ENTERPRISE RESOURCE PLANNING and PROCUREMENT PROCESSES EFFICIENCY IN FOUR SELECTED OIL AND GAS SERVICING COMPANIES IN LAGOS STATE, NIGERIA
Inappropriate tool to connect procurement unit with other parts of the organization has resulted to poor co-ordination and leakage of important information which has turned out to be costly component to the whole management process of the procurement function. Production schedule are often obstructed due to shortage of raw materials caused by delayed delivery as a result of slow procurement cycle time. Manual way of approving purchase documents has not only been seen as delay of process but caused organizations to incur cost on salaries and other allowances of additional employees that move the documents from one office to the other for approvals. Traditional procurement process negatively affects employees (job) performance since it requires time to perform the calculations manually. This research therefore sought to examine Enterprise Resource Planning (ERP) and procurement process efficiency in selected oil and gas servicing companies in Lagos State.
A survey research design was adopted. The population of the study consisted of staff that uses ERP on their various job functions in the four selected oil and gas servicing companies in Lagos. Purposive sampling technique was adopted for this study. The population size of 315 was used as provided by the information technology (IT) department of the understudied companies. Total enumeration method was adopted to select the sample for the study. A validated questionnaire was used as the research instrument. The results of the reliability test for questions on ERP system, information integration, timely procurement cycle, cost reduction and employees’ performance using the Cronbach’s alpha statistics were 0.845, 0.879, 0.766, 0.787 & 0.811 respectively. A total of 315 copies of questionnaire were distributed. Out of 315 copies administered, 297 copies of the questionnaire representing about (94.3%) were returned, and 18 questionnaires representing (5.7%) were not returned.
The findings revealed that ERP has significant influence on information integration (P=.001<0.05) and significant effect on timely procurement cycle in organizations (P=.000<0.05). The study further revealed that ERP has significant impact of ERP on cost reduction in organizations (P=.000<0.05) and there is significant relationship between ERP and employees’ performance in the organizations (P=.000<0.05).
The study concluded that ERP has significant influence on procurement process efficiency. It is therefore recommended that the implementation of ERP should be adopted in procurement processes in all oil and gas servicing companies in Lagos state. This study also recommended that the adoption of the implementation of ERP should not only be limited to procurement department alone but should be adopted in all units of the organizations to enhance the integration of information, timely procurement cycle, reduction of cost and to enhance employees’ performance towards profit maximization for the organizations.
Keywords: Enterprise Resource Planning (ERP), Procurement process, Traditional / Conventional Procurement process.