Information and Communications Technology and Operational Efficiency in Supermarkets in Nairobi


Thesis (M.A.), 2013
48 Pages, Grade: 87% (1st)

Excerpt

TABLE OF CONTENTS

DEDICATION

ACKNOWLEDGEMENT

LIST OF TABLES AND FIGURES

ABSTRACT

CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
1.1.1 Operational Efficiency
1.1.2 Information and Communication Technology (ICT)
1.1.3 Role of Information and Communications Technology in Supermarkets
1.1.4 Supermarkets in Kenya
1.2 Statement of the Problem
1.3 Objectives of the study
1.4 Importance of the Study

CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
2.2 Overview of Information and Communications Technology
2.3 Operational Efficiency in Supermarkets
2.4 ICT and Operational Efficiency in Supermarkets
2.5 Summary and conceptual framework

CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research design
3.2 Target Population
3.3 Sample Design
3.4 Data collection
3.5 Data Analysis

CHAPTER FOUR: DATA ANALYSIS, RESULTS AND DISCUSSION
4.1 Introduction
4.2 Demographic Data
4.3 Extent of ICT Adoption among Supermarkets in Nairobi
4.4 The relationship between ICT usage and operational efficiency in supermarkets in Nairobi
4.5 Discussion of results

CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions
5.2 Recommendations
5.3 Limitations of the study
5.4 Suggestions for further research

REFERENCES

Appendix I: Research Questionnaire

Appendix II: List of Supermarkets in Nairobi

LIST OF TABLES AND FIGURES

Table 1: Summary of methodology

Table 2: Number of years ICT has been used by the supermarkets in Nairobi

Table 3: Number of employees

Table 4: Extent of ICT adoption among Supermarkets in Nairobi

Table 5: Means of measures of operational efficiency

Table 6: Model Summary

Figure 1: Extent of ICT usage

Table 7: Coefficients of the independent variables

DEDICATION

This research is dedicated to all seekers of academic knowledge and all that struggle to make education the key to personal improvement and national economic development. I take the opportunity to dedicate this document to all lecturers that took their time to sacrifice to impart knowledge in me with regard to this course of study. My family members that believed in me and gave me moral support to undertake this study are also acknowledged

ACKNOWLEDGEMENT

The thesis is dedicated to my supervisor, Kariuki C. Ngugi for accepting to take me through the research process. His insights, masterly of research process and keen eye to detail were necessary to produce this work that reached a final step of submission. The moderator and all panellists that guided me in correcting the proposal are also highly appreciated for their time and honest recommendations

ABSTRACT

The aim of this research was to find out the role of various ICT applications in the improvement of operational efficiency for supermarkets in Nairobi. It aimed to answer the questions of ICT applications that are adopted by supermarkets in Nairobi and the relationship between the level of adoption of these applications and operational efficiency that was attained.

A sample of 58 supermarkets was chosen from the list of 110 supermarkets to which structured questionnaires were issued by drop-and-pick method. The forty-two questionnaires were duly filled and returned. This constitutes 72.4% response which according to Stacks (2011) was adequate for use in analysing and presenting findings for the identified research objectives.

The findings indicated that applications that were simple and cheap to install and implement such as CCTV cameras, electronic point-of-sale systems and bar code readers were most prevalent while advanced and relatively expensive ICT applications such as ecommerce, supply chain systems and enterprise resource systems were least used. The size of supermarkets also determined ICT equipment that were used. Coefficient of correlation of 0.52 was obtained from the regression analysis that measured the strength of the relationship between dependent and independent variables. The relationship was direct, meaning that supermarkets with largest extent of ICT application in their premises had the highest operational efficiency.

It was recommended that supermarket owners acquaint themselves with ICT applications that are available in the market and evaluate those that are suitable for their needs. Supermarkets that had a wide array of application in their premises had high operational efficiency. It is therefore necessary that they use all available ICT applications depending on their needs. Given that some ICT applications were expensive to buy and implement, it was suggested that developers make applications that are suitable for local needs, with regard to supermarkets.

