Surviving Supply Chain Integration Strategies for Small Manufacturers (2000) / Chapter Skim
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Executive Summary
Executive Summary
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Byrd Institute requested that the National Research Council conduct a study of the new roles and challenges faced by small and medium-sized manufacturing enterprises (SMEs) in integrated supply chains.
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SMEs typically provide capabilities that their larger customers do not have or cannot cost-effectively create, such as: · agility in responding to changes in technologies, markets, and trends · efficiency due, in part, to less bureaucracy · initiative and entrepreneurial behavior on the part of employees resulting in higher levels of creativity and energy and a greater desire for success · access to specialized proprietary technologies, process capabilities, and expertise · shorter time-to-market because operations are small and focused · lower labor costs and less restrictive labor contracts · spreading the costs of specialized capabilities over larger production volumes by serving multiple customers · lower cost, customer focused, and customized services, including documentation, after-sales support, spare parts, recycling, and disposal SUPPLY CHAINS The committee defined a supply chain as an association of customers and suppliers who, working together yet in their own best interests, buy,
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. REQUIREMENTS, CAPABILITIES, AND GAPS Competitive cost, quality, service, and delivery are the traditional fundamental capabilities required of all suppliers, but successful participation in today's integrated supply chains requires more.
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Recommendation. In response to the requirements of integrated supply chains for improved quality, small and medium-sized manufacturing enterprises should adopt quality as a competitive strategy and consider implementing techniques, such as six sigma, ISO certification, and statistical process controls, to comply with customer demands, improve overall business performance, and provide a common language for communication on quality issues.
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However, with advanced information systems, agile manufacturing organizations with flexible equipment and tooling, and sophisticated logistics systems, integrated supply chains no longer need large, costly inventory buffers to respond to unexpected events and variations in demand. These capabilities should be augmented by the effective use of advanced transportation capabilities, such as overnight delivery.
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Although extensive formal planning may not be justified, it is becoming imperative that small and medium-sized manufacturing enterprises periodically pause from the rush of daily business to survey the business environment of rapidly changing technologies and customer requirements and develop brief, formal business plans. Recommendation.
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Despite significant media coverage of the capabilities of business management systems, small and medium-sized manufacturing enterprises should evaluate, but generally defer, purchasing enterprise resource planning and supply chain integration software until prices come down, these systems are easier to install and use, and the benefits of specific systems have been more thoroughly validated. Recommendation.
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, chartered specifically to provide advice and counsel to SMEs, can be found in virtually every city and region in the United States. Although these organizations are extremely helpful to SMEs, the committee found that not all of them are fully capable of helping SMEs compete successfully in a rapidly changing integrated supply chain environment, nor are they consistently proficient in providing guidance to SMEs attempting to integrate their own supply chains.
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In the context of converging trends in supply chain integration, technology, and logistics, which are resulting in dramatic increases in low-cost global competition and substantial demands for investment, small and medium-sized manufacturing enterprises must take the following key steps: · engage in meaningful strategic planning, not just budgeting · increase their financial, managerial, and technological strengths · add value to their products and integrate more closely with their customers · integrate their own supply chains to reduce costs and improve performance These responses will not, by themselves, ensure competitiveness, but they are essential for the successful participation of small and mediumsized manufacturing enterprises in modern integrated supply chains.
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