Conquering the SMEs Supply Chain Challenges

When a crisis comes, such as the COVID-19 pandemic or the Ukraine war, well-planned business strategies will be put to the test. A very powerful image is now circulating within maritime circles. Hundreds of ships can be seen littering the Shanghai harbour on satellite images.

For more than five weeks, the city has been on lockdown. The suspension of discharge and loading activities has sent shockwaves around the world. This port, which is perhaps the starting point for the entire global supply chain, is unquestionably the busiest on the planet. When Shanghai port sneezes, downstream stakeholders in the value chain are reported to scramble for their masks.

Here's an example of a medium-sized global maker of industrial process sensors. Even before 2020, metal and semiconductor supplies were in short supply, and the pandemic added to supplier defaults. The manufacturer pays a premium for standard supplies from a self-certified supplier, but due to COVID-19 and quarantine requirements, there is no staff on the shop floor once they arrive.

Due to a global scarcity, there are no containers available to load the shipment when the workers return, and production is completed. The booked vessel is cancelled when the containers arrive because the shipping operator diverts it to the highest bidder.

The vessels must find their way out of the clogged coastlines and into the commerce lanes when the rescheduled vessel arrives, and the containers barely meet the cut-off dates after dealing with days-long lines at the gates.

The journey does not end here. The package must still pass through congested transit and ultimate discharge ports. Most SMEs providing worldwide clients have delivery delays that are 2 to 10 times longer than before the world went insane.

Scale, according to strategy experts, leads to efficiencies. However, the relationship between economy and scale is not indefinite nor linear. The concentration of capacity is ultimately harmful to the ecosystem that connects the producer and the consumer. If commerce cannot connect consumer demand to availability in a consistent, sustainable, and predictable manner, quality of life will suffer.

In their never-ending pursuit of development and profits, large corporations have swung the pendulum to its illogical extreme. It's past time to pause and reconsider the long-term consequences, if not efficacy, of this widely accepted management paradigm. Size does matter but going overboard will be detrimental.

Machine malfunctions, logistical setbacks, raw material quality variation, and other production floor concerns may occur from time to time, and actions can be taken to promptly resolve these issues using big data analytics, artificial intelligence, and the Internet of Things (IoT). Preventive maintenance should never be avoided since it provides valuable insight into potential problems before they develop.

SMEs may improve their production forecasting system by focusing on consumer demands all the time. Customers and suppliers will benefit from reduced inventory holding costs and associated opportunity costs. SMEs may give distinctive value to not only their immediate clients but also their end consumers, by focusing on them. This creates long-term, binding ties.