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study

Innovation in Information and Communications Technology (ICT) is without doubt one of the most remarkable developments in recent times. Virtually, no field can claim irrelevance of ICT in any of their operations. Equally, in operations management, ICT has an array of applications that enable organisations to achieve various objectives. Tomar (2009) observed that information technology is the most effective tool in decision-making process in operations management.

Prevalence of ICT in modern operations has often obviated its definition partly because of differences in level of usage and an assumption of its necessity. Hence, the definition of the term in supply chain management differs from the working definition in finance, though both fields appreciate the basic aim, which is to achieve operational efficiency. In business, the general definition of ICT is the application of technology to coordinate various players where knowledge is created and shared seamlessly, hence obviating or reducing transactional costs (Carugati & Rossignoli, 2011). Lindgren (2011) noted that utilisation of ICT technologies can help a firm to achieve competitive advantage due to high speed of development, ability to visualise business performance and reduction in cost of doing business. Use of information technology in data collection and analysis can be used to gain information on customer preferences and business performance, which can be used to answer the ever begging question of meeting customer satisfaction (Grant, 2011).

1.1.1 Operational Efficiency

In Operations Management, operational efficiency is a necessity rather than a choice as it forms the basic goal of operational managers. According to Schniederjans and Cao (2002), the goal of operational managers in achieving operational efficiency is narrowed down to application of e-commerce which provides advantages such as cutting operational costs on resources usage, increasing flexibility and improving speed of service delivery. Operational efficiency was defined by Dymski (1999, p. 63) as “how much output is produced per unit of input”. While explaining the concept, Hasenpusch (2009) mentioned cost as a key determinant when deciding to increase efficiency.

Operational efficiency is related to profitability of a business, which increases with the decline of transactional or operational costs. Misra (2009) and Roy (2005) also mentioned of the ratio between input and output of resources in determination of operational efficiency of a process, within an organisation or industry in general. In other words, operational efficiency is used to assess how much customers or businesses gain from inputs applied in a given transformational process in an organisation. It is all about how cost effective the process of delivering desired outputs is. It differs in different organisations, depending on their goals and objectives. For example, in the with respect to supply chain management, a comprehensive definition is given by Slack, Chambers, and Johnston (2010, p. 426) as:

“…the efforts that each operation in the chain can make to reduce its own complexity, reduce the cost of doing business with other operations in the chain and increase throughput time…”

1.1.2 Information and Communication Technology (ICT)

Development of ICT has been breath-taking in the past few decades and its ubiquitous applications have changed operations in many industries today. The main beneficiaries have been those that have applied it to their usual operations to make work easier through automation and reducing the cost of undertaking various operations. In the supermarket service industry, effective application and adoption of ICT is likely to have many advantages, like has been the case in emerging economies and in developed economies. In the scenario of supermarket service-based business, the main beneficiaries are the stakeholders that include the suppliers, customers and business owners.

In countries where internet penetration is high, e-commerce has succeeded significantly and major businesses have been able to achieve operational efficiency. However, businesses that need to apply assistive ICT technologies need to be sure about relevance of the technology and how it fits in their operations. Some ICT applications are expensive and need time to learn before they can be fully integrated into systems of an organisation. Without earnest consideration, the very technology can be their downfall. In such cases, ICT implementation needs deep understanding of the specific need that ICT would achieve and drafting of effective and workable policies and that should also be implemented in an organisation for the objectives to be achieved (OECD, 2004).

1.1.3 Role of Information and Communications Technology in Supermarkets

Retail sector has an onus task of meeting customer satisfaction owing to the fact that they interact with them in the process of delivering a product or service. Supermarkets are major players in the retail industry. Retail businesses with reference to supermarkets have workers, finances, suppliers and goods to manage in their operations and these can be daunting tasks that can greatly impact on their efficiency and ability to meet the needs of their customers.

