Abstract:To circumvent the possibility of business failure, small to medium enterprises in emerging economies face mounting pressure to increase the satisfaction of their customers. The adoption of supply chain management practices is critical to the provision of quality products and services as well as the satisfaction of customers by small to medium enterprises. This paper investigated the relationship between customer satisfaction, supply chain management practices and three input factors; namely, product quality, flexibility and product variety in small to medium enterprises. The study adopted a quantitative approach in which a four section questionnaire was distributed to 131 managers in small to medium enterprises based in Gauteng Province, South Africa. Hypotheses were tested using regression analysis. The results of the study revealed that product quality and flexibility predicted supply chain management practices. Supply chain management practices were also statistically significant, and mediated the relationship between customer satisfaction and product quality and flexibility. Based on these results, conclusions were drawn and appropriate recommendations were made.
JEL Classification: L1Keywords: Product quality, flexibility, product variety, supply chain management practices, customer satisfaction
IntroductionThat small and medium enterprises (SMEs) are renowned drivers of economic growth in emerging economies such as South Africa is a long-established fact. SMEs are well known for their contributions to the development and survival as well as revenue generators to any economy (Rosenbusch, Brinckmann and Bausch, 2011). Even so, government, institutions, practitioners, as well as researchers have extensively commended and acknowledged the importance of SMEs as contributors to economic growth in terms of poverty alleviation (Sui, Lin, Fang and Lui, 2006) (Bhutta, Rana and Asad, 2008), and innovators of new product and services as well as technological advancement (Shin and Lee, 2013). However, it has been observed that the survival and the continued existence of SMEs strongly depends on their ability to fully integrate supply chain management (SCM) practices in a strategic manner in order to provide quality products and services, and to provide product varieties that satisfy the dynamic needs of modern-day customers (Kim, Cavusgil and Cavusgil, 2013;Sharifl et al., 2013).Customer satisfaction is the key to SME business growth and continued existence (Chow, 2014;Sun and Kim, 2013). It has been identified as the key indicator that differentiates between high or successful business performance and a low or unsuccessful business performance within the business environment in present-day South Africa (Sharifl et al., 2013). In other words, when a customer is satisfied, there is a strong possibility that the customer might become loyal, which results in the improvement of organisational performance (Terpstra and Verbeeten, 2014). A chain of customers is established through word of mouth as a result of custom...