• Identify the gaps between integrated supply chain requirements and the capabilities of SMEs.

• Suggest strategies to assist SMEs in developing the capabilities required for successful participation.

This report is intended for the owners and managers of small and medium-sized manufacturing enterprises and for the manufacturing extension centers and technical resource providers (MEC/TRPs) that support them.

The estimated 330,000 SMEs in the United States have a substantial economic impact. Defined as having fewer than 500 employees, SMEs are important to the nation because they account for 98 percent of all manufacturing plants, employ two-thirds of the nation's 18 million manufacturing workers, generate more than half of the total value-added in the manufacturing sector, and are the source of many innovations in technology.

SMEs typically provide capabilities that their larger customers do not have or cannot cost-effectively create, such as:

• agility in responding to changes in technologies, markets, and trends

• efficiency due, in part, to less bureaucracy

• initiative and entrepreneurial behavior on the part of employees resulting in higher levels of creativity and energy and a greater desire for success

• access to specialized proprietary technologies, process capabilities, and expertise

• shorter time-to-market because operations are small and focused

• lower labor costs and less restrictive labor contracts

• spreading the costs of specialized capabilities over larger production volumes by serving multiple customers

• lower cost, customer focused, and customized services, including documentation, after-sales support, spare parts, recycling, and disposal

The committee defined a supply chain as an association of customers and suppliers who, working together yet in their own best interests, buy,