Efficiency in the case of a supermarket is desirable where the services to customers need to be standardised as is the case in fast food industry. One of the means to achieve operations efficiency is by separating services that need customer contact from those that do not and hence do not require interaction with the service attendants (Greasly, 1999). To achieve cost efficiency, capacity for stock and inventory has to be fully utilised, overheads have to be minimised as much as possible, usage of equipment that can do different functions and they have to achieve higher productivity ought to be used (Rowbotham, Azhashemi, & Galloway, 2007).

ICT has been applied in achieving operational efficiency in many operations of supermarkets. One of main reasons for using ICT is achieving cost efficiency where businesses cut on costs of doing business (Tsai, 2003). In many businesses and equally in supermarket retail operations, there are functions such as supply chain management, inventory management, advertising, point-of-sale management and actual service to customers that need application of ICT to achieve operational efficiency.

Supermarkets, especially in the developed world are adopting ICT with the main goal of achieving operational efficiency. Wal-Mart was one of the first companies to apply ICT in its management practices where it used innovative ICT platforms to link the business to suppliers, hence helping it achieve operational efficiency (Breznitz & Zysman, 2013).

1.1.4 Supermarkets in Kenya

Kenya has 110 supermarkets, 8 of which are have more than one branch, according to Yellow Pages (2013). Most of these supermarkets are concentrated in Nairobi where they are headquartered. Only the government-linked supermarket, Uchumi is listed in Nairobi Stock Exchange, while the rest are privately owned and a number such as Nakumatt operate in several East African countries. There are a number of operations that are linked to ICT that are practiced in some of the supermarkets. According to the website, Balancing Act (2013), Uchumi installed an Enterprise Resource Planning system that took a period of 18 months and a cost of over USD 1.2 million for license and an additional USD 2 million for implementation and an annual maintenance cost of USD 150,000. Besides improvement in coordination and communication, there were no immediate benefits noted from this installation. Vendor Managed Inventory (VMI) was also found to have improved stock management, cash flows and risk management in the sampled supermarkets in Nairobi-based supermarkets, according to Irungu and Wanjau (2011). Generally, there is fast development of supermarkets in Kenya, most of which are based in Nairobi. One of the reasons for this is fast development of Kenyan economy which has the second most advanced supermarkets in sub-Saharan Africa (Neven & Reardon, 2003).

1.2 Statement of the Problem

ICT is useful in most operations including supermarkets that have many stakeholders such as customers, suppliers, government and owners. Different operations are needed to efficiently serve these people and ICT is used to meet these needs efficiently. These businesses need to coordinate with suppliers upstream to ensure inventory levels are optimum and supply chain management is efficient. Coordination among various stakeholders in the industry includes information sharing to achieve common predetermined objectives, often to minimise costs and maximise on profits. Ecommerce has been developed in the recent to be one of the most useful platforms for achieving operational efficiency. In this case, information can be shared seamlessly and decisions making can be not only quick but also effective and smart decisions.

The main strength of ICT is that operations can be automated such that a customer can interact with the machine without employee necessarily attending to them. Businesses using automated machines reduce on the cost of employees and time for serving customers. In a typical case of banking business, ATMs (Automated Teller Machines) have been successfully deployed by banks world over to achieve operational efficiency. This was aimed at increasing flexibility such that customers would access their cash any time of the day and in easily accessible locations. Banks have been able to reduce the need for employees performing simple transactions such as depositing and withdrawing of cash, checking of balances and requesting of mini-statements for their accounts. Other applications such Managed Inventory (VMI) technology, electronic point of sale (EPOS) and supply management systems are needed to achieve the stated goal of operational efficiency.

