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Surviving Supply Chain Integration: Strategies for Small Manufacturers
Strengthening Manufacturing Extension Centers and Technical Resource Providers
The committee found that not all MEC/TRPs are fully capable of helping SMEs compete successfully in a rapidly changing integrated supply chain environment, and not all of them are consistently proficient in providing guidance to SMEs seeking to integrate their own supply chains. Specifically, MEC/TRPs must develop a standard set of supply chain best practices for SMEs and implement appropriate support programs at all of their centers. Uniform, high-quality programs are essential because supply chain integration typically involves multiple companies in scattered locations. Therefore, inconsistent local programs and levels of support can make integration efforts difficult. Sufficient funding is essential for MEC/TRPs to carry out this important new mission without detracting from their other operations in support of SMEs.
SMEs generally cannot afford the same high-priced guidance provided by consultants to OEMs. As the survival of SMEs is being increasingly imperiled by converging trends in supply chain integration, technology, and logistics, which are resulting in dramatic increases in low cost, global competition and substantial demands for investment, SMEs have unprecedented needs for state-of-the-art guidance at an affordable cost. Thus, MEC/TRPs should be provided with sufficient public and private funding so that they can focus their efforts on providing critically needed services rather than on fund-raising. SMEs, in turn, should rely more heavily on MEC/TRPs to guide them through their increasingly complex business environments.
SMALL BUSINESS SET-ASIDES
Considering the imposing requirements of some integrated supply chains, it might seem impossible for SMEs to participate, even in the lower tiers. However, Public Law 100–656 requires that OEMs receiving government contracts in excess of $500,000 give preference to, or put a good faith effort toward, setting aside as much as 20 percent of their subcontracts (or the priced bill of materials) for small, disadvantaged, and minority-owned businesses. Of this 20 percent, 5 percent is allocated for small disadvantaged businesses and 5 percent for businesses owned by women. Numerous OEMs, despite extensive efforts, never fully meet these quotas, often because of a lack of qualified candidates. Many OEMs have taken steps to assist SMEs by making provisions for their participation on procurement review boards, sponsoring small business supplier conferences, and establishing mentor protégé programs to assist SMEs in process development and the development of program plans and budgets.