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Aspects Influencing Enterprise Resource Planning Projects Performance

in Retail Supermarkets in Nairobi County, Kenya

 

FEATURED PAPER

by Maureen Njoki Munyori and Dr. Karanja Ngugi

Jomo Kenyatta University of Agriculture and Technology

Nairobi, Kenya

 


ABSTRACT

This study was carried out on aspects influencing enterprise resource planning projects on the performance of retail supermarkets in Kenya. The study had four objectives: To assess the influence of team project leadership on Enterprise Resource Planning projects project performance in Enterprise Resource Planning projects, to investigate the influence of strategy alignment on Enterprise Resource Planning projects performance, to examine the influence of stakeholder participation on Enterprise Resource Planning projects performance and to evaluate the influence of firm resources on Enterprise Resource Planning projects performance.

The research adopted a descriptive approach in trying to establish aspects influencing Enterprise Resource Planning projects on the performance of retail Supermarket branches in Nairobi. The study targeted 53 supermarkets in Nairobi. A sample frame was drawn from the target population using a census survey. A pilot study was conducted to pretest the validity and reliability of data collection instruments.  After data, had be collected it was prepared in readiness for analysis by editing, handling blank responses, coding, categorizing and keying into statistical package for social sciences (SPSS) computer software for analysis.  SPSS software version 21.0 was used to produce frequencies, descriptive and inferential statistics were used to derive conclusions and generalizations regarding the population. A multiple regression model was used to show the relationship between the independent variables to the dependent variable.

Data was presented using tables to make it reader friendly. The study found that project leadership, stakeholder participation, strategy alignment and firm resources had a positive and significant effect on enterprise resource planning projects on the performance of retail supermarkets in Kenya. The study recommends; that a competent project leader be given the responsibility to oversee the performance of the Enterprise Resource Planning project, proper guidance on the utilization of firm resources to meet the project requirements hence improving performance, the project manager and the team should formulate project strategies based on project objectives, and develop interconnections between IT projects and the organization’s performance outputs to increase project success rates, development of best measures for stakeholder participation be identified to avoid conflict of interests among the project stakeholders. Lastly, there should also be adequate preparation and communication before project initiation to ensure that the project acceptance does not experience major setbacks by the project stakeholders.

Background of the Study

Projects are activities or an undertaking that need to be accomplished by certain date, for a certain amount of money and within some expected level of performance. Important aspects of a project includes “inputs” in the form of men, money, materials, and plans and “outputs” in the form of activities, products or services (Asfandyar, 2012). Abuya, (2016) argues that development projects in Kenya have become the principal mechanisms through which governments deliver public services. Understanding this strategic role is important because few politicians and citizens appreciate the role that development projects play in the delivery of essential public services.

The globalization of competition means that apart from ensuring their own successful operation, firms that hope to survive must establish highly responsive supply chains, with upstream, midstream, and downstream partners (Yang, 2009). The Enterprise Resource Planning (ERP) system plays the role of central nervous system in promoting globalization of enterprise operations and shortening product lifecycle. Therefore, the ERP system has become popular. Li (2009) considered ERPs enveloped software that provides various internal information for an enterprise using an efficient means that enables units at different organizational hierarchies to effectively make business or daily operational decisions.

Conceptually, many firms have implemented company-wide systems called Enterprise Resource Planning systems, which are designed to integrate and optimize various business processes, such as order entry and production planning, across the entire firm (Mabert et al., 2001). This investment has also made possible the sharing of large amounts of information along the supply chain, and has enabled real-time collaboration between supply chain partners, providing organizations with forward visibility, thus improving inventory management and distribution (Mbogori, 2010). Furthermore, many firms deploying ERP systems considered extending system scope mainly to integrate their suppliers, customers or both to the system, to provide additional e-commerce or e-business operations and to increase supply chain functionalities (Olhanger & Selldin, 2003).

When enterprise resource planning systems are fully realized in a business organization, they can be expected to yield many benefits, such as reduction of cycle time, faster transactions, better financial management, the laying of the groundwork for e-commerce, linking the entire organization together seamlessly, providing instantaneous information, and making tacit knowledge explicit (Mabert et al., 2001; Davenport and Brooks, 2004; Shang and Seddon, 2000; Murphy and Simon, 2002; Al-Mashari et al., 2003). ERP can provide the digital nervous system and the backbone in an organization to respond swiftly to customers and suppliers (Cox et al., 2000; Mabert et al., 2001).

As reported in Akkermans et al. (2003), ERP systems are widely believed to support operations in technical areas such as standardization, transparency and globalization. ERP systems are a leading tool for this purpose, and are always expected to be an integral component of operations (Nah et al., 2001; Themistocleous et al., 2004). The potential benefits of an integrated ERP system are such that many organizations are willing to undertake the difficult process of conversion.

Yurtkoru (2015) state that there have been a large number of studies on the success factors of ERP implementation .The basic underlying premise of most of these studies is that the success of ERP is largely determined by initial implementation. For this reason, most of these studies focus on the implementation activities and tend to ignore the role of the post-implementation stage that can either improve or impair the performance of ERP regardless of how successful the initial implementation was.

Statement of the problem

The Financial Year ending 2005 was a challenging one for Uchumi Supermarket Ltd. The rise in operational costs was among the factors that affected its profitability and this heavily resulted from amortization of ERP/Computerization costs, a higher depreciation charge and a number of one-off costs that included derecognizing of the deferred tax assets. The insolvency caused Uchumi Supermarkets to close for a month in 2006 but reopened after the Government lent it Ksh675 million and receiving Kshs 300 million from its shareholders (Kadzo, 2011). Uchumi has already made a retreat from Uganda, while Nakumatt is facing problems in the same market. Two of Kenya’s largest retail supermarkets have closed two of their stores within a fortnight while the third one is still struggling to sell its assets to turn around its fortunes, exposing the woes facing the retail industry. Nakumatt has shut its Ronald Ngala branch among others while Tuskys Supermarket closed its Sheikh Karume branch both in Nairobi (Achuka, 2017).

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How to cite this article:  Munyori, M.N., Karanja N. (2018); Aspects Influencing Enterprise Resource Planning Projects on Performance of Retail Supermarkets in Nairobi County, Kenya; PM World Journal, Vol. VII, Issue 6 – June. Retrieved from https://pmworldjournal.net/wp-content/uploads/2018/06/pmwj71-Jun2018-Munyori-factors-influencing-erp-project-performance-retail-supermarkets-nairobi.pdf



About the Authors


Maureen Njoki Munyori

Nairobi, Kenya

 




Maureen Njoki Munyori
is a graduate student at Jomo Kenyatta University of Agriculture and Technology, Kenya, studying for a MSc. Project Management degree. She previously earned a Diploma in Procurement and Supply from the Chartered Institute of Purchasing and Supply (May 2015 – Dec 2016); Bachelor of Business Administration (Procurement and Supply Chain Management option) from Kenya Methodist University (2012 – 2015). She resides in Nairobi, Kenya and can be contacted at [email protected]

 


Prof Patrick Karanja Ngugi, PhD

Jomo Kenyatta University of Agriculture & Technology
Nairobi, Kenya

 


Patrick Karanja Ngugi
is a professor at the Jomo Kenyatta University of Agriculture & Technology, from which he earned a PhD and MSc degrees in Entrepreneurship.  He also holds a Bachelor of Business Administration degree from the University of South Africa, a Diploma in Electrical Engineering from Kenya Polytechnic and a Diploma in Theology from Presbyterian College.  He has authored numerous presentations and papers at international conferences and in international journals on business, education, public health and other topics.