coordinate and integration of organization procurement Process due
to its ability in processing information faster, track Order and inventory control.
automation of order and duplication in procurement in the procurement system
module .The most cover area in ERP was the customer relation management 80%
this implies that both the internal and external customer need had been well taken
care of by the system leading to a faster process in procurement.
The study recommended that organization should embrace technology change that
is rapidly changing on the environment that the organization exists. This was
evident with the effect of ERP on timely delivery of product, improves customer
relationship and was reliable information systems.
.

12
13
CHAPTER ONE: INTRODUCTION

This chapter comprises of the background to the study, statement of the problem,

objectives of the study, research questions, significance of the study, scope of the

study, limitations of the study and organization of the study.

1.1 Background to the Study

The adoption of Information Communication and Technology (ICT) for business

goes beyond simply buying an office computer and connecting it to the internet. It

is made more beneficial if it is set up with integrated information systems to

support the functional areas of the business .These areas include operations and

management of accounting, finances, manufacturing, production, transportation,

sales and distribution, human resource, supply chain, customer relationship and e-

business. An example of such a system is the Enterprise Resource Planning (ERP)

Software (Torach, 2011).Tidier (2010), emphasizes that ERP systems are one

database, one application and a unified interface across the entire enterprise”. ERP

systems offer unique benefits to the organizations implementing them. This they

do by improving the decision making process of the organizations through the

provision of appropriate and timely information (Hunton et al., 2012).

Globalization has necessitated most companies to standardize processes and learn

the best practices embedded in ERP systems, which ensure quality and

predictability in their global business interests by reducing cycle time from order to

delivery (Ross, 2013). With the evolvement of ERP systems, the interest in the

1
impact that these systems have on organizational performance has risen.

1.1.1 Enterprise Resource Planning Systems

Enterprise Resource Planning (ERP) is the generic term used for management

software that include modules such as production, finance, marketing and human

resources and that allow companies to plan their goods and services (Stevenson,

2007). According to Hossein (2004), Enterprise resource planning (ERP) systems

integrate internal and external management information across an entire

organization, embracing finance/accounting, manufacturing, sales and service,

customer relationship management, etc. ERP systems automate this activity with

an integrated software application.

Zhao and Fan (2007) suggested that new generation ERP systems should be

developed based on the principles of low cost, high quality and efficiency. In the

recent years, ERP software has become widely used in almost all sectors such as

production, services, finance, transportation and public utilities. The purpose of

ERP is to facilitate the flow of information between all

business functions inside the boundaries of the organization and manage the

connections to outside stakeholders. This software, used by many enterprises,

particularly by multinational corporations, has a critical role in ensuring increased

efficiency.

Kumar and Keshan (2009) explains that lacking an ERP solution, firms especially

manufacturers, find themselves struggling to compete and grow using applications

2
that are functionally deficient, obsolete, and isolated from other applications and

data. According to Asemi and Jazi (2010) even though the price of prewritten

software is cheap compared to in-house development, the total cost of

implementation could be three to five times the purchase price of the software.

Clemmons and Simon (2011) assert that nowadays human resources management

is being renewed in organizations and becoming one of the fundamental functions

of the project management. HRM has changed from an inactive and problem-

solving role to a strategic, focusing on the retention and development of the best

human resources. Traditional HR practices consisted of activities such as payroll,

hiring activities, records management, reporting and termination activities.

Nowadays, HRM takes more of a full service role providing employee support

beyond pension planning and career development. With the arrival of ERP

systems, HR functions became fully integrated with the operations side of the

business (Clemmons & Simon, 2011).

According to Handfield (2013) the capability to consider multiple suppliers in turn

provides the purchasing firm with a considerable opportunity for cost reduction

through bargaining, and hence reduces the benefits and likelihood of JIT adoption).

Handfield’s (2013) also argue that if ERP systems provide reductions in material

requirements uncertainty, therefore, they may also

be associated with an increased potential to benefit from the use of B2B market

places for Internet-based procurement.

1.1.2 Organizational Performance

3
Organizational performance is the final achievement of an organization and

contains; existence of certain targets to be achieved, has a period of time in

achieving the targets and the realization of efficiency and effectiveness (Gibson,

Mundy & Sink, 2010). On the other hand, organizational performance refers to

ability of an enterprise to achieve such objectives as high profit, quality product,

large market share, good financial results, and survival at pre-determined time

using relevant strategy for action. Organizational performance can also be used to

view how an enterprise is doing in terms of level of profit, market share and

product quality in relation to other enterprises in the same industry. Consequently,

it is a reflection of productivity of members of an enterprise measured in terms of

revenue, profit, growth, development and expansion of the organization.

Delaney, Dess and Robinson (2010) assert that organization performance can be

evaluated by quality service and products, satisfying customers, market

performance, service innovations, and employee that organization performance can

be appraised by the following “dimensions of performance: return of investment,

margin on sales, capacity utilization, customer satisfaction and product quality”. In

the same way, Green et al (2011) identified that return on investment, sales and

market growth, and profit are important factors that be measured by organization

performance. Improved organizational performance is determined by how an entity

strategically trade-off cost (efficiency) and responsiveness at all levels.

Incorporating supply chain practices into existing structures has the potential of

yielding positive returns for the organization.

4
 Finance always being disregarded in financial decision making since it involves

investment and financing in short-term period. Further, also act as a restrain in

financial performance, since it does not contribute to return on equity (Rafuse,

2011).A well designed and implemented

Financial management is expected to contribute positively to the creation of a

firm’s value. Dilemma in financial management is to achieve desired trade-off

between liquidity, solvency and profitability. Almajali, Alamro& Al-Soub (2012)

argue that financial integration has also been the primary concern of business

practitioners in all types of organizations since financial performance has

implications to organization’s health and ultimately its survival. High performance

reflects management effectiveness and efficiency in making use of company’s

resources and this in turn contributes to the country’s economy at large.

1.1.3 Selected manufacturing firms

United millers

United Millers is primarily engaged in manufacturing and marketing of Fast Moving Consumer

Goods (FMCG) items of daily consumption and is deeply entrenched into processing and

marketing human food, like Wheat flours of different kind, Maize Meals, Bakery products,

Vegetable cooking Oils and Fats and Soaps.

