Logistics benefits and challenges: The case of SMEs in a South African local municipality

Abstract

Small and medium enterprises (SMEs) are the lifeblood of every economy. However, in order for them to sustain their role of contributing to the mainstream economy, SMEs have to implement effective strategies in all of their business operations, inclusive of logistics. The function of logistics is important to SMEs because it is the quintessence of the organisation's relationship with suppliers and customers. The aim of this study was to investigate the challenges encountered as well as the benefits realised by SMEs during the implementation of logistics strategies. A quantitative approach using the cross-sectional descriptive survey technique was used in which a three-section questionnaire was administered to a randomly selected sample of 131 SME owners and managers in Emfuleni Local Municipality in Gauteng Province, South Africa. Data analysis was conducted using simple descriptive statistics. The results of the study reveal that financial constraints, the lack of logistics skills among the workforce, high costs of information technology and rapid technological advancements were the most important challenges to SMEs. Challenges related to inventory and environmental management emerged as the least relevant. Enhanced competitive advantage, increased sales and a reduction in operational costs were the most important benefits to SMEs. Reduction in labour turnover and innovation emerged as the least important benefits. Based on the findings, several recommendations were proposed.

Interrogating antecedents to SME supplier performance in a developing country

“…There are huge numbers of SMEs in South Africa, to the extent that at least 80% of all business enterprises in the country fall within this economic sector (Ladzani & Seeletse 2012). Owing to their massive presence in South Africa, SMEs contribute at least 50% of the country's annual GDP (Abor & Quartey 2010); are pivotal in employment creation (Fatoki & Garwe 2010;Kongolo 2010;Mafini & Omoruyi 2013); and are renowned for generating at least 40% of all economic activities in the country (Pellissier & Nenzhelele 2013). In order to survive in the harsh economic environment of today, many SMEs in South Africa have been compelled to adopt current best practices, including supply chain management, in their operations (Mafini & Omoruyi 2013).…”

Dynamic Capabilities, Service Quality and Relationship Continuity as Drivers of Sme Supply Chain Performance

“…Given the challenges of maintaining the competitive edge by SMEs, various research endeavours (for example, Adams, Khoja & Kauffman, 2012;Chinomona & Chinomona, 2013;Mafini & Omoruyi, 2013) have been made which are directed to the implementation of supply chain management activities to enhance SME supply chain performance. This fact notwithstanding, there is scant evidence of previous studies that have attempted to test the conceptual framework put forward in this study in the South African SME economic sector.…”

“…According to Razaq (2010), SMEs are the most important sector for growth in the economy in South Africa. To determine the sample size, the historical reference method was used, by means of previous studies (Adams, Khoja & Kauffman, 2012;Chinomona & Chinomona, 2013;Jain et al, 2014;Mafini & Omoruyi, 2013); that examined various supply chain management issues in the SME sector which used sample sizes ranging between 200 and 500 elements. Using the historical reference method, the sample size for this study was initially pegged at N=500 respondents.…”

Dynamic Capabilities as Determinants of Supply Chain Performance in Small to Medium Enterprises in Gauteng Province

“…Given the challenges of maintaining competitive edge by SMEs, various research endeavours (Adams, Khoja & Kauffman, 2012;Chinomona & Chinomona, 2013;Mafini & Omoruyi, 2013) have been made, which are directed to the implementation of supply chain management activities to enhance SME supply chain performance (SCP). This fact notwithstanding, there is scant evidence of previous studies that attempted to test the conceptual framework put forward in this study in the South African SME economic sector.…”