A MODEL FOR INVENTORY MANAGEMENT AND WAREHOUSE PERFORMANCE IN THE SOUTH AFRICAN RETAIL INDUSTRY

Background: The South African retail sector faces numerous inventory management-related problems that have detrimental effects on both inventory and warehouse performance. Some of the negative effects include the inability to fulfil orders, poor-quality control and inventory management operating systems, and ineffective warehouse security and layout design. It is necessary to develop and identify interventions for mitigating these problems. Additionally, literature on inventory and warehouse management in the South African retail sector is currently limited. The study tests a model for linking inventory management to warehouse performance in the retail industry in South Africa.

Method: The study used a quantitative survey method involving 203 supply chain professionals selected from retail outlets in the Gauteng and KwaZulu Natal provinces.  Data were analysed using structural equation modelling based on the partial least squares technique.

Results: Three inventory management practices: inventory investment and ABC analysis contributed positively to inventory performance. Inventory performance contributed positively to warehouse performance.

Conclusions: Inventory management and performance are important drivers of warehouse performance in the retail sector. However, a correct mix of inventory management practices is essential. The study offers several contributions. Theoretically, the study provides insights into the contribution of inventory management to warehouse performance in retail environments. Specifically, the study identifies the inventory management practices that are important in optimising both inventory and warehouse performance in retail supply chains.