Research into adoption of Information and Communications Technology in supermarkets has been done in Kenya and elsewhere in the world. Yu and Ramanathan (2008) did a similar research in UK and found out that out of 41 retail businesses that included supermarkets, 20 had installed high technology in ICT and had achieved significant operational efficiency. Gichoya (2005) assessed factors that affected ICT adoption in government administration. This research found out that ICT was beneficial in several areas such as improvement of service delivery to citizens, reduction of cost of operations, transparency, faster decision making, improved access to information and file management system.

Otiso, Chelangat, and Bonuke (2012) carried out a research that aimed at establishing effectiveness of ICT in service quality delivery at Kenya Power and Lighting Company. The study found out that ICT boosted service quality and improved customer satisfaction but to do this, an appropriate ICT system had to be put in place and the organisational manpower had to be trained and prepared to put these changes in into practice.

In health-related SMEs in Kenya, Makau, Wawire, and Ofafa (2013) found that although there was a general perception of positive benefits of adoption of ICT, the rate of adoption and implementation was slow. Organisations did not achieve their perceived expectations due to low informational intensity, low ICT specialisation, such as low skills in the sector and poor organisational readiness.

Despite the perception of the benefits of ICT in both public and the private sectors, there is a sluggish rate of ICT adoption in the country to achieve operational efficiency. Only few studies have been done on supermarkets in Nairobi where ICT is linked to operational efficiency. An example is where Vendor Managed Inventory (VMI) technology was found to increase effectiveness in stock management and cash flow management (Irungu & Wanjau, 2011). Besides, the studies have been concentrated on the constraints and assessment of rate of adoption of ICT in the country. There is paucity of research that has been conducted to assess how supermarkets or at close, retail businesses have to benefit from adoption of ICT to improve operational efficiency. The study aims to fill this gap by conducting a research to establish the role of ICT in achieving operational efficiency among supermarkets in Nairobi. The study sought to answer the following questions: what is the extent of ICT adoption among supermarkets in Nairobi? What is the role of ICT in achieving operational efficiency in supermarkets in Nairobi?

1.3 Objectives of the study

The aim of this research is to establish the role of ICT in achieving operational efficiency in supermarkets in Nairobi.

Specific objectives

i. To explore the extent of ICT adoption among supermarkets in Nairobi.

ii. To determine the relationship of ICT and operational achieving operational efficiency among supermarkets in Nairobi.

1.4 Importance of the Study

Supermarket owners would gain from learning about opportunities that ICT offers in achieving operational efficiency. The research provided a benchmark on how various organisations in other sectors and countries have used ICT to attain operational efficiency through means such as reducing cost of handling customers directly through automation, usage of ecommerce mode of shopping.

This research would benefit the government that facilitates ICT infrastructure in the country. The government would gain information on how technology influences supermarket business and hence draft policies that would ensure its adoption rate in the country increases to a significant level.

Members of academia would gain from the findings of the research by using the compiled report for furthering their research, referencing their own work and also critiquing it. Students usually use past works to base their respective studies and this research would provide a background of their work. They would either seek to further the research or use a different context to compare the findings to suit their individual needs.

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter describes adoption of ICT sector and presents opportunities that lie in implementation of various technologies in the supermarket retail context. It presents a conceptual framework that were adopted in finding solutions to the identified objectives of the study. It was also be useful in comparing methodologies adopted in previous researches and how the same can adapted or borrowed to this research. Besides, literature review is important to recognise works of the other people in the subject so that the same research is not replicated in this study. Finding out what has been done guided the researcher in justifying this study by identifying the unfilled gap by other researchers. The issues discussed include general overview of ICT and operational efficiency and the role of ICT in achieving operational efficiency. The chapter concludes with the summary of the reviewed literature and the knowledge gap.

2.2 Overview of Information and Communications Technology

Development of ICT is increasing at a rapid pace in effort to fill gaps in the market that are identified and which promise to meet needs of users in various fields. New software and matching equipment have been developed and adapted to daily lives of people. Examples of developments in ICT include smartphones, tablet computers, cloud computing, fast internet speeds now in Fourth Generation (4G) stage among others. These can be adopted to fit into operations of supermarkets to increase operational efficiency. Some of the areas where ICT is applied in a business context include linking business partners and players through network, fast generation of information and seamless decision making by multiple stakeholders.

