The Impact of Enterprise Resource Planning Systems (ERP) Effectiveness on the Supply Chain Competitiveness in the Courier Services Sector (An Empirical Case Study).

• Author: ElKhouly, Sayed M. ElSayed

INTRODUCTION

Growing and advancement of knowledge and technology has brought a new competitive prospect for the Courier service sector in Egypt to satisfy customer needs for quality and performance level and government and stakeholder demands. These Courier companies have been forced to improve the quality of service to their customers through the deployment and implementation of the ERP system, which in turn has improved their performance, efficiency, and effectiveness, thus positively affecting competitiveness. The ERP system was deployed to replace legacy management and computer systems to improve performance by providing a superior management tool to make a positive change in both performance and effectiveness. Consequently, the ERP system plays an important role especially for courier service companies in integrating information for service operations efficiency. Also, ERP embraces the processes of tracking, security, quick delivery times, speed, signature, specialization, and individualization of express fast services, which are not available for most normal ordinary mail services. There is a perception that ERP has understood the use of best business practices and by applying these practices, this will help to improve or completely substitute old practices to gain an opportunity to be re-engineered. This can ensure promise of an organization's success in the long-term. Kumar & Hillegersberg (2000) state that ERP is an information system (IS) capable of integrating data across the organization's functional areas. These include the capacity for better data analysis, improved levels of organizational performance and efficiency due to improving processes in place that allow for better levels of customer service. ERP advantages afford benefits and values to organizations enabling organizations to be more competitive in the market. Due to the extensive benefits of the ERP system, some Courier service companies have allocated a huge investment in the ERP system. In this paper, we examine whether the adoption of the ERP system by Courier services companies creates advancement levels of efficiency and performance.

LITERATURE REVIEW

ERP

Technology is the keyword to enhance and improve the integration of supply chain management, the advancement of these tools helping with information-sharing that supports supply chain management (SCM). Nowadays, businesses search to adopt innovative technologies aiming to reach the integration and gain a competitive advantage with their entire supply chain. ERP system is one of those tools that drive progress.

According to Al-Fawaeer and Al-Zu'bi (2013), ERP is defined as a system used for an arrangement of business best practices and advanced technologies to empowers the organization to gain a competitive advantage and achieve its specific business goals by supplying a corporate platform to integrate all aspects of the business. Bafna et al. (2017) describe ERP as business techniques and empowering software that integrates manufacturing, financial, distribution functions to balance and better use of enterprise resources. It is not designed only to integrate internal business functions but also to integrate with customers and suppliers as part of the enterprise's operation. It can provide custom-designed report systems and an integrated database. It helps to form a set of best practices for the business processes that may lead firms to change their structures, business processes, and even their business strategies needed in implementation. Klaus et al. (2000) and Hsu and Chen (2004) agree that ERP system can improve customer responsiveness and product quality and also increase information quality and sharing between different departments within the single company, as well as customers and suppliers in the entire supply chain. Ultimately, this should increase overall business performance to attain a competitive advantage in the national and global market, improving long term profitability.

ERP System Deployment

The deployment process of ERP systems passes through different phases. The length and complexity of each phase depends on the nature and type of industry and operations itself.

According to Markus and Tanis's (2000) model, an ERP implementation consists of four phases: (1) Chartering phase: which includes crucial decisions taken regarding if ERP will have a positive impact on the business or not; (2) Project phase: (getting the system running) involves the customization of ERP software package, testing, troubleshooting including changing the management process and culture; (3) Shakedown phase: referring to the routine use of system, monitoring and evaluated for the performance achieved; (4) Onwards and upward phase: includes system upgrades and supporting service taken.

Esteves and Pastor (2001) proposed a 6-phase life-cycle used for the ERP implementation, as shown in the following table. (1) adoption Need for a new ERP system is checked (2) acquisition Selecting the right ERP vendor and the right package (3) implementation Adapting the business process with ERP, customizing if needed and testing new ERP (4) use and maintenance The function of the ERP system is used and checked, training is provided (5) evolution It involves system upgrades and maintenance (6) retirement 1 Now, old ERP system is replaced with new one Table: 1 Six phase life cycle for ERP implementation (adapted source Esteves and Pastor, 2001) Mandal and Gunasekaran (2003) described the ERP implementation in three phases and the related activities for each phase as in the following table.

A- pre-implementation phase activities B- Implementation phase activities 1. Risk analysis 1. Collecting user requirements through 2. Preparing a change management formulating a specialized team plan 2. Setting up a network for monitoring 3. Forming a cross-functional team and feedback communications 3. Providing strong leadership, 4. Considering a phase-based 4. Accruing top management supports approach for implementation 5. Promoting expertise consultation and 5. Using proper planning styles for user participation, each different tasks 6. Obtaining approval from parties for what is being undertaken throughout the project A- pre-implementation phase activities C-Post-implementation phase decision 1. Risk analysis 1. Whether the objectives of the 2. Preparing a change management ERP system were fully obtained plan or not 3. Forming a cross-functional team 2. Whether the anticipation and communications project information was accurate 4. Considering a phase-based 3. Whether the agreed practices and approach for implementation techniques were complied with or 5. Using proper planning styles for not each different tasks 4. Any other issues which are considered appropriate Table: 2 Three stages of ERP implementation and related activities (adapted source Mandal and Gunasekaran, 2003) Implementing an ERP system requires changes in the organizational culture, a long time to implement, adapting business processes and expanding costs. Therefore, companies need to know clearly what ERP system can do and how it can affect the company before thinking of applying and implementing this ERP system.

Critical Success Factors in (ERP) Implementation

Critical success factors (CFS) is critical for assessing what are the risks accompanied by ERP implementation. According to Umble, Haft, and Umble (2003), CFS are clear identification of company strategic goals, excellent project management, the commitment of top management, user education and training, organizational change management, data accuracy and performance measures tools. Al-Mashari, Al-Mudimigh, and Zairi (2003) added more success factors to the Umble et al's (2003), such as management and leadership, visioning and planning, ERP package selection, and communication.

All these success factors must be taken into concern during the implementing ERP. Failure of the ERP system or the unsuitable usage of this system will cause a huge loss for the company and may even lead to insolvency. Shatat and Udin, (2012) stated that many companies only used between 50 and 75% of modules of the ERP system. While Betts (2001) showed that 80 % of the ERP system implemented failed to achieve that was expected from it and also the company objectives.

ERP System Effectiveness Measurement Approach

The issue of ERP effectiveness or success evaluation is an important area of field study, because organizations try to maximize their returns for their investments (ROI) by applying the system. There are different measurement models for ERP effectiveness that can be expressed in the following section.

The DeLone McLean Model. DeLone and McLean's (1992) the IS success model consists of six dimensions of measurements for success:1) information quality, 2) system quality, 3) user satisfaction, 4) use, 5) organizational impact and 5) individual impact. Taken into consideration that measurement of ERP effectiveness using the same tools for an Information system (IS) when evaluating its success for the organizations. On the converse side, Klaus et al. (2000) stated that the ERP systems are not the same as other IS because ERP systems implementation is associated with technological, operational, strategic, managerial and organizational related issues.

The Gable et al. model. In order to avoid these drawbacks from the traditional evaluation of Delone and Mclean's evaluation model, the Gabel model et al. (2003) model was introduced. They built a model used for measurement of ERP consisting of four quadrants: 1) The individual impact: which measures the effect of the system on the employees using the system, such as individual productivity; 2) Organizational impact: which measures the impact of the system on the organization such as organizational total costs or workforce costs; 3) Information quality: which is related to the relevance or importance of the information output and timeliness; 4) System...