Equator bottlers

Equator Bottlers Limited (EBL) is based in Kisumu, Kenya and was established in 1966. Equator

Bottlers is a subsidiary of Coca-Cola Beverages Africa (CCBA).CCBA produces and sells 40%

5
of all the Coca-Cola volumes on the African content. There are more than 30 bottling plants

across the CCBA territories.

1.2 Statement of the Problem

ERP systems attempt to integrate all business processes into one enterprise wide

solution to enhance data homogeneity and integration of modular applications. To

handle challenges encountered by various transactional systems within an

organization, a common course of action has been the adoption of Enterprise

Resource Planning (ERP) system. The challenge most organizations encounter is in

consolidating ERP systems within the organization. Many organizations prefer a

system platform that would provide integration for processes throughout the

organization’s divisional systems to replace the previous transactional systems.

ADC adopted the ERP system to streamline its support departments’ operations

with the eventual goal of efficiency in running its core business of revenue

collection. The purpose of the ERP was to modernize the support departments

Finance department, Human Resource department and Procurement and Supplies

department (ADC, 2017). This adoption has been marked by a mixture of success

and challenges. Reports on the adoption, state that customization of the ERP

software from the vendors to KRA business operations has been limited. The ERP

system has also been very expensive. ERP implementation is considerably also

more difficult and politically charged because the organization is structured in such

a way that there are in dependent support departments, each responsible for their

6
own reports, because they each have different processes, rules, data semantics,

authorization hierarchies and decision centers.

7
of ERP leads to efficiency and his results show that at the organizational level,

ERP has very positive impact on the performance of companies. Therefore, this

study sought to investigate effect of enterprise resource planning system on

organizational performance in manufacturing firms in Kisumu County.

1.3 Objectives of the Study

1.3.1 General Objective

The general objective of this study was to investigate effect of enterprise resource

planning system on organizational supply chain performance in manufacturing firms

in Kisumu County.

1.3.2 Specific Objectives

This study was guided by the following specific research objectives:

i. To determine the types enterprise resource planning systems.

ii. To identify indicators of Organizational supply chain performance.

iii. To establish relationship between enterprise resources planning systems

and organizational supply chain performance.

8
 1.4 Research Questions

This study sought answers to the following research questions:

i. What are the types of Enterprise resource planning system?

ii. What are the indicators of organizational supply chain performance?

iii. What are the relationship between enterprise resource planning systems

and organizational supply chain performance?

1.5 Significance of the Study

There are various benefits that the findings would accrue to the field of enterprise

resource management in Kisumu county organizations especially in the public

sector. These benefits are indicative of the significance of the study and the

justifications for the same. The findings of this study would help identify the

challenges that are faced by organizations when they are adopting new

technologies in Africa, and especially in Kisumu County. This knowledge will help

managers and other stakeholders in the organization to come up with strategies that

can be used to increase the benefits that the organization can accrue from a new

technology.

This study would offer valuable contribution to theory and practice. This study

could be seen in the fact that the outcome can be applied in the development of an

ICT policy framework as a guide for ERP adoption, which is relevant in most

organizations’ in Kisumu which helps in promoting the economic growth.

9
The study would create a forum for further discussions on best practices to

implement an ERP system. This would help organizations in not only looking at

ERP just as any other technological adoption but looking at it as a strategic tool

that would help an organization to improve its performance and also towards

competing effectively in the competitive field. This would basically give an

organization a competitive edge over its rivals.

The study would also act as a source of reference material for future researchers on

other related topics. Further, it would help other academicians who will undertake

the same topic in their studies. Apart from this, it would also emphasize on other

significant relationships that require further research. This may be in the area of

relationships between ERP and organizational performance.

10
 1.6 Scope of the Study

This study focused on two selected goods manufacturing organizations. Both

internal customers (employees) and management in procurement function were

engaged in giving their views on ERP system, and to what level it affects

procurement performance in an organization.

Random selection was used to distribute questionnaires during the study.

1.7 Limitation of the study

The objective of the research were achieved but with various limitations. Due to the different

scope of operations among the different departments across selected manufacturing firms in

Kisumu County, the safety and health measures and practices were different in findings based on

mere judgments of the respondents. Because of the confidentiality policy of some departments,

the respondents from other departments did not answer the questionnaires or failed to give all the

required information without approval from the legal department

11
 CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter dealt with the theoretical review, empirical review based on specific

objectives of the study, summary and research gaps and conceptual framework.

2.2 Theoretical Review

2.2.1 Contingency Theory

The study was guided by Contingency Theory (CT) developed by Lawrence and

Lorsch (1967).In this study, as the two levels in the research framework are

composed of contextual factors or contingencies such as size, culture, structure,

and so forth. CT assumes the existence of rational actors and often researchers

using it narrow their focus to deterministic models (i.e., only the arrows

representing a required association are shown and the effects of other factors are

ignored)(Weill & Olson, 1989). Due to the limitations in CT and its gradually

diminishing influence among researchers in IS and related field, Weill and Olson

(1989) encourage the use of other theories to explain aspects of organizational

behavior. The Contingency Theory states that organizational effectiveness in this

instance ERP effectiveness or success can result from the matching of

organizational characteristics with contingency factor.

2.2.2 Balanced Scorecard

12
This study was guided by Balanced score card by Kaplan & Norton (1995).

Balanced Scorecard (BSC) suggests managers to view organization’s performance

from four dimensions, customer perspective, internal perspective, innovation &

learning perspective, financial perspective (Kaplan & Norton, 1995). BSC

incorporates financial and non-financial measures in one measurement system. The

objectives and measures of BSC are derived from an organization’s vision and

strategy. The Balanced Scorecard provides executives with a comprehensive

framework that translates a company’s vision and strategy into a coherent set of

performance measures. According to Kaplan and Norton (1995) the balanced

scorecard not only allows the monitoring of present performance, but also tries to

capture information about how

Well the organization is positioned to perform in the future. Furthermore, the

Balanced Scorecard has evolved to become a core management tool, in that it helps

CEOs not only to clarify and communicate strategy, but also to manage strategy. In

practice, companies use the BSC approach to accomplish four critical management

processes, clarify and translate vision and strategy, communicate and link strategic

objectives and measures, plan, set targets, and align strategic initiatives and

enhance strategic feedback and learning.

