Effects Of Enterprise Resource Planning Systems On Procurement Efficiency In Selected Manufacturing Organisations In Nairobi, Kenya

Abstract

Enterprise Resource Planning (ERP) is one of the major business system that assist organizations to manage their resources effectively. In the era of Information Technology, ERP system has become the necessary tool to operate business efficiently. The purpose of the study was to investigate effects of Enterprise Resource Planning (ERP) systems on procurement efficiency in selected manufacturing organizations in Nairobi, Kenya. The objectives of the study were; to determine the effect of system controls of Enterprise Resource Planning on procurement efficiency in selected manufacturing firms in Nairobi, to establish the effect of cost saving of Enterprise Resource Planning on procurement efficiency in selected manufacturing firms in Nairobi, to assess the influence of process flexibility of Enterprise Resource Planning on procurement efficiency in selected manufacturing firms in Nairobi and to find out the effect of a faster process of Enterprise Resource Planning on procurement efficiency in selected manufacturing firms in Nairobi. The study was carried out in five selected manufacturing organizations which were randomly sampled in Nairobi County. The organization are; East Africa Breweries Limited, Uniliver Kenya, Athi River, Tetrapak and Farmers Choice. The study adopted a quantitative descriptive research design and used questionnaires as the main data collection instrument. The target population was all the managers, senior and junior clerks in the procurement, production and finance departments respectively. Data was analyzed by Statistical Packages for Social Sciences and ANOVA was presented in form frequency tables, bar charts and bar graphs. The study found that the ERP systems has come out to be the best tool in coordinating and integration of organizations procurement processes due to its ability in processing information faster, track orders and inventory control, automation of orders and payments processes, lowering of set-up costs, reduction of order cycle, avoidance of data duplication in the procurement system module. The most covered area in the ERP was the customer relation management (80%) this implies that both the internal and external customers’ needs had been well taken care of by the system leading to a faster process in the procurement. The study recommended that organizations should embrace technological changes that are rapidly changing on the environment that the organization exists. This was evident with the effects of ERP on timely delivery of products, improved customer relationship and was a reliable information system.