Investigating stock–outs in the warehouse retail liquor sector in Johannesburg

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