The Balanced Score Card (BSC) is a management system used to align business

activities to the vision and strategy of the organization, improve internal and

external communication and monitor organizational performance against strategic

13
 goals. It is a performance measurement tool that considers not only financial

measures but also customer satisfaction, business process and learning measures

(Johnson et al., 2008). Organizations primarily uses balanced score card as a

performance measurement tool and recommends that the company should provide

enoughresourcesespeciallyforfundingfurthercomprehensivesensitizationon the

importance of balanced scorecard.

2.3 Empirical Review

2.3.1 Enterprise resource planning systems

ERP System Examples

Here are examples of ERP systems that can help you automate your company processes.

Oracle ERP Cloud

Our first example of an ERP system is probably one you’ve heard of before. Founded in 2012,

Oracle ERP Cloud is modern, dynamic software that’s used by a wide range of customers. The

suite of cloud applications leverages artificial intelligence (AI) and machine learning to automate

everyday tasks.

SAP S/4HANA. This next-generation service is known for its far-reaching compatibility with

multiple company sizes and existing software.

Oracle Cloud ERP. Oracle is one of the most well-established software companies in the

world. They boast a broad range of capabilities within their ERP solution, including

expense and risk management.

Sage Intact. This company is known for its extensive third-party integration capabilities

14
 and being useful for smaller, high-growth companies.

EPCOR ERP. EPCOR offers a high degree of scalability and customizability for

businesses of different sizes. Also includes options for in-house or cloud-based usability.

2.3.2 Indicators of quality organizational supply chain performance

1. Increase efficiency

One of the most useful indicators of organizational effectiveness is how well an organization

meets its goals.

Measuring organizational performance can be accomplished by:

1. Comparing actual achievements against set goals. Comparing the projected aims, such as

profit and innovation, against actual results.

2. Measuring the efficiency of business functions, areas, and processes. How cost-effectively,

efficiently, and quickly business areas achieve their aims.

3. Balancing expenditures against returns. Viewing each business project or process as an

investment, and the results of that process as the return on that investment.

This is perhaps the most straightforward indicator of organizational effectiveness.

In this case, organizational effectiveness amounts to a cost-benefit analysis.

Organizations that meet or exceed their set aims would be considered more effective than those

that don’t.

2. Increased productivity

Employee’s performances directly affects their contribution to the efficiency and results of a

business unit.

And the performance of each business unit, in turn, affects the organization’s overall

15
performance.

Several factors can contribute to workforce performance, including: Management, as mentioned

above, values, and mission, tools and technology, the work environment.

3. Reduced cost

In the digital age, digital capabilities are a prerequisite for success.

Without the right tools, an organization simply cannot keep up with its competitors.

The right tools and technology positively impact theworkforce experience. A digitally-powered

workplace also improves the employee experience. Effective digital tools and training can

improve worker efficiency, productivity, collaboration, engagement, and motivation, among

other things.

2.3.3Relationship Between Enterprise resource planning And Organizational Supply

Chain Performance

This paper has empirically tested a framework identifying the relationships among SCM

practices, ERP systems, competitive advantage and firm performance. The primary goal of this

research has been investigate the effects of SCM practices and ERP systems on competitive

advantage and firm performance. To test the research hypotheses, a path analysis using AMOS

4.0 program was applied. Our results show that most of the hypotheses were supported. For

example, SCM practices have a greater positive impact on competitive advantage and firm

performance. The standardized path coefficients for SCM practices on competitive advantage

and firm performance were 0.77 and 0.50, respectively. ERP practices do not have any effect on

competitive advantage but they have a positive impact on firm performance. The standardized

16
path coefficients for SCM practices on competitive advantage and firm performance were 0.12

and 0.27, respectively. Finally, competitive advantage does not have any effect on firm

performance. These findings support our conceptual model and offer a number of managerial

implications. First, this study provides a practical tool for managers to evaluate the SCM

practices and ERP systems, through the development and the validation of these systems. Also,

we showed the effectiveness of SCM practices and ERP success in increasing the performance

and competitive advantage. In order to achieve higher competitive advantage, managers should

adopt SCM practices. Since the competition is moving from to reduce supply chain costs and

secures competitive advantage. The results of this research support that SCM practices can have

discernible impact on competitive advantage and firm performance. It should be noted that SCM

practices and ERP systems may be influenced by contextual factors, such as the type of the

industry, firm size, etc. This study integrates the all the activities of the SCM and ERP systems

and links these activities with competitive advantage and firm performance.

2.4 Summary and Research Gap

Locally, many studies recommend organizations to address the obstacles affecting proper

implementation ERP systems hence existence of a research gap on ERP system on

organizational performance.

17
2.5 Conceptual framework in dependent variables

ERP systems Organizational Supply chain Performance

Oracle ERP Cloud  Accountability

SAPS/4HANA
EPCOR ERP  Increased productivity
 Reduced cost

Figure2.1: Conceptual Framework

2.5.1 Explanations of variables

18
Figure 2.1 shows the relationship between independent variables and dependent

variable. The independent variable is ERP which include oracle ERP cloud,

SAP S/4HANA and EPCOR ERP. The dependent variable is the organizational

supply chain performance in manufacturing firms.CHAPTER THREE:

RESEARCH METHODOLOGY

3.1 Introduction

This chapter comprised of the research design, target population, sampling design

and sample size, data collection instruments, pilot study, data collection

techniques, data analysis and ethical consideration.

3.2 Research Design

This study employed a descriptive research design. According to Kothari (2004) descriptive

research design is recommended for studies that are concerned with specific predictions, with

narration of facts and characteristics concerning individuals, group or situation. According to

Cooper and Schindler (2003), a descriptive study is concerned with finding out what, where

and how of a phenomenon. Descriptive research includes survey and fact finding inquiries

and is applied where the study is using comparative variables in the field of study and the

case at hand has no control over the variables and the researcher can only report on what

happened or what is happening (Mathooko et al., 2011). Descriptive research design was

chosen because it enabled the findings to be generalized to a larger population. It also

provided quantitative data from cross-section of the chosen population. The study sought to

determine the Effects of Enterprise Resource Planning Systems on organizational

19
 performance.

3.3 Target Population

According to Mugenda and Mugenda (2003), target population is group,

individual, objects or items from which samples are taken measurement in

research. The target population in this study was three selected manufacturing

firms in Kisumu namely: United millers Kisumu and Equator Bottlers.

The targeted respondents was 330 respondents comprising of 15 sectional

managers and 105employees from Finance department, IT department, Human

resources, Procurement departmentasshownintable3.1.