Today, some organisations are dependent on ICT for deploying e-commerce platforms to increase business presence and link to customers, data mining where patterns can be used to guide firms to make timely decisions and simplification of tasks that otherwise could be unwieldy to manage by humans. Because businesses are dependent on ICT in improvement of service delivery, they have incorporated it into their strategic plans to give it deserved attention (Kodama, 2013). Applications of ICT are as wide as are the needs of an organisation; they can range from simple point of sale unit to a whole organisation where Enterprise Resource Planning system is installed to manage almost every aspect of the organisation. Some of these areas include supply chain management, human resources, customer management and accounts (Duggan, 2012).

2.3 Operational Efficiency in Supermarkets

Operational efficiency is essential in improving service delivery and customer satisfaction in businesses. Supermarkets need operational efficiency whereby operations managers strive to reduce the cost of doing business and aim at maximisation of profits from input resources into their operations. Operational efficiency in the context of supermarket business refers to the ratio of output to inputs and effectiveness in realisation of outputs. Depending on the goal to be achieved, there are equipment that can reduce sluggish, repetitive and error prone procedures to enable an organisation realise its goals efficiently and effectively.

According to Neves, Trombin, and Fonseca (2011), one aspect of achieving operational efficiency for units of products that are sold is ascertaining the unit of floor space achieves high turnover and optimal profits, hence, greater operational efficiency. To do this, retail prices have to be lower, number of consumers has to increase and customers have to access goods available for sale easily. Adoption of relevant information technology can be used to improve operational efficiency in the case of a supermarket hence increasing customer satisfaction (Khosrowpour, 2006). In this case, operational managers would analyse performance of different goods by collecting data and assessing behaviour of customers with respect to the said variables.

2.4 ICT and Operational Efficiency in Supermarkets

ICT is often used in various operations of supermarket business and common applications from the literature include Universal Service & Cash Order System (USCOS), automated supply chain management, bar codes, loyalty cards, online stores and automated teller machines. These are typical operations that are easily found in supermarkets where the aim is to provide efficient service to customers while aiming at reaping optimal returns.

Universal Service & Cash Order System (USCOS) system was developed and found to be quite efficient in achieving operational efficiency. It is an improvement to usual POS system. This system is placed at distribution outlets to dispense required change and manage transaction funds such that the attendants do not have to manually count change or calculate deposited cash in the collection box. There are separate slots for change and deposits and the user may not need to access any of the stored cash. According to Takahashi, Hirai, and Kaneko (2006), the system can improve fund management, efficiency of operations of tasks, and efficiency of management where errors could be incurred in manual counting of cash or when issuing change to customers.

The system eliminates need for reconciling cash at the end of the day which can be laborious and sluggish to supermarket managers. The trio did a short survey where USCOS machines had just been installed and to their satisfaction, 90% of common errors had been eliminated, time for processing funds has been reduced tenfold and operations had significantly improved. In this case, operational efficiency is improved in saving of time for operations and increasing effectiveness in fund management at the point of sale. These machines are especially applicable in large stores where customers queue to be served and expect to be served correctly at the least time possible.

Monitoring and controlling of stock is one of the many operations that is basic to supermarket business. These are businesses that have multiple suppliers and thousands of products for sale and make reorders at certain designated periods. Through automated supply chain management (SCM) system, electronic communication is made between the suppliers and the mainframe computer of a supermarket such that upon reaching a certain level, a reorder request is triggered and effected automatically. It is possible to make faster decisions in this scenario where operations can be remodelled within the system to reflect the wishes of the specific company (Emmett, 2005). A supermarket can use the system to perform other functions such as tracking order of goods as soon as they enter their warehouse and preventing overstocking of goods where depending on movement of specific items.

