to include innovation in discussions of management because it is critical that management create a corporate culture broadly conducive to innovation. Fourth, the Competitiveness Review facilitates measuring the current status of an enterprise and identifies targets for improvement for each of the variables. However, it does not identify constraints or help resource-limited SMEs decide which factors are most critical.

Constraints

The identification of internal and external corporate constraints is an important adjunct to the assessment of capability gaps. Constraints can take the form of limited capital resources, lack of employee know-how, conflicting customer demands, inadequate operating policies, resistance to change, poor leadership capabilities, and so forth. Because constraints can be limitations or barriers to improvement, identifying and dealing with the most significant constraints is as important as filling the highest priority capability and performance gaps.

The Goldratt Theory of Constraints attempts to identify the root causes of undesired business effects by evaluating the constraints (both operational and policy) that stifle innovation (Goldratt, 1990). The Goldratt Theory can be used as an adjunct to the Competitiveness Review to help SMEs describe, in operational terms, their goals and how they plan to achieve them. Goldratt used this method, for instance, to analyze a major supply chain for the Cadillac Motor Division of GM, and Cadillac is using the results for competitive advantage.

Thus, the challenge for MEC/TRPs is to help each SME understand the implications of supply chain requirements, set appropriate goals or targets, identify the most significant gaps and constraints impeding its business performance, and suggest ways to overcome them. Capability mapping can be helpful for identifying and prioritizing specific capability gaps. Closing the gaps involves (1) eliminating or circumventing constraints, (2) obtaining appropriate capabilities for the evolving business environment, and (3) using those capabilities effectively.

Recommendation. Small and medium-sized manufacturing enterprises should seek out local manufacturing extension centers and technical resource providers for assistance in understanding the supply chain integration process, identifying constraints and capability gaps, laying out a road map for improving performance, and implementing the road map.



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