The inventory management practices amongst manufacturing SMEs in the Cape Metropole, province of the Western Cape, South Africa

Abstract

Financial management is one of the seven important managerial functions and is responsible for ensuring that institutions have adequate or access to financial resources to meet short-term and long-term resources to meet long-term obligations. Long-term resources are capital provided by the owner (s) and long-term loans, whilst short-term resources include cash on hand or in the bank, accounts receivable and inventory or commonly referred to as current assets. The investment in inventory is often 50% of the value of current assets and in many cases overlooked as a source of short-term funds. Considering the importance of inventory in any business, this study focused on inventory management practices in SMEs. Using a sample of 100 businesses, our research revealed that only (i) 19% always prepare inventory budgets; (ii) 21% always review inventory levels; (iii) 25% review the shelf-space allocated for the products; and (iv) 19% use computers in inventory management.