Supply chain success in small to medium-sized businesses
The meaning of success
At the 2020 Tokyo Olympic Games (held from July to August 2021), 1,079 medals were awarded to a record 93 nations. However, less than 25 countries earned more than a 1% share of the total medal count.
For most nations participating, one could jump to the conclusion that the Games were an unsuccessful venture. However, it is unlikely for Bermuda to view the Tokyo games as anything but a success, as Flora Duffy brought home their first ever gold medal for her effort in the women’s triathlon.
Whether for the Olympic games or supply chains, the meaning of success is shaped by the context, as it depends on many different factors.
David and Goliath
Schneider Electric, a large French multinational enterprise, joined the Gartner Supply Chain Top 25 in 2016. In 2021, the company climbed to #4 in the ranking. This success was the result of recognizing that their acquisition-led growth had resulted in developing a diverse customer base with no clear path to meet the needs of these different market segments. Recognition was quickly followed by redesigning their supply chain culture to focus on the customer and developing unique supply chain service offerings aligned to the characteristics of segment (Transforming Supply Chains, Gattorna and Ellis). Their effort has been recognized as a success, including their lofty Gartner ranking.
The Gartner Supply Chain Top 25 is filled with global businesses between US $15-570B in annual revenue. A likely misinterpretation of the list would suggest that these large industry titans block the path for small and medium-sized businesses requiring a David vs. Goliath outcome to be successful.
Can small and medium-sized businesses (SMBs) achieve a similar level of success?
While SMBs may not crack the Top 25 global supply chain list, they can find success through targeted improvement and growth by creating their own unique and meaningful success story.
However, common challenges restrict their path:
Limited budgets, especially recovering from a global pandemic
Reduced access to necessary supply chain leadership talent
Limited internal development and training
Dated and restrictive technology
While these challenges present difficulties, they can be overcome.
An example
An industrial SMB was struggling to satisfy their industrial customer’s requirements. As the customer was starting up their manufacturing facility, the SMB was unable to reach the right supply rhythm to optimize on-time delivery performance and cost. With a contract renewal in the near future, the SMB wanted to improve their customer outcome but were restricted by a budget tied to their expected revenue, internal talent capable of delivering specific outcomes but potentially unaware of other improvement opportunities, and limited supply chain technology.
The SMB overcame their challenges by investing in a fixed cost supply chain improvement project run by an independent external advisor. The project yielded the following results:
Margin erosion was reduced through improved communication
Collaboration increased by installing a rhythmic planning process
Disruption was identified earlier triggering alternatives
Customer confidence increased
By bringing in a knowledgeable industry expert, the SMB had access to necessary leadership and received internal development and training from the expert generating the successful results without bursting their budget.
Other SMBs can find similar supply chain success by collaborating with external resources and addressing the 3 core pillars of successful supply chains:
Leadership: Understanding how the business creates value for its customers and identifying a specific supply chain approach to supports its value proposition
Managing talent: Investing time into the capability development of internal resources
Applying technology: Identifying specific software and hardware solutions to provide data aligned to the business value proposition to key stakeholders to enable better decision making
Conclusion:
While SMBs may not be ranked among the Top 25 Supply Chains in the world, it is still possible for them to become their own success stories by drawing on the right support and making strategic changes to overcome their challenges. David and Goliath can co-exist.
In line with this vision, Lesser Supply Chain (LSC) was launched to help SMBs achieve success through a more collaborative supply chain. LSC is passionate about advising SMBs to strengthen supply chain leadership, mentoring key personnel to grow internal talent, and identifying appropriate technology to achieve a new performance level.
Contact us today to learn more about our approach and how we can help you transform your supply chain into a supply chain success story.