Bar codes, which identify products, their origin, manufacturer details and other specific details such as price and quantity, are used at the point of sale where EPOS system is often installed. Bar codes are useful in improving time of serving customers and enabling the business to do other functions such as performance analysis of various goods and maintaining stock levels of particular goods. At POS, scanned products send a message to the central computer that has data about all goods in a store which can be retrieved at will. Information such as country source, the manufacturer, specific products details are useful in making reference to the product in future and especially at the point of sale where usually quantity and price are needed. At the same time of scanning, there is a system that runs seamlessly and helps in monitoring movements of the specific products within the store (ISACA, 2009).

Bar codes and automated stock performance and monitoring control system aid in making a store to be efficient and effective. Operational efficiency is achieved in several ways such as accuracy of records, saving of costs, better integration and coordination among workers within the business and other stakeholders such as suppliers, easy to control and also ability to offer better service. At the end of the day, a business that utilises these opportunities achieves competitive advantage in the market. To achieve full benefits, it means that a business has to install an appropriate software application as required such as warehouse management system (Tompkins & Smith, 1998).

Loyalty cards are used to collect data about customer spending habits where preferences and other analytics are done to help a business better satisfy its customers. Almost all major supermarket chains have loyalty cards that are used to collect customers spending data thus enabling them to serve customers depending on their shopping preferences (Yeshin, 2012). Operations at customer service at the supermarket are thus made possible using loyalty cards with customer details stored in the system within the business. Instead of analysing manually what specific customers shop and at what frequency, ICT automates this process and makes the otherwise laborious exercise to be achieved easily, accurately and effectively. A supermarket business can then ensure preferences of certain orders are made in advance to meet needs of specific clientele as analysed by product analysis systems. Customers prefer to be served as individuals rather than being lumped together as if their needs and preferences were universal. This is the essence of customer relationship management function which aims at identifying customers as individuals and anticipating their needs to serve them better (Kracklauer, Mills, & Seifert, 2004). This is in line with objectives of businesses to increase customer satisfaction.

Online stores are applicable where ordered goods using internet platform are delivered at the homes of customers, saves time for customers that due to their nature of work or condition are unable to leave their physical locations. Gupta and Jaroliya (2008) aptly captured application of ICT in retail environment by linking operational efficiency to competitive advantage. According to the duo, ICT is used to better serve customers hence maintaining a competitive edge in business. E-commerce is one of these ICT applications that enables customers to compare prices of products in various stores. This improved flexibility enables them to buy products of their preference and also make payment on the same without necessarily leaving the comfort of their homes or places of works. This could be due to personal privacy or health reasons that may prevent customers from doing shopping at supermarket premises as usual. However, this platform may be a disadvantage to some shoppers where they are not able to check goods before buying them physically and chances businesses of misusing of customer data that is collected at the time of placing an order online. This may influence online shoppers to avoid going online for shopping for fear of especially their credit card data being abused.

Automated Teller Machines (ATMs) in some of the developed countries such as UK are often used within precincts of supermarkets (Pond, 2007). Plastic money usage is on the increase in Kenya and other of parts of the world, where ATMs linked to Visa or MasterCard are used as debit cards; supermarkets have systems where they are ‘swiped’ and payments made automatically (Mugwe, 2012). A client’s ATM card is ‘swiped’ in a magnetic detection machine that reads customer’s information and helps banks to make deductions of specific cost of goods due for payment (Ryan, 2011). This saves customers need for withdrawing cash from the ATM machines and also helps in reducing time to issue change. The exact amount of money is deducted sometimes customers withdraw limited amounts of cash from the supermarkets. However, this system is also fraught with risks such as using skimming devices to impersonate ownership of debit card privileges (Byron, 2012). For security reasons, debit cards should be used sparingly since they are not as secure as credit cards. Customers are often advised against using them for online shopping since their funds are not protected (Ryan, 2011).