Table3.1: Target Population

Category Managers Employees Population

Finance Department 3 84 87

Human Resource Department 3 55. 40

Procurement Department 3 28 30

Total 15 202 217

Source: Field data 2021

3.4 Sampling Design and Sample Size

3.4.1 Sample Design

20
Sampling procedures refers to how cases are to be selected for observation. It

provides a detailed explanation of the subjects to be involved in investigation and

how these are to be selected from the target group. Stratified sampling was used to

sample the respondents from the selected four departments (finance, human

resource, CT and procurement). A census method was used to select the managers

and simple random sampling was used to select the employees.

21
 3.4.2 Sample Size

The study of sample size involves two firms because they were already accessible to the

researcher thus minimizing the study cost and reduce time spent for data collection.

Departmental population size for the selected organization is elaborated in table 1.

Table 1

Companies Procurement Production Finance Total

United Miller 15 100 16 141

Equator Bottle 20 40 6 66

Total 35 140 22 177

From the population size per firm 30% of the two firms sample per department were selected

to allow for full representation of all groups in the entire firm total selected sample 75 as shown.

Company’s procurement 30% production 60 % finance 30% total

United millers 5 20 5 40

Equator 12 10 13 35

Total 17 40 18 75

18
3.5 DATA COLLECTION METHODS

The data collection instrument are tool used for collection data during study .The

study only the questionnaire it's the most preffered as being economical in as for

data collection is concerned.

3.5.1 Questionnaires

Questionnaire were preferred as being economical in as far as data collection is

concerned. The questionnaire entailed section A-F, section A focused on general

information while section B-f were structure to measure each of the study objective

namely To determine the types of enterprise resource planning system, various

indicator of organization supply chain performance and relationship between

enterprise resource planning system and organization supply chain performance.

The research got an introductory letter from the department of business and

presents it to the National Commission for Science and Technology and Innovation

order to acquire a research permit .The managerial board of the selected

organization was informed on the data collection period. The researcher hired two

experience research assistant who aided in distribution and collection filled

questionnaire from the sample respondent during the data collection the researcher

observed research ethics as needed.

3.6 Data Analysis and Presentation

19
The data of the study was from primary source which involved the use of structure

questionnaire. The respondent was strictly asked to focus on procurement as a

function to determine the types of ERP system, various indicator of organization

supply chain performance and establish relationship between enterprise resource

planning system and organization supply chain performance on ERP system in

bringing efficiency to manufacturing organization.

20
CHAPTER 4: DATA ANALYSIS , FINDINGS CONCLUSION AND

RECOMMENDATION.

4.1 Introduction

This chapter is a presentation of results and findings obtained from the field of responses and

data, broken into two parts. The first section discusses the background information of the

respondents, while the other sections present findings of the analysis. The study used descriptive

and inferential statistics in the analysis and discussed the issues in the best way possible.

4.2. Section A: General Organization Information

4.2.1 Response Rate

Out of 120 questionnaires which had been administered to the interviewees, 88 of them were

returned for analysis. This translates to 73 percent return rate of the respondents. Overall, the

response rate can be considered to have been very high as shown in table 4. According to

Mugenda and Mugenda (2003) a 50% response rate is adequate, 60% good and above,70% rated

very good. This also corroborates Bailey (2000) assertion that a response rate of 50% is

adequate, while a response rate greater than 70% is very good. This implies that based on this

assertion; the response rate in this case of 73% is good.

TABLE4 Response rate

21
Response rate Frequency Percent

Issued 120 100

Returned 88 73

Not returned 32 27

22
4.2.2 Organization in the Study

The organizations
. The respondents attributed in the staff
to the study are shown
working below. The figure
in the procurement, finance 4 shows the organizations

that respondents in this worked, 65% were of the respondents were from united Miller's,while

35%, were from Equitor bottlers

And operations departments in the selected manufacturing organizations. United Miller's had

the least number of staff respondents (25%) mostly from procurement filling the questionnaires,

while Equator bottles had more staff respondents (45%) offering information in relation to the study

objectives.

Figure 4

4.2.3 Job Position Held

The study sought to find out which position the respondent held in the organization. The

Figure 5 below shows the results. Majority of the respondents were junior clerks (68.77%),

Followed by senior officers who were 11.14% and managers who were 9.10% of the respondents.

The manager’s response can be attributed to the busy schedule they have in their work schedule

30
23
Organization in study

35% United millers

Equator bottlers
65%

24
Thus, having limited time for data filling. The junior clerks were readily available because of the

limited duties they have at work while others were flexible enough to meet after office hours for

data filling exercise.

FIGURE 5
JOB POSITION HELD

4.2.4 Length of time worked for the organization

The study sought to establish how long the respondents had been working at their

respective organizations to ascertain to what extent their responses could be relied upon to make

conclusions for the study based on experience. From the study findings as indicated in figure 6,

majority (42%) indicated that they had been working at their respective organizations for a

period between 1-5 years, 31% indicated they had been working for 5-10 years, 23% for less

than 1 year a few (4%) indicated they had been working for a period more that 10 years. It can be

noted that the 31% of the respondents were mostly senior officers and managers who had

attributed that they had got promotions to senior ranks after working for over five years and had

furthered their studies which was a factor promoting the rise in ranks. The 23% of the

respondents who had worked for less than a year were procurement officers who had modern IT

skills which facilitated efficiency in e-procurement. It can be asserted that employee retention in

the manufacturing organizations was poor as only 4% of the respondents had worked over 10

years.
31
19
 FIGURE 6
LENGTH OF TIME WORKED FOR THE ORGANIZATION

4.2.5 No. of Employees in Organization

The study sought the number of employees from each of the organization in the study. As

shown in figure 7 below, 80% of the organizations had employees ranging from 200-300 while

20% of the organizations had employees ranging from 400-500. Of the five organizations

selected only EABL had the 20% employee ranging from 400-500. This implies that the market

demand for EABL products is more as compared to the products from other organizations.

FIGURE 7
NUMBER OF EMPLOYEES IN ORGANIZATION

100
80
60
40
20
0
less than 100 201-300 301-400 401-500
employees employees employees employees

32
20
4.3 System Controls in the Organization

4.3.1 Systems used by the Company before ERP Implementation

The study established which systems were used by the company before the ERP

implementation. Figure 8 shows the response. Majority (80%) indicated that they used legacy

systems while a small no. (20%) indicated that they didn’t have any system. Many organizations

preferred the legacy system because the operators were familiar with the process and could easily

track any data because of continual usage. However, the maintenance and staffing cost of the

legacy system are high and growing.

