Abstract
M.Com. (Business Management)
The retail industry in South Africa is faced with economic pressure, which is affecting
growth in the sector. Consumers are affected by inflation which affects their
purchasing power. Added to this many retail businesses in South Africa are
experiencing the phenomena of stock-outs. Retail stock-outs can amount to 4% of
annual turnover for an average retail business in South Africa.
This is putting huge strain on retail businesses to remain competitive in the industry
and thus retail businesses have to ensure adequate management is in place to drive
efficiency. Management of processes and practices in a supply chain are critical to
achieve synchronisation amongst supply chain entities. This assists in achieving
reliability, responsiveness and flexibility with customers in the supply chain and thus
stock-outs can be avoided or reduced.
This study highlights four management processes and practices that are critical in
achieving synchronisation and decreased variability in the supply chain, which would
result in avoiding or reducing stock-outs. The four management processes and
practices analysed in this study are customer demand, inventory management, retail
operations and supplier relationships.
These four management processes and practices were tested using an exploratory
case study using a case study approach in the warehouse retail liquor industry in
Johannesburg. Data was collected using questionnaires and semi-structured
interviews in retail outlets. The questionnaires were structured in a format that
categorised the four management processes and practices through perceptions and
realities of management. The semi-structured interviews were used to gather
responses of perceptions and realities of management processes and practices and
causes to stock-outs.
From the results of the study, the primary reasons for stock-outs were attributed to
poor inventory management practices, a lack of understanding customer purchasing
patterns and poor communication with suppliers. These reasons affected the
synchronisation of activities in the supply chain and thus increased variability which
resulted in stock-outs.