Awareness and response strategies in small and medium-sized manufacturing enterprises

Abstract

Summary form only given. This paper presents data on small and medium-sized manufacturing enterprises (SMME) perspectives gathered through a series of research and intervention programmes in the UK. In general, this demonstrates that SMMEs lack awareness of the external drivers of change and have a strategic focus on stability within a small network of customers and suppliers, rather than on agility and growth. In contrast, the best performing SMMEs, in terms of growth and profitability, dominate markets, have many customers and have frequent new product introductions. The paper then discusses the global scenario, in which OEMs are reducing their own value-add, creating new opportunities for SMMEs to add value in the supply chain. Improvements in communications and logistics enable SMMEs in peripheral regions and newly industrialising countries to compete globally. In this environment, the authors argue, the ability to innovate is a key survival factor. The OEMs' demands for continuous efficiency improvements can force SMMEs in their supply base to sacrifice the resources that contribute to innovation capability. Yet, for SMMEs which lose their place in the supply chain, the ability to innovate is the only quality which will enable them to break into new markets, with new products and services. The authors illustrate their argument with three pairs of case studies, in electronics, automotive components and capital goods. Each pair of case studies features two SMMEs with similar characteristics and products, in the same region, but pursuing different strategies.