Transportation decisions of small businesses in Soweto: Balancing responsiveness and efficiency

Abstract

Background: The performance of small businesses makes an important contribution to the South African economy. Although the South African government implemented various initiatives for the development of small businesses in townships, the full advantage of such initiatives has not yet been experienced.

Objectives: To investigate how formal, independent small retail businesses operating in Soweto manage transportation as a logistical supply chain driver to be financially sustainable.

Method: During 2014, a survey was conducted among a sample of 556 formal, independent small retail businesses in Soweto to determine if these retailers focused on responsiveness or cost-efficiency when managing their logistical supply chain driver of transportation.

Results: The results showed that the retailers manage transportation decisions by focusing on either cost-efficiency or responsiveness, depending on the type of transportation decision and the industry in which the retailer operates. In terms of the profile of the older businesses (5 years and older) that showed a growth pattern in income (turnover) over the past year, responsive transportation decisions based on having inventory available (either by direct delivery by suppliers or by using own transportation) was a higher priority than considering cost.

Conclusion: The type of transportation decisions made by the older, growing businesses could serve as an example to younger businesses showing a stagnating or contracting growth pattern.