Integrating supply chain management and enterprise resource planning systems: a survey of supermarkets in Nairobi

Abstract

This study was carried out among the supermarkets operating in Nairobi, Kenya, between August 2003 and January 2004. The study was about the integration of SCM and ERP systems. SCM as a competitive advantage creating and sustaining process aims at optimizing a company's internal practices by synchronizing the management of the flow of physical goods that results in efficient and economic product delivery. The major goal of an SCM system is to optimize customer-supplier relationship. An ERP system on the other hand is a packaged business software system, with several modules that can facilitate the modeling of basic business processes, allow automation and integration of a company's departments and link these to its customers and suppliers in a manner that results in effective and efficient product! service delivery. SCM and ERP systems are not exclusive but complimentary and there integration is expected to result in a multiplier effect in terms of enhancing the organizations performance. However, this is not always the case, as other researchers have demonstrated key limitations of current ERP systems in providing effective SCM support. The objectives of the study were to determine the awareness of supermarkets in Nairobi on the usefulness of integrating SCM with ERP systems, to assess the level of contribution as perceived by supermarkets as a result of integrating SCM and ERP systems and to identify factors hindering full integration of SCM and ERP systems among these supermarkets. The need for the study arose out of the necessity to establish how systems improvements resulting from emerging best practices, among them integration of SCM and ERP systems, can lead to gaining strategic value for the supply chain within the Kenyan Retailing Industry. The data collection for this study was carried out using a semi-structured questionnaire and analyzed using descriptive statistics and frequencies. Factor analysis was used to identify the factors hindering full integration of SCM and ERP systems among supermarkets in Kenya. Results of the study revealed that, the respondents generally associated integration of SCM and ERP systems with the creation of competitive advantage for their organizations. Secondly, although the respondents indicated that

integrating the two systems is beneficial in enhancing marketing services, budgeting and resource planning, distribution management, customer focusing and supplier contact, only about one third had embarked on using either of the systems, let alone integrating them. Thirdly, for those integrating, the factors hindering full integration of SCM and ERP either related to organizational structure, staff issues, financial and technological constraints, Finally, because of the hindrances to integration the respondents suggested staff training and sensitization, organizations embracing new technologies and open . sharing of information as some of the ways of enhancing integration of SCM and ERP systems for the "benefit of their organizations. In conclusion, majority of the supermarkets that took part in the study are moderately aware of the use of SCM and ERP let alone the integration of SCM and ERP and that the hindrances to integration stem from organizational, technological and environmental factors. The study recommended that further study be done to determine the reasons behind the individual hindrances.