FIGURE 8
SYSTEMS USED BY THE COMPANY BEFORE ERP IMPLEMENTATION

Previous operating
system

20%
legacysystem
none
80%

4.3.2 Main challenges the company faced with the old system

The study sought to determine the main challenges faced in the company. The response

are shown in the Table 5 below

33
21
 TABLE 5

CHALLENGES FACED WITH THE OLD SYSTEM

Challenge Frequency Percentage

(%)
Bloated purchasing department 77 88
Slower and less flexible purchasing process. 68 77
Maverick buying 72 82
Higher clerical and administrative costs 71 81
High process inaccuracy due to very high manual component 75 85
Bigger space required to archive fiscal documentation. 78 89
Less efficient process. 67 76
Could not perform some advanced functions i.e. send orders 63 72
online, online order receiving and issuing, order
acknowledgement and order confirmation to customers.

As shown in Table 5 above, 88% of the respondent felt that bloated purchasing

department, 77% identified slower and less flexible purchasing process, 82% indicated that

maverick buying, 81% identified higher clerical and administrative cost as a challenge, 85% of

the respondents felt that high process inaccuracy due to high manual component was a challenge

in their organizations. 89% identified bigger space required to archive fiscal documentation as a

challenge. 76% found less efficient process as a challenge and 72 % indicated that not being able

to perform some advance functions as a challenge.

4.3.3 ERP System Used In Your Organization

The study sought to determine which ERP systems the organizations in the study used.

The responses are displayed in the figure 9 below; 60% of the organizations used SAP R/3, 20%

of the organizations use Iscala and another 20% use Navison financials. This implies that SAP

R/3 is the most preferred ERP system by many manufacturing organizations. SAP R/3 also is the

34
22
most advanced ERP system in the market currently serving both internal and external

stakeholders. Thus, many organizations seem to prefer it.

FIGURE 9
ERP SYSTEMS USED IN YOUR ORGANIZATION

4.3.4 Driving Force for ERP

The study sought to find out the driving force for these organizations to adopt the ERP.

The responses are shown in the Table 6 below.

TABLE 6

DRIVING FORCES FOR ERP ADOPTION

Driving force Frequency Percentage %

Reduced direct operating cost 70 80
Quickened information response time 76 86
Improved order management/order cycle 82 93
Lowered inventory levels 86 98
Increase interaction across enterprise 72 82
Improved on-time delivery 80 91
Improved cash management 85 97
Improved interaction with suppliers 73 83
Improved interaction with customers 77 88

35
23
As shown in Table 6 above, 80% of the respondents indicated that reducing direct operation cost

was a driving force for the organization, 86% identified quickened information response time as

a driving force, 93% indicated that improved order management, 98% identified that lowered

inventory levels was also a driving force. The study also found 82% of the respondents felt that

it helped increase interaction across enterprise and so making it a driving force, 91% indicated it

improved on time delivery, 97% being the highest response on any driving force being on

improved cash management. Eighty three percent indicated that it helped in interaction with

suppliers and 88% indicated it was driven by the ability to improve interaction with customers.

4.3.5 Time for Adoption of ERP

The study sought to find out whether the adoption happened was finished on time. The

figure 10 below shows the response from the respondents where the majority (60%) indicated it

was completed on time while 40% responded that it wasn’t adopted in time. The 40% attributed

challenges like lack of proper analysis of requirements during implementation and thereafter,

inadequate training of personnel’s and cost overheads. Majority attributed to completion on time

due to adequate support from senior management and good investment in infrastructure. The

organizations also did a proper analysis of the requirements thus had the essential functionalities.

This indicates that absence of senior management support may delay ERP implementation in an

organization

36
24
 FIGURE 10
TIME FOR ADOPTION OFERP

4.3.6 Total Cost of Implementing the ERP System

The study sought to determine the cost of implementing an ERP system in these

organizations. The responses are shown in the figure 11. According to the findings 20% of the

organization had used cost ranging from Ksh 1-5 million, 60% of the organizations had used a

cost ranging from Ksh 5-10 million while 20% had used a cost of over 10 million. This implies

that the cost of ERP implementation is high and thus organizations with limited funds may not be

able to implement the system. The cost is related to the ERP software’s involved, planning,

customization and configuration which requires IT experts, testing and the actual

implementation.

37
25
 FIGURE 11
TOTAL COST OF IMPLEMENTING THE ERP SYSTEM

Cost incurred

0% less than Ksh

20% 20% million
1Ksh 1-5
60%
Million
Ksh 5-10

million

4.3.7 Factors Affecting the Implementation and Adoption of ERP Systems

The study sought to determine which factors affect the implementation and adoption of

ERP systems. The results are displayed in the Table 7 below.

TABLE 7

FACTORS AFFECTING IMPLEMENTATION AND ADOPTION OF ERP SYSTEMS

Factors Frequency Percentage (%)

Skills and knowledge 78 89
Budgetary allocation 80 91
Top management support 67 76
Firm’s size 82 93

As shown in Table 7 above, 89% identified skill and knowledge as a factor affecting the

implementation and adoption of ERP systems, 91% indicated that budgetary allocation does

affect the implementation of ERP systems, 76% identified top management support as a factor.

Lastly the respondents (93%) indicated that firm size does act as a factor affecting the

implementation of ERP systems.

38
1
 TABLE 8

TECHNOLOGICAL FACTORS LEADING TO ERP SYSTEM IMPLEMENTATION

Factors Frequency Percentage (%)

IT infrastructure 52 59
Information security 22 25
risks
Rapid change of 14 16
technologies
Total 88 100

From the results in the Table 8 above 59% indicated that IT infrastructure did lead to ERP

systems, 25% indicated that information security also lead to the implementation of the ERP

systems and 16% of the respondents identified the rapid change of technologies.

4.4 Cost Savings in the Organization

4.4.1 Extent of Meeting Overall Needs

The study sought to find out the extent in which ERP system meets the overall needs of

the organization. The figure 12 below shows how the majority (75%) felt that it met the needs to

a larger extent while 25% felt it met to lesser extent. The majority cited that ERP offered

complete visibility of all the important processes across various departments, reduced costs of

departmental software’s, created an automatic and coherent flow from one department to another

and some ERP systems like Sap R/3 provided business intelligence functionalities. On the hand

however, the 25% of the respondent cited the ERP deployments were highly time consuming and

the cost of ERP software, planning and customization were too high. The fact that ERP

implementation also made some organizations single vendors lock in limited organizations

negotiations of their services.

