Enterprise Resource Planning System Adoption and Performance Among Third Party Logistic Service Providers in Kenya

Abstract

ERP systems has been expressed as costly, risky and complicated. However, times have changed and this perception ought to be revised so as to accommodate the recent technological advancement. Numerous researches have been done worldwide to identify the connection of ERP systems adoption and the performance of organizations but the findings have not been consistent. Thus the main aim of this research project was to find out the relationship of ERP system and performance of 3PL firms in Kenya. The following were the specific objectives of the study: (1) To determine the extent to which ERP systems has been adopted among third party logistic service providers in Kenya, (2) To establish the relationship between ERP adoption and performance among third party logistic service providers in Kenya and (3) To establish the challenges facing the implementation of ERP system among third party logistic service providers in Kenya. The research adopted the technology acceptance model, resource based view theory and the diffusion of innovation theory. A descriptive survey design was used in this research. The study population was all the 43 3PL firms in Kenya. The target respondents were the operation managers or their representatives. Questionnaires were used to collect primary data, that were sent by email as well as drop-and-pick methods. The data was analyzed using frequencies, percentages, mean, standard deviation and correlation and regression analysis. The study found that ERP Systems have been adopted to a large extent. The study found a significant positive relationship between ERP adoption and firm performance. The challenges related to ERP adoption were experienced to a large extent. Regression analysis found that the collective adoption of ERP systems was responsible for 42.1 percent of the changes in performance of these companies. According to the findings of this survey, ERP adoption is critical for businesses looking to improve their performance. Based on the findings, materials management had the greatest influence on performance followed by distribution management while quality management and production planning had the least influence on performance of 3PL firms in Kenya. Managers as well as shareholders of companies that have yet to implement ERP systems are advised to do so in order to remain competitive and profitable in this challenging business environment. It is also suggested that 3PL firm management develop sound policies to assist them in overcoming the problems of ERP system deployment.