Moving products from one area of the globe to
another in an efficient manner is difficult. Ensure that inventory is accurate
and supplies arrive when needed is also difficult. Small and medium size
enterprises (SMEs) often lack the competence and skill to manage their supply
chains well. A study Dr. by Mohd Rahman
discusses some of the challenges in supply chain management (SCM) faced by
small businesses in Malaysia.
A few decades ago Malaysia was an agricultural
center but grew to prominence in the business world. In 2005, approximately 29.6% of all companies
were geared toward manufacturing exports. SME’s are 92% of registered companies
and constitute 90% of manufacturing companies that contribute to 65% of
employment. SMEs within Malaysia provide a strong case study of the difficulties
SMEs have with SCM.
SMEs are often a strong catalyst for growth when
they can effectively obtain resources and convert those resources to export
products. Despite their benefits, many SMEs have a hard time achieving growth
due to limitations on resources and knowledge. Understanding their strengths
and weaknesses helps in tackling limitations to create a stronger business
environment.
Advantages
of SMEs:
-Flat structure and short decision making that
allows companies to adjust quickly.
-Flexible culture adaptable to change.
-Chances of improved success with organic vs. bureaucratic
culture.
-Higher levels of innovative activities.
Disadvantages
of SMEs:
-Lack of
skills and knowledge.
-Lack of financial resources.
-Owner controlling everything.
-Improper systems and processes.
The study indicated that SMEs are limited by both
internal and external environmental issues. Some of these issues include cooperation
with other parties in the supply chain, management supports and data
transformation. Such businesses don’t
often cooperate for mutual benefit, have enough management knowledge to run
certain programs effectively and lack acute ability to understand and use data.
The study found that the top five SMC dysfunctions
in SMEs are 39% inefficient inventory management, 30% ignoring uncertainties in
the supply chain, 26% incorrect inventory assessments, 26% lack of
communication, 23% inaccurate use of data.
Rahman, M. (2012). The effective implementation of
global supply chain management in small to medium-sized companies in Malaysia:
An empirical study. International Journal
of Management, 29 (3).