39
2
 FIGURE 12

EXTENT OF MEETING OVERALL NEEDS

4.4.2 Savings the Organization Generated In the Adoption of ERP System

The study put several statements to investigate the areas in which the organizations had

cost saved. The Table 4.6 below shows statements that aimed to investigate these areas.

TABLE 9
AREAS OF COST SAVINGS

1 2 3 4 5 Mean Std
Statement DEV

Procurement Cycle
0 0 0 38 62 4.6 0.26
Inventory Management
0 0 0 19 81 4.8 0.32
Contracts Management
0 0 10 29 62 4.6 0.24

The Table 9 above shows that a majority (62%) indicated that there organizations had saved cost

in the procurement cycle, 81% indicated a saving cost in inventory management while 62%

indicated cost saving in contract management.

40
3
4 .4.3 Overall Benefits of Using ERP System

The study put several statements to investigate the benefits in which the organizations

had acquired in using an ERP system. The Table 4.7 below shows statements that aimed to

investigate these benefits.

TABLE 10
OVERALL BENEFITS OF USING ERP SYSTEM
1 2 3 4 5 Mean Std
Statement DEV

Reliable information access

0 0 0 30 70 4.6 0.24
Delivery & cycle time reduction
0 0 21 40 39 4.8 0.32
Cost reduction
0 0 10 31 59 3.6 0.19
Easy adaptability
0 0 40 29 31 4.15 0.74
Global outreach
0 0 60 35 5 3.85 1.18
E-Commerce, e-business 0 0 0 59 41 4.2 0.77

As shown in Table 10 above, reliable information was the most overall benefit (70%) of the ERP

system in the selected manufacturing companies while global outreach had the least (5%) benefit

. ERP system reduced costs by 59%, enhanced e-business by 41% contributed to delivery and

cycle time reduction by 39% and was easily adaptable by 31%. This implies that ERP systems

had benefits across all areas in the organization.

4.4.4 E-Procurement System Using ERP System Process

The study sought to find out how the ERP system works in this organization and the

response was as follows. Request starts from the customer or user through e-business which is a

software fitted to customers linking them with Tetra Pak to be able to: View prices (quotes),

41
4
view physical stocks from spare parts stores, view their credit financial status, view order status

and follow-up, send orders on-line to Tetra Pak spare parts sale points overseas, receive order

acknowledgement, receive out bond deliveries (parking list), and monitor order status (progress)

i.e. placed, confirmed and delivered.

Thereafter feeding in requirement in e-business, an order notification followed by an

order acknowledgement is triggered in outlook indicating an order received from the customer:

Lu (2011) defines an order confirmation as a triggered system based in SAP R/3 generating a

unique number to the order which is also sent to the customer on email as a notification as well.

In SAP R/3 inbox, any order request without issues was triggered straight in creating an out bond

delivery and creating a purchase order. When items are in stock, an out bond delivery is created,

and if not, the system automatically created a purchase order to where it is available in Tetra Pak

sale points i.e. Tetra Pak Dubai, Tetra Pak Sweden (HQ). This is possible since the entire Tetra

Pak sale / buying points are connected in the same data base worldwide:

If items are available, using the out bond delivery produced by the system, the storekeeper /

spare parts administrator picks items from the store, confirming with the order out bond delivery

then goes to SAP R/3 to generate and produce the out bond delivery. After executing, the system

prompts the customer that goods are ready for collection of which an invoice is generated and

accompanies the items during collection. A purchase order for the item is created online when

items are not in stock. At this point, the purchasing administrator opens the respective purchase

orders in SAP R/3 to check for special conditions from the customer i.e. urgency, lead time,

delivery terms. This is to enable the purchaser be able to execute those specific special

conditions before the order is transmitted to the supplier. Changes can also be on quantities

required, on prices, and cancellation of requested items.

42
5
 Once the purchaser is satisfied that the order is okay, he clicks save and the order is

automatically sent to the suppliers and he gets an email notification of the same. The system

triggers an order confirmation online after an order is sent and received. This then updates on the

order of the dispatch dates against the respective items ordered followed by an out bond delivery.

The purchasing administrator can be able to view in SAP R/3 all this information by opening the

respective orders. The systems prompts the supplier on email to release items on its date of

dispatch, thereafter, a shipping notification is released online followed with an invoice generated

immediately on the same date. An invoice notification is also sent on email to the purchasing

administrator. It is important to note that if the items are for customers outside Kenya, the items

are sent direct to the customer. The purchasing administrator conveys the supply information on

email or on phone with details i.e. AWB (Air Way Bill) which shows the delivery details.

On the arrival in the airport, Tetra Pak Purchasing Administrator creates an invoice for

the buyer (customer) with Tetra Pak Kenya own terms i.e. local prices which have the mark-up

and VAT, which is sent to the customer, then Tetra Pak credit controls follows for payment

based on agreed terms and conditions, and at the same time Tetra Pak Kenya pays Tetra Pak

Global as per set company group rules. The same process is followed for replenishment of local

stocks for selling to customers as per need and request of which goods receipts has to be done in

SAP R/3 under MIGO goods receipts to reflect actual stocks received.

4.5 Areas (Modules) of ERP System Coverage

As shown in Table 11 below, the major areas that ERP covered were; customer

relationship management (4.7), sales and distribution management (4.7 and production

management (4.6). The least covered areas by the ERP system were human resource

management (3.7), accounting management (3.6) and financial management (3.6). This implies

43
6
that ERP system were more efficient in serving both external stakeholders who are customers

and internal stakeholders that is production. However, the internal system like human resource

management and accounting management were not adequately covered by ERP as compared to

external systems of sales and distribution.

TABLE 11
MODULES COVERED BY YOUR ORGANIZATIONS ERP SYSTEM

1 2 3 4 5 Mean Std
Statement DEV

Accounting management
0 0 0 37 63 3.6 0.16
Financial management
0 0 0 29 71 3.7 0.18
Manufacturing management
0 0 0 29 62 4.6 0.24
Production management
0 0 0 44 56 3.9 0.18
Transportation management
0 0 0 21 79 4.1 0.22
Sales & distribution management
0 0 0 31 69 4.7 0.05
Human resources management
0 0 0 25 75 3.7 0.18
Supply chain management 0 0 0 34 66 4.1 0.22
Customer relationship management
0 0 0 20 80 4.7 0.05

4.6 Regression of Study Variables

The section below presents a regression analysis of the study variables namely; Control

Systems, Cost Saving, Process Flexibility and Faster Process.

