In the spring of 2023, I aim to investigate through a literature review the challenges growth poses to the supply chains of SMEs and to clarify and structure the connection between supply chain practices and growth.
Key Challenges to the Supply Chain Caused by Growth
Understanding the importance of the supply chain is crucial as it significantly affects the efficiency, performance, and profitability of an SME. Growth brings multiple challenges to the supply chain, complicating production scheduling, inventory management, optimal capacity utilization, and supplier relationship management. Growth also brings hidden challenges that are difficult to notice. For example, an inefficient supplier relationship may go unnoticed during high growth periods. As growth progresses, the supply chain often expands and becomes more complex, making its management more challenging.
Supply Chain Practices as Part of the Growth Management Concept
There are many different practices in the supply chain. In my thesis, I focused on managing supplier and customer relationships, information management, agile operations, market orientation, demand-based operations, and the use of simulation as supply chain practices. All these practices offer perspectives related to the concept of growth management, and when implemented correctly, they reduce the disadvantages of growth and support it. Well-managed supply chain practices improve the performance and operational efficiency of an SME. Thus, it is possible to better anticipate the obstacles brought by growth and reduce the additional costs of growth, making growth more economically viable. On the other hand, supply chain practices can offer a competitive advantage to SMEs, enabling them to achieve additional growth. The concept of growth management can thus be linked to supply chain management and its practices.
Similarities, intersections, and resemblances from the perspective of growth management were also observed between different supply chain practices. For example, technology plays a significant role in supplier management, but it is also crucial in information management. Similarly, the importance of trust is reflected in both customer and supplier management.
Special Features of SMEs
However, choosing supply chain practices in SMEs is easier said than done. SMEs have various limiting factors due to their size. For example, limited resources and smaller relative negotiating power with supply chain members limit the optimal utilization of some practices. The existing expertise within the organization also sets its own limits for the implementation of supply chain practices.
In conclusion, it is paramount for SMEs to understand their own situation when considering supply chain practices. This situation also changes with growth, as the resources and capabilities of the SME change. Therefore, supply chain practices also need to be updated. The study also emphasizes the importance of monitoring and measuring operations, which is beneficial when considering supply chain practices. With a fact-based and holistic assessment, a company can identify and anticipate potential development targets in supply chain practices, make changes to them, and thus create better conditions for growth.
Learn more about my thesis (in Finnish) through the link below, where you can find more details on the connection between different supply chain practices and the concept of growth management.
Author: Niilo Keskitalo, Bachelor of Engineering, Degree Programme in Industrial Engineering and Management, University of Oulu
Supervisors: Martti Saarela, Juha-Antti Rankinen
Publication (in Finnish): Keskitalo, Niilo, 2023: Toimitusketjun käytänteet Pk-yritysten kasvunhallinnassa
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