Global sourcing risk management approaches : a study of small clothing and textile retailers in Gauteng

Abstract

BACKGROUND : Global sourcing has increased as buyers searched for new markets that offered better pricing, quality, variety and delivery lead times than their local markets. However, the increase in global sourcing has also exposed businesses to many supply risks. PURPOSE : The purpose of this descriptive qualitative study was to explore the global sourcing supply risks encountered by small clothing and textile retailers in Gauteng and to determine what supply risk identification and management approaches they utilise. METHOD : This study utilised semi-structured interviews conducted with 12 small clothing and textile retail owners. RESULTS : The study found that the three major supply risks encountered by these retailers were fluctuating exchange rates, communication barriers and costly and complicated logistics, which included high customs costs. Furthermore, although aware of the supply risks, none of the small clothing and textile retailers had formal identification and management approaches in place. Instead, risks are dealt with at the sole discretion of the owner as and when they occur. The study also found that informal identification and management approaches were being applied by some of the retailers. These included factoring exchange rate fluctuations into the profit margins and using translators to combat communication barriers. CONTRIBUTION : The study is one of the first empirical studies conducted on global supply risks and the associated identification and management approaches in the South African small business context, specifically focused on clothing and textile retailers. CONCLUSION : Small clothing and textile retailers need to proactively identify and manage global sourcing risk using the identified approaches in order to reduce and mitigate potential supply disruptions.