Effects Of Information Technology On Performance Oflogistics Firms In Nairobi
Macharia Ngombo Wilson, Dr. Mike A Iravo, Ondabu Ibrahim Tirimba, Dr.Kepha Ombui - Effects of Information Technology on Performance of Logistics Firms in Nairobi County - published at: 'International Journal of Scientific and Research Publications (IJSRP), Volume 5, Issue 4, April 2015 Edition'. And its effects on the financial performance of insurance companies in Kenya, specifically in Nairobi County. With the use of variables such as profitability, cost reduction, return on asset, earnings per share and liquidity, the study sought to show how bancassurance has impacted on these financial aspects of insurance companies. Effects Of Information Technology On Performance Of Logistics Effects of Information Technology on Performance of Logistics Firms in Nairobi County Macharia Ngombo Wilson1, Dr. Mike A Iravo2, Ondabu Ibrahim Tirimba3, firms in Kenya provide the following services to both importers and exporters.
Background of the research problem
World trade, in our increasingly globalised and networked economy, depends on the rapid and timely transportation of goods from manufacturing places to market areas (Gidado 2015). In this regard, port activities and transportation network operations are inseparable, as good performance of the port is linked to its information systems usage (Wilson et al. 2015). Port congestion in Africa is an inevitable seasonal occurrence that is largely associated with improper planning and inadequate equipment or infrastructure that could otherwise support the transport and logistics network African ports need. Information systems constitute one of the solutions for addressing the challenges that occur in many processes that are important for the economic development of a nation (Pierson and Harner 2006). Information systems collect, supply, arrange, and use information to ensure the efficiency and effectiveness of an organisation’s operations (Pierson and Harner 2006). According to Nowduri (2011), information systems enable management to quickly make decisions about different issues in the organisation. These information systems have become important in logistics service (Salin 2000) and entail a significant tool to reduce costs and effectively serve clients through better customisation of the service provided (Salin 2000). The basic purpose of any information system is to help its users obtain a certain type of value from the information in the systems, regardless of the types of information stored or desired value type. The integration of information systems in logistics has contributed to competitive supply chains that accord certain companies competitive edges in the market, with new methods implemented to prevent any inherent danger and loss of life (Weiss 2011).
Dar es Salaam port, owned by the Tanzania Ports Authority, is Tanzania’s principal port, with a rated capacity of 4.1 million tonnes dry cargo and 6.0 million tonnes bulk liquid cargo (Tanzania Ports Authority 2017). Improved efficiency at the port can translate into additional tonnage of imports and exports. In fact, the volume of cargo has continued to record an upward trend, partly due to an increase in the use of information systems. The port handles almost all of Tanzania’s international trade cargo and serves its landlocked neighbouring countries of Malawi, Zambia, the Democratic Republic of the Congo, Burundi, Rwanda and Uganda. These countries are connected to the port through two railway systems and road networks, in addition to a pipeline in the case of Zambia.
Impact Of Information Technology On Logistics
However, the delay in cargo clearance and the resultant congestion at the port of Dar es Salaam has become a matter of serious concern to all users of the port (Raballand et al. 2012, Daudi 2010, Kunaka et al. 2016). As Dar es Salaam is a major port that serves neighbouring land-locked countries, the Tanzania Ports Authority management should ensure that port services satisfy regional customer needs, as congestion at the port results in the port losing a high percentage of its potential income. Potential income could come from Kenya, Uganda, South Sudan, the Democratic Republic of Congo, Zambia, Malawi, Mozambique, and even Zimbabwe. The changing business environment and globalisation continued to expose the port of Dar es Salaam to stiff competition, especially with the port of Mombasa in the north for cargo originating from and destined to Uganda, Rwanda, the Democratic Republic of Congo (Kivu Province), the northern part of Tanzania and South Sudan. To its south, Dar es Salaam port competes with the Mozambican ports of Nacala, Beira and Maputo and the South African port of Durban for Zambia, Malawi and the Democratic Republic of Congo (Katanga Province) cargo. In the west, it competes with the Namibian port of Walvis Bay and the Angolan port of Lobito for traffic with Zambia and the Democratic Republic of Congo (Katanga Province).
Overall, the application of information systems at a given port should facilitate process management and control of the flow of work, data interface to minimise the recapture of data (both within the organisation and with third parties), data validation to prevent the costs of rework, performance measurement to manage the activities undertaken and compliance with local regulatory requirements (Weiss 2011). Therefore, information systems in ports hold the potential for significant progress, particularly in business management and public administration, by harmonising the manner of doing business for both customs administrations and traders, hence greatly reducing the delivery times and allowing rapid access to information (Arnold et al. 2011).
In fact, the advancement of information systems enables containers’ operators to reduce the manual effort in providing services and facilitating the timely information flow and enhanced quality control in service and decision making (Kia et al. 2000, Ally and Mbamba 2009). Moreover, the use of computer simulations has simplified handling complex cargo facilities, leading to significant savings derived from the implementation of electronic devices in port terminals operation (Kia et al. 2000). Against this backdrop, this study investigated the role of information systems usage in port logistics performance using the Dar es Salaam port as a case study.
Of the several schools of thought regarding the influence of information systems usage on performance, a notable one is the productivity paradox, which claims that despite investments in information technology, there may be no corresponding productivity gains. The paradox has been widely discussed and debated. Although empirical data have revealed no improvement in productivity, those individuals who favour more investments in information technology argue that the information age is not an industrial age; therefore, new metrics to measure productivity are necessary and not necessarily the same as those of the industrial age. In addition, they argue that productivity is an output of many other factors in addition to information technology. This debate also calls for the proper evaluation of information systems usage; otherwise, the consequent effect may not be measured properly.
The productivity paradox dominated the debates in the early 1990s, which involved more developed countries than developing countries. Subsequently, a debate about the effect of information systems usage in developing countries emerged. Whereas one school of thought believes that developing countries can leapfrog from using information systems, i.e., there are positive effects of skipping some stages of development, negative effects are also prevalent; that is, information technology increases the gap between developing and developed countries because developing countries do not have the prerequisite infrastructure to support new technologies, and hence, their implementation may add more problems than it solves. However, effective usage of many new information technological tools may require high bandwidth and some necessary technological infrastructure that may not be present in some developing countries. In this regard, this study aimed to determine whether investment in information systems usage has any effect – particularly a positive one – on performance.