Despite the much hyped advantages of ICT and its myriad ways of applications in various industries, benefits from the same are not often quite visible in some of the places where they are applied (Cagliano, Caniato, & Spina, 2003). An example is ERP installation at Kenya’s Uchumi supermarket where despite massive investment of over USD 3.2 million and annual maintenance fee of USD 150,000, there as little to be accounted for despite reports of increased collaboration, coordination and communication among employees within the supermarket and its stakeholders such a suppliers (Balancing Act, 2013). Some of the benefits of ICT take a long time to before they are fully realised due to issues such as skills, regulations, organisational change inertia (Rocha, 2008).

2.5 Summary and conceptual framework

There is significant development in ICT in the general retail sector that if applied effectively, a business can gain in operational efficiency and customer satisfaction. Most of the information gathered was from developed countries that have significant differences in ICT infrastructural development from the current scenario in the country. Whereas there is documented literature of ICT application in retail sector, it is assumed that level of adoption and its effectiveness is the same for all regions. However, there is little to show for success in achieving operational efficiency in developing countries in the biggest retail segment, supermarkets or convenience stores. Through this research the level of adoption and gains in operational efficiency would fill this gap.

The conceptual framework of the research is represented diagrammatically in the figure below. Various applications such as supply chain management system (SCM), enterprise resource planning (ERP), customer relationship management (CRM) and bar code systems are used by the supermarkets at the backend of operations of a supermarket. Others such as closed circuit televisions (CCTVs) and point of sale systems are used within the premises while loyalty cards and ATM cards that are used as debit cards are used interactively by the customers in the process of doing their purchases in the supermarkets. The end goal of effective application of ICT is attainment of operational efficiency that is used to increase customer satisfaction and company profitability. Operational efficiency is explained using variables of speed, flexibility, reliability and cost efficiency.

Supermarket ICT applications

Diagrammatic presentation of research conceptual framework

Independent variables

Dependent variables


CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research design

The research intended to use cross-sectional survey and descriptive research designs. These research designs are adequate since data collection was done once and were used to develop a regression model. The resulting equation were used to explain the relationship between operational efficiency and extent of ICT usage in the sampled supermarkets in Nairobi.

3.2 Target Population

The researcher targeted supermarkets operating in Nairobi. At the moment, the total number of supermarkets operating in Nairobi, (provided in the appendix), according to the Official Yellow Pages Kenya are one hundred and ten (110) (yellowpageskenya.com, 2013). These supermarkets therefore formed the target population for this study. It is from the 110 supermarkets that the researcher sampled the ones that were considered for the study. Nairobi was chosen because of high density of supermarkets where most of them are also headquartered. Besides, Nairobi is the capital city of Kenya its high population with relatively high incomes attracted most investment in supermarkets to meet the needs of the residents.

3.3 Sample Design

According to Cooper and Schindler (2008), the ultimate test of a sample design is how well it represents the characteristics of the population it purports to present. Yamane (1967) provided a simplified formula to calculate sample sizes. The researcher utilised Yamane (1967)’s formula as provided here below to calculate the sample size for this study.

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Stratified sampling was used in this study due to variations in the population that were targeted. There are supermarkets that have one branch and those that have multiple branches, which could affect complexity of ICT usage. Proportional stratified sampling or proportionate sampling is used where a certain size is used to select samples from each of the represented stratum in the population, but selection from those selected is done randomly (Gideon, 2012).

Using the formula above, “n” is the sample size, “N” is the population size, and “e” is the level of precision. The study assumed a precision level of 10%. Supermarkets that have more than one branch are 8 while those with one branch were 102. Using the formula above for two different populations yields the size of each stratum.

Therefore:

n for “branched” supermarkets = 102/((1+102*(0.1)^2)) =50.5

n for “unbranched” supermarkets = 8/((1+8*(0.1)^2)) =7.4

Thus, 51 supermarkets were selected randomly from “one-branch” supermarkets while seven supermarkets from the “branched” stratum was also be selected. The total sample were 58 with each sample being equal to its stratum size.

