Abstract

Inventory management is regarded as one of the most important influencers of competitiveness, and is also seen as a key operational performance measure for Small Medium and Micro Enterprises (SMMEs) in inventory-intensive industries. Prior research shows that manufacturing SMMEs are confronted with increased competition from businesses that purchase and sell ‘cheaper’ manufactured products from countries such as China and India, among other; resulting in these manufacturing SMMEs to consequently struggle to develop. As such, it is imperative that SMMEs formalise their internal structures and systems in order to become more competitive. Moreover approximately 80% of SMMEs are believed to fail within their first 4 years of existence. Stemming from the latter the authors formulated the perception that SMMEs’ overall existence is adversely influenced as a result of ineffectively managing its inventory, which evidently affects operations, production, customer relations and profitability, among other areas. The main objective of this study was to ascertain the how effectively inventory was managed by SMMEs, specifically in the manufacturing industry; situated in Cape Town. The study was descriptive in nature and was conducted using quantitative research methods. Data were collected by means of questionnaires from 21 SMMEs leaders in the manufacturing industry in the northern suburbs of Cape Town. It was found that although majority of respondents were aware of formal inventory management systems, they did not extensively make use of them. Ironically the inventory management systems which were used by respondents, though informal to a large extent, were found to be working for them. DOI: 10.5901/mjss.2015.v6n1p382

Highlights

  • Small Medium and Micro Enterprises are defined by the National Small Business Act No.102 of 1996 of South Africa as separate and distinct business entities, including co-operative enterprises and nongovernmental organisations, managed by one owner or more which, including its branches or subsidiaries, if any, are predominantly carried on in any sector or subsector of the economy (South Africa, 1996). Berry, et al (2002) express the view that SMMEs have been actively promoted, by the South African government since before 1995 and, by Law, have been given the main responsibilities of enhancing economic growth, reducing unemployment and alleviating poverty

  • Et al (2002) express the view that SMMEs have been actively promoted, by the South African government since before 1995 and, by Law, have been given the main responsibilities of enhancing economic growth, reducing unemployment and alleviating poverty. The latter is confirmed by the research conducted by Kesper (2001) which states that SMMEs are deemed to be at the forefront of economic development and are actively involved in the resolution of socio-economic problems

  • Notwithstanding the above it is of paramount importance that South African SMMEs, those entities based in the manufacturing industry, need to formalise their internal structures and systems in order to become more competitive and efficient in the process (Terziovski, 2010)

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Summary

Introduction

Small Medium and Micro Enterprises (often referred to as SMMEs) are defined by the National Small Business Act No.102 of 1996 of South Africa as separate and distinct business entities, including co-operative enterprises and nongovernmental organisations, managed by one owner or more which, including its branches or subsidiaries, if any, are predominantly carried on in any sector or subsector of the economy (South Africa, 1996). Berry, et al (2002) express the view that SMMEs have been actively promoted, by the South African government since before 1995 and, by Law, have been given the main responsibilities of enhancing economic growth, reducing unemployment and alleviating poverty. Berry, et al (2002) express the view that SMMEs have been actively promoted, by the South African government since before 1995 and, by Law, have been given the main responsibilities of enhancing economic growth, reducing unemployment and alleviating poverty. The latter is confirmed by the research conducted by Kesper (2001) which states that SMMEs are deemed to be at the forefront of economic development and are actively involved in the resolution of socio-economic problems. As a result the authors formulated the perception that the existence rate of South African SMMEs is adversely influenced by the ineffective inventory management initiatives

Research questions
An overview of South African SMMEs
Factors influencing South African SMME failure
An introduction to inventory management and inventory systems
Inventory management systems
Research Design and Methodology
Respondent demographics
The perception of respondents on inventory management
The perception of the big four inventory management systems
Findings
Conclusion
Full Text
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