Tuesday, May 13, 2014

SMEs & SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT - TIME FOR SME's TO TAKE CONTROL OF THEIR DESTINIES
Supply chain management is a complex responsibility. There are supply chains within supply chain. Supply chains are not linear from one customer to one supplier. They involve multiple customers and multiple suppliers each of whom has a supply chain. Compound that with presence of three different supply chains-product, information and financial.
This conundrum applies to companies regardless of size, regardless of industry and regardless of what country the businesses are located. It is especially difficult for Small-Medium Enterprises (SMEs). These firms fight a competitive battle against large companies who have leverage and resource advantages. Less-than-outstanding supply chain management only compounds the problems for these small-medium companies. It applies to SMEs regardless of their industries, markets or geographical locations. Despite the scope and complexity, supply chain management is often not a vital part for many companies. The impact to companies of their treatment of supply chain management has handicapped its effectiveness resulting in:
  1. Wasted capital and resources
  2. Increased costs to perform activities and transactions
  3. Lost customer sales and poor customer service
  4. Sacrificed competitive advantage to the point that it has created opportunities. Non-US companies are assessing going Direct to Market by entering the US market to compete directly, which increases the US firm's competition

Companies are in a survival mode trying to deal with and get through the global economic crisis and the credit collapse. As firms work through the difficulties, will change come for those companies have not properly performed supply chain management? There will be change because many firms will not make it through the global recession. What other changes will occur? Will firms try to bully their way through the economy with broad brush approaches with inventory reductions and costs reductions? Will there be change from the revived economies or will companies repeat the mistakes of the past with regards to supply chain management? How will firms deal with the permanent changes that come from the global recession? Will they choose to have lower costs; better customer service; faster capital velocity, for inventory and, in turn, cash; and increased competitiveness, even advantage? Growth, even survival, may depend on the answer. The answer should be to change. Not changing is to repeat the mistakes of the past and can be considered as lunacy-doing the same thing over and over and expecting different results. Many company business models are outdated; more will join that with the global economy that emerges from the global recession. LTD has designed a program specifically targeted for SMEs. Key points of the program include:
  1. Work together to combine volumes of multiple SMEs and to leverage procurement of similar commodities using technology and approach as major corporations utilize
  2. Manage supply chains and suppliers as large companies do using technology and process to drive efficiencies across the supply chain from suppliers through to customers
  3. Determine and differentiate what the company needs from its supply chain with regards to competitive advantage, market positioning, cycle time, capital required for inventory and other applications, service, revenue, profitability and growth.
  4. Segment and assess present supply chain performance and process as to customers, markets, industries, distribution channels and products. Analyze the process based on customer and market requirements and on competition. Depending on the assessment results, supply chain redesign from the customer and market perspectives is preferable to trying to fix the present operation. Utilize different tactics for higher risk, higher complexity, high volume, fast moving, profitable products, customer and markets than for ones that are marginal.

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. The program LTD has designed with technology and supply chain process to leverage volume for lower prices and to create supply chain efficiency is important for SMEs. They must change. Standing pat is not a viable option. The changes from the new global economy will create opportunities for those prepared to take advantage of them