SMEs and SCM

In today’s modern economy, success of a business is not always measured by its products or by the size of the market share of the company. It is, instead, measured by the ability to harness its supply in delivering responsively to customers as and when they demand it. In short, the success of any business lies in its ability to manage its supply chain effectively. Firms that streamline their supply chain and churn out finished products faster will undoubtedly benefit the most.

Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

The organizations that make up the supply chain are “linked” together through physical flows and information flows. Physical flows involve the transformation, movement, and storage of goods and materials. They are the most visible piece of the supply chain. But just as important are information flows. Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supply chain.

In an increasingly uncertain and complex business environment, Supply Chain Management (SCM) is a critical capability for all companies regardless of their size. This is particularly true for small and medium-sized enterprises (SMEs) as they compete on scope rather than scale, which requires an adaptable supply chain. SMEs promote business ownership and entrepreneurial skills. They are agile and flexible towards the shifts in supply and demand; attributes that are particularly important in volatile global markets. In addition, SMEs are engines for job creation.

SMEs often lack the SCM expertise that is found in larger companies. SMEs are limited by the insufficient resources and lack of skills required to design, build, and manage an advanced supply chain; capabilities that are critical for their survival. For example, SMEs have a difficult time accessing and understanding their capital requirements and managing finances effectively both domestically and across borders. Without a sound understanding of currency fluctuations, trans-border transactions and associated costs, these organizations struggle to compete. Also, while larger companies capture efficiencies by forming strategic alliances with core suppliers, SMEs are not equipped financially to enter into such partnerships.

SMEs must break the cycle of inefficiency that limits profits, growth and return. Change is difficult, but not impossible. Opportunities will come from the new economy.  It`s time for SMEs to take control of their destinies by adopting supply chain management.

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