3.4 Data collection

Primary data were used because of its reliability over secondary data. This is because of recency of information and better reliability of the study as the researcher had the opportunity to control the process to ensure veracity of results. This was done using questionnaires where the researcher formulated questions intended to be used to achieve the specified research objectives.

The design of the questionnaire was such that Part A dealt with demographic data where information that contained business details was recorded. This section was essential in identifying supermarkets that submitted the completed questionnaire and when it was done. This is especially useful for clarification purposes if needed at the time of data analysis. Number of employees, number of branches and number of years in business was helpful in getting information on size of the business and possible complexity of business operations associated with specific supermarkets.

Section B of the questionnaire addressed the specific objectives of the research and it contained two tables with various questions. The first objective was addressed by listing several ICT applications where supermarket managers or their equivalents were expected to respond the extent to which they used them. The second objective was addressed using a list of statements that aimed at assessing the level of operational efficiencies that was realised as a result of using the ICT applications provided in the previous table of the questionnaire.

3.5 Data Analysis

Descriptive statistics that include means, percentages and frequencies were used to analyse both section A and B of the questionnaire. Information from section A is about demographics while section B addressed the specific research objectives. These were exploration of business operations and determining extent to which supermarkets in Nairobi adopted ICT to improve their operational efficiencies. These inferential statistics enabled the researcher to measure and determine the state of the sample regarding the study objectives which was useful in studying and understanding large population of supermarkets in Nairobi in this case.

Tables and graphs were used to present and describe the number of operations of supermarket and also extent of use of ICT in these operations. In this case, the means of various ICT applications were presented in figures that made it easier for interpretation.

Frequencies were used to present numerical data on the number of operations that are found in supermarket in Nairobi and the extent to which they are applied. This assisted in ascertaining operations that need ICT to be applied in order to improve operational efficiency.

Means and standard deviations were calculated from Likert scale where the resulting mean indicated the extent to which ICT applications are used by various supermarkets in Nairobi. This was done specifically by assessing the extent to which various ICT applications are used in different supermarket operations. Means also rated the level of agreement by the respondents on operational efficiency achieved by using specified ICT applications.

Regression analysis was used for the second objective which sought to determine the relationship between ICT applications and operational efficiency among supermarkets in Nairobi Statistical Package Social Sciences (SPSS) was used in calculation of descriptive statistics and also running of regression analysis.

The regression model was in the form:

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A regression model was used to explain the linear relationship between operational efficiency as the dependent variable and independent variables of speed, cost, flexibility and service quality as enabled by various ICT applications in supermarket operations.

Table 1 Summary of methodology

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Excerpt out of 48 pages

Details

Title
Information and Communications Technology and Operational Efficiency in Supermarkets in Nairobi
College
University of Nairobi  (Management Science)
Course
Operations Management
Grade
87% (1st)
Author
Year
2013
Pages
48
Catalog Number
V441810
ISBN (eBook)
9783668806047
ISBN (Book)
9783668806054
Language
English
Notes
The research was done in Nairobi to assess how supermarkets and other convenience stores employed ICT to improve their operational efficiency. The research findings that there is wide use of various ICT technologies available in the market such as PCs, Bar Codes, CCTVs, ERP and other accounting software to improve their performance and competitiveness in the market. There is need for more awareness of how these technologies can boost their performance. Installation cost and technological knowhow were mojor factor in determination of technology applied in the surveyed locations.
Tags
Operations Management, information technology, ICT, Supermarkets, Nairobi, Operational efficiency, Information communication technology
Quote paper
Josephat Mwebi (Author), 2013, Information and Communications Technology and Operational Efficiency in Supermarkets in Nairobi, Munich, GRIN Verlag, https://www.grin.com/document/441810

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Title: Information and Communications Technology and Operational Efficiency in Supermarkets in Nairobi


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