Physical and Technological Capital Efficiency for Profit Growth in Small and Medium Enterprises in Gauteng, South Africa: A Descriptive Qualitative Study

Abstract

The increasing number of businesses closing down and the persistent slow growth of small and medium enterprises (SMEs) within the manufacturing sector is a serious concern globally, including in South Africa. The SMEs that are currently existing are operating below the required efficiency level. Physical and technological capital efficiency integrating manufacturing systematic planning, work study, standardisation and inventory management to improve the profit of SMEs in Gauteng South Africa is inadequate, which is a major concern. This study aimed to explore the physical and technological capital constraints affecting SMEs’ profit growth and develop the physical and technological capital efficiency adoption model merging manufacturing systematic planning, work study, standardisation and inventory management for SME profit growth in Gauteng. The study was qualitative, exploratory and descriptive in nature. Face-to-face interviews were conducted targeting 15 owners/managers amongst SMEs in Gauteng. The findings show the most common causes of slow profit growth, which involve poor material handling, unfavourable workplace layout, unscheduled machine maintenance, network challenges, failure to adhere to workplace standards, insufficient product and material recording systems and poor work methods and procedures. The study revealed major concerns for SMEs that required intervention for these enterprises to sustain their profit growth. Thus, the adoption of the model concerning the incorporation of physical and technological capital efficiency tools to advance manufacturing operations be considered as the contributing insight into the profit growth of SMEs in Gauteng. Thus, this study recommends that the government creates an enabling environment for the adoption of this model for SMEs.