Inventory management systems used by manufacturing small medium and micro enterprises in Cape Town

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.