Equipping small business retailers to manage logistical supply chain drivers: A theoretical guideline

Abstract

Background: Small businesses are seen as the impetus behind a country’s economic growth. The South African government’s continued commitment to prioritise the development of small businesses, the promising rise of the retail sector in South Africa and the substantial contribution of small businesses to trade, business services, personal services and construction make the small retailers a force to be reckoned with. Businesses often fail because of a lack of strategic fit between the competitive and supply chain strategies. It is imperative that the supply chain design, resources and processes provide the necessary capabilities to support the desired competitive strategy. Managing the three logistical supply chain drivers of facilities, inventory and transportation can contribute to achieving a strategic fit between the selected competitive strategy and supply chain strategy. The logistical supply chain drivers should not only be managed as a cohesive unit, but should also be aligned with the orientation of the selected supply chain strategy, in terms of responsiveness and cost-efficiency.Objective: The objective of this article is to provide guidelines from literature that small business retailers can use in managing their logistical supply chain drivers to be aligned with the orientation of their selected supply chain strategy in terms of responsiveness and cost-efficiency.Method: An extensive literature review was conducted pertaining to the management of the three logistical supply chain drivers by small retailers.Results: It was determined that small responsive retailers typically order inventory on a frequent basis, hold excess inventory, provide customers with a seamless in-store experience and are located close to their customers. These responsive retailers make use of direct delivery from suppliers (and to customers) to increase their flexibility and reduce lead times. On the other hand, small cost-efficient retailers typically do not hold excess inventory, and their stores are usually located further away from customers. These cost-efficient retailers take advantage of both economies of scale when purchasing inventory and economies of distance when transporting inventory.Conclusion: Literature guidelines with regard to the management of the logistical supply chain drivers are provided to assist small retailers in achieving a strategic fit between the selected competitive strategy and supply chain strategy.