Recent Research II: Reports Offer Suggestions for Small and Medium Manufacturers to Compete in Global Supply Chain

Considerable changes are affecting the structure of traditional manufacturing supply chains, and firms that do not adapt to these shifts will suffer economically, according to a recent report from the National Association of Manufacturers (NAM). Forging New Partnerships: How to Thrive in Today’s Global Value Chain provides information about specific programs and organizations, as well as suggestions and best practices, that may improve the difficulties small and medium manufacturers (SMMs) face as both their competitive markets and internal management needs are changing.

 

The report is the second release in NAM’s Small and Medium Manufacturers Series. The first report identified the challenges facing SMMs in the 21st century (see the March 6, 2006 issue of the Digest). Small manufacturers are considered to have less than 500 employees, and medium-sized manufacturers have between 500 and 2000 employees. Together, these two groups account for 99 percent of all manufacturers and 40 percent of U.S. production value.

 

Forging New Partnerships looks deeper into the evolving relationships between manufacturing suppliers, producers and consumers. In the past, the end consumer often dictated design, pricing and services, and components were primarily built to specification. But today, as globalization expands the locations of suppliers and producers, the end user is expecting more, requiring small and medium-sized manufacturers to incorporate innovation into their designs and offer enhanced services and support. In order to take advantage of this shift from supply chains to global value chains, SMMs need to both engage new overseas partners and position themselves as better, more valuable alternatives to foreign producers, NAM contends.

 

Noting only half of U.S. manufacturers presently have value chain strategies, Forging New Partnerships outlines strategies in four critical area: 

• Growing overseas sales and business opportunities;
• Building a highly skilled workforce;
• Identifying future sources of financing; and,
• Incorporating innovation into business practices, such as mastering lean manufacturing principles, creating new products, utilizing specific government programs and/or pushing sustainable manufacturing.

The report also provides a “Value-Chain Matrix” to assist SMMs with a self-assessment of their current relationships with suppliers and customers. To help with developing and implementing new strategies, the report identifies various resources and national organizations specializing in global sales and competition, workforce development, manufacturing and business development, lean manufacturing, federal government funding and sustainable practices.

 

State manufacturing policymakers and TBED practitioners will find useful information in the report as well, based on results of survey data presenting the top three reasons SMMs do not participate in government-sponsored programs:

• Lack of familiarity with public assistance programs;
• No interest in participating or a lack of understanding the value of engaging government involvement; and,
• Not knowing how to get started.

To address these problems, state and national programs could expand their outreach and visibility, and cultivate closer relationships and knowledge about manufacturers located in their service areas.

Forging New Partnerships: How to Thrive in Today’s Global Value Chain can be found at:

http://www.nam.org/s_nam/bin.asp?CID=216&DID=239787&DOC=FILE.PDF



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