44
7
 TABLE 12

SHOWING MODEL OF SYSTEM CONTROL

Std. Error of the

Model R R Square Adjusted R Square Estimate
1 .605a .366 .339 .62749

An inverse model was applied in determining the relationship between the effects of system

controls of Enterprise Resource Planning and procurement efficiency. Results in table 12 above

indicate that the system controls was efficient. This finding was supported by an R Squared of

0.366. An R Squared of 0.366 indicates that 56.6% of variation in system control of ERP affects

procurement efficiency.

TABLE 13

ANALYSIS OF VARIANCE OF SYSTEM CONTROL

Model Sum of Squares df Mean Square F Sig.

1 Regression 4.603 1 4.603 10.931 .003a
Residual 9.684 23 .421
Total 14.287 24

Regression results in Table 13 indicate that the inverse of system controls of ERP is positively

related to procurement efficiency. This was evidence by a regression coefficient of 0.941 (p

value = 0.003). The relationship was significant at 0.05 critical value since the reported p value

0.003 was less than the critical value of 0.05. An increase in system controls of ERP by one unit

leads to an increase in procurement efficiency by 0.941 units.

45
8
4.6.2 Cost saving

TABLE 14

MODEL OF COST SAVING

Std. Error of the

Model R R Square Adjusted R Square Estimate
1 .230a .053 .047 .37300

An analysis was done to determine the relationship between the effects of cost saving of

Enterprise Resource Planning and procurement efficiency. Result in table 14 indicates that the

cost saving was not effective with regard to procurement efficiency. This finding was supported

by an R squared of 0.053.An R squared of 0.053 indicates that 5.6% variation in the cost saving

on procurement efficiency. This implies that ERP system was not cost effective with regard to

procurement efficiency

TABLE 15
ANALYSIS OF VARIANCE OF COST SAVING

Model Sum of Squares df Mean Square F Sig.

1 Regression 1.282 1 1.282 9.216 .003a
Residual 22.956 165 .139
Total 24.238 166

An Analysis of Variance (ANOVA) results in Table 15 indicates that the overall model was

significant. This was supported by an F statistic of 9.216 (p value = 0.003). The ANOVA results

demonstrated that the independent variable (cost saving) affected procurement efficiency.

46
9
 TABLE 16
REGRESSION COEFFICIENTS OF COST SAVING

Unstandardized Standardized
Model Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) 2.875 .256 11.211 .000
Cost effectiveness .212 .070 .230 3.036 .003

Regression results in Table 16 indicate that the inverse cost of ERP system is positively related

to procurement efficiency. This was evidence by a regression coefficient of 0.212 (p value =

0.003). The relationship was significant at 0.05 critical value since the reported p value 0.003

was less than the critical value of 0.05. An increase in cost effectiveness by one unit leads to a

decrease in procurement efficiency by 0.212 units.

4.6.3 Process flexibility

TABLE 17

MODEL OF PROCESS FLEXIBILITY

Std. Error of the

Model R R Square Adjusted R Square Estimate
1 .823a .685 .635 .36665

Analysis on the effects of process flexibility of Enterprise Resource Planning on procurement

efficiency was done. Results in table 17 indicate that the process flexibility was effective with

regard to procurement efficiency. This finding was supported by an R squared of 0.685. An R

squared of 0.685 indicates that process flexibility of ERP system was 68.5% effective in

procurement efficiency.

47
10
 TABLE 18
ANALYSIS OF VARIANCE OF PROCESS FLRXIBILITY
Model Sum of Squares df Mean Square F Sig.
1 Regression 2.057 1 2.057 15.303 .000a
Residual 22.181 165 .134
Total 24.238 166

Results in Table 18 present an Analysis of Variance (ANOVA). Results indicate that the overall

model was significant. This was supported by an F statistic of 15.303 (p value = 0.006). The

ANOVA results demonstrated that the independent variable process flexibility affects

procurement efficiency positively.

TABLE 19

REGRESSION COEFFICIENTS OF PROCESS FLEXIBILITY

Unstandardized Standardized
Model Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) 2.928 .186 15.726 .000
Process flexibility .893 .050 .291 3.912 .006

Regression results in Table 19 indicate that process flexibility in ERP system affected

procurement efficiency in a positive way. This was evidence by a regression coefficient of 0.893

(p value = 0.006). The relationship was significant at 0.05 critical value since the reported p

value 0.006 was more than the critical value of 0.05. This indicates that process flexibility in the

ERP system enhances procurement efficiency more effectively.

4.6.4 Faster process

TABLE 20

48
11
 MODEL OF FASTER PROCESS

Std. Error of the

Model R R Square Adjusted R Square Estimate
1 .912a .832 .882 .36665

Analysis on the effects of faster process f of Enterprise Resource Planning on procurement

efficiency was done. Results in table 20 indicate that the faster process was positively effective

with regard to procurement efficiency. This finding was supported by an R squared of 0.832. An

R squared of 0.832 indicates that faster process of ERP system contributed to 83.2% in

procurement efficiency.

TABLE 21
ANALYSYS OF VARIANCE OF FASTER PROCESS
Model Sum of Squares df Mean Square F Sig.
1 Regression 3.167 1 3.167 15.303 .000a
Residual 24.181 172 .134
Total 27.134 169

Results in Table 21 present an Analysis of Variance (ANOVA). Results indicate that the overall

model was significant. This was supported by an F statistic of 15.303 (p value = 0.006). The

ANOVA results demonstrated that the independent variable process flexibility affects

procurement efficiency positively.

TABLE 22

REGRESSION OF COEFFICIENTS OF FATSRE PROCESS

Unstandardized Standardized
Model Coefficients Coefficients t Sig.

49
12
 Unstandardized Standardized
Model Coefficients Coefficients t Sig.
B Std. Error Beta
1 (Constant) 2.928 .186 15.726 .000
Faster process .973 .050 .291 3.912 .006

Regression results in Table 22 indicate that faster process ERP system affected procurement

efficiency in a positive way. This was evidence by a regression coefficient of 0.213 (p value =

0.008). The relationship was significant at 0.05 critical value since the reported p value 0.008

was more than the critical value of 0.05. This indicates that faster process in the ERP system
enhances procurement efficiency more effectively.

