Effect of Enterprise Resource Planning On Supply Chain Performance of the Energy Sector in Kenya: A Case Study of Kenya Power Limited

Abstract

While enterprise resource planning systems provide promising potential, it is reported that only 10% of firms that use ERP systems have gained substantial benefits. Kenyan energy companies endeavor to improve their performance through operational efficiency has led them to adopt ERP systems. The Kenyan energy sectors have implemented ERP systems but that is not evident on performance and efficiency. For Example Kenya Power Limited (KPL) implemented the SAP R/3 system in 1997 and yet it has been performing poorly. It is due to this that the current study will seek to establish the effect of enterprise resource planning applications on supply chain performance of the energy sector in Kenya. The study specifically sought to establish the effect of ERP in inventory management, quality management, warehouse management and customer relationship management on supply chain performance of energy sector in Kenya.  This study employed descriptive research design. The target population of this study  consisted of all the 280 employees in management positions from the operations, Human Resource, Quality Assurance, Finance, Supply Chain, Technical Services, Information Technology, Projects and Strategy, Regulatory Affairs and Transport as well as Administration departments. The study used descriptive research design. A sample size of 96 was sampled randomly from this population and be used in responding to the questionnaire. An ordinary least square regression model was used. Findings were presented using tables, graphs and charts. The study findings indicated that all the predictor variables were positively and significantly correlated to supply chain performance. The findings also established that all the predictor variables were positively and significantly related to supply chain performance. The study recommends that the management of KPLC should aim to improve the implementation of ERP in inventory management since it leads to better supply chain performance. The study also recommends that the management of KPLC should encourage the use of ERP in many more quality management activities since this would lead to a more improved supply chain performance. Another recommendation made by the study is that the management of KPLC should come up with strategies which will lead to increased adoption of ERP in warehouse management for instance in activities like valuation of inventory and automation of inbound operations since is positively related to supply chain performance.

Keywords: Inventory management, Quality management, warehouse management, Customer relationship management, Supply chain performance