50
13
4.7 FINDING

1. To determine the type of enterprise resource planning system.

That enterprise resource planning enable companies to break down traditional organization, they

have replace them with a tightly integrated horizontal structure by using integration technology

to integrate management of document activities.

2. To identify indicator of organization supply chain performance.

An enterprise resource planning enable most companies to forecast accuracy time delivery

and performance against date logistics and planned performance, in practice many metrics and

models have been develop to identify the success of supply chain.

3. To establish relation between enterprise resource planning System and organization supply

chain performance.

Enterprise resource planning provide various benefits to an organization in terms of

capabilities and functionality, it also provide substantial average over competitors.

4.8 CONCLUSION.

The study findings indicates that enterprise resource planning process has met 65% of the

organization needs making the procurement system more efficiency.

The most are covered were customer relation management .80% both internal and external

customer relations needs had been well taken care by the system leading to faster process in the

14
procurement.

4.9 RECOMMENDATIONS

The study recommends that the top management should provide the necessary resource in terms

of leadership financial support, to management may also be involve monitoring and evaluating

the implementation process trim time to time.

The key performance indicator are patient part of measuring the success and failure of the

companies, it’s also allow companies owner and manager to get overview of individual

department is performing at any given time. its also recommend that enterprise resource planning

can improve a company business performance by developing the most efficient way to plan and

schedule resource and optimize productivity, it can also offer data visibility to user customer and

vender allowing them to view data in real time and improve relationship in all aspect of your

business.

15
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 APPENDICES

APPENDIX 1

QUESTIONNAIRE
Kindly fill the questionnaire and tick where appropriate. The information provided will be

treated with utmost confidentiality and it is for academic purposes only.

Section A: General Information about the Organisation and the Respondent

1. What is the name of your organization?

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2. Job title in the Organization? (Optional)

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3. What is your position in your organization?

Manager

Senior Officer

Junior Clerk

4. What type of manufacturing firm is your organization?

Packaging material

Alcohol Beverages

Non alcoholic Beverages

Food Products

Others (Please Specify)

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5. For how long have your organization been in existence in Kenya?

Less than 1 year

1
 Between 1 and 5 years

Between 5 and 10 years

10 years and over

6. For how long have you worked for the organization?

Less than 1 year

Between 1 and 5 years

Between 5 and 10 years

10 years and over

7. How many employees does your organization have?

Less than 50 employees

51 – 200 employees

201 – 400 emplyees

above 400 employees

Section B: System Controls in the Organization

8. What systems was the company using before ERP implementation?

Legacy systems

None

9. What two main challenges did the company face with the old system?

i. Bloated purchasing department

ii. Slower and less flexible purchasing process.

iii. Maverick buying

iv. Higher clerical and administrative costs.

v. High process inaccuracy due to very high manual component.

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 vi. Bigger space required to archive fiscal documentation.

vii. Less efficient process.

viii. Could not perform some advanced functions i.e. send orders online, online order

receiving and issuing, order acknowledgement and order confirmation to customers.

10. What ERP system is your organization using?

SAP R/3

Oracle

Ariba

Others (Please specify)

11. What was the driving force in terms of benefits motivated your firm to adopt ERP system in

your organization? Tick the ones affecting your firm:

Reduced direct operating cost

Quickened information response time

Improved order management/order cycle

Lowered inventory levels

Increase interaction across enterprise

Improved on-time delivery

Improved cash management

Improved interaction with suppliers

Improved interaction with customers

Others (Please specify)

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 ------------------------------------------------------------------------------------------------------

12. Was the project of adopting ERP system in your organization completed on time?

Yes No.

If No, for how long did it delay? Please Specify___________________

13. What was the total cost of implementing the ERP System you are using?

Less than 1 mioKes

1 mio – 5 mioKes

5 mio – 10 mio Kes

above 10 mio Kes

Others (Please specify) Kes._____________________

14. Did the actual budget of ERP implementation exceed the planned budget?

Yes No.

If Yes, by what estimate did it exceed? Please Specify_________________

15. From the following organizational and relational factors, tick the ones that mostly affect the

implementation and adoption of ERP Systems in procurement functions.

i. Firm’s size

ii. Budgetary allocation

iii. Top management support

iv. Skills and knowledge

v. Others(Please Specify)

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16. Choose the technological factors that lead to ERP System implementation.

i. IT infrastructure

ii. Information security risks

iii. Rapid change of technologies

Section C: Cost Savings in the Organization

17. To what extent has the ERP system met the overall needs of your department?

Larger Lesser

18. What savings has your organization generated in the adoption of ERP System?

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19. Which of the following areas of cost savings is your organization focusing brought about by

the use of ERP System?

Please us the scale below to rank your opinion. 1 –Not at all; 2 - to a less extent; 3 –to a

moderate extent; 4 –to a great extent; 5 - to a very great extent.

Areas of Cost Savings 1 2 3 4 5

Procurement Cycle

Inventory Management

Contracts Management

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 Others (Please Specify)

-------------------------------------------------------------------------------------------------------

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20. What are the overall challenges of using ERP system in your organisation?

-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------

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Section E: Process Flexibility

21. Which are your organisations ERP system approaches?

-------------------------------------------------------------------------------------------------------

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22. In your opinion do you think the use of ERP systems has any benefits on the following areas?

Please indicate your choice of answer to the question by marking the preferred box.

Areas of Benefits Strongly Disagree Neutral Agree Strongly

Disagree Agree

Reliable information access

Delivery & cycle time reduction

Cost reduction

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Easy adaptability

Improved maintenance

Global outreach

E-Commerce, e-business

Other (Please Specify)

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Section F: Faster Process

23. Describe your e-procurement process using the ERP system in place.

-------------------------------------------------------------------------------------------------------

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24. Which of the following areas (modules) does your organizations ERP system cover?

Please us the scale below to rank your opinion. 1 –Not at all; 2 to a less extent; 3 –to a

moderate extent; 4 –to a great extent; 5 to a very great extent.

Areas (ERP Modules) 1 2 3 4 5

Accounting management

Financial management

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7
Manufacturing management

Production management

Transportation management

Sales & distribution management

Human resources management

Supply chain management

Customer relationship management

Thanks for your co-operation.

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