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Surviving Supply Chain Integration: Strategies for Small Manufacturers
convert, distribute, and sell goods and services among themselves resulting in the creation of a specific end product. A supply chain includes all of the capabilities and functions required to design, fabricate, distribute, sell, support, use, and recycle or dispose of a product. An integrated supply chain can be defined as an association of customers and suppliers who work together to optimize their collective performance in the creation, distribution, and support of an end product. The objective of integration is to focus and coordinate the relevant resources of each participant on the needs of the supply chain and to optimize the overall performance of the chain.
GENERAL REQUIREMENTS AND CAPABILITIES
SMEs cannot ignore the supply chain revolution and remain competitive. Although the outsourcing trend is providing increased opportunities for suppliers, trends toward globalization and increased supply chain integration pose serious challenges. A comparison of the requirements of each OEM's supply chain with the unique capabilities of an SME and its own supply chains often reveals deficiencies or gaps the SME must address. Closing these gaps involves (1) eliminating or circumventing constraints, (2) obtaining appropriate capabilities to satisfy the unmet need, and (3) utilizing the capabilities in a timely and effective manner. Although each SME has its own definition of success, the committee defined successful supply chain participation in a manner similar to the traditional definition of business success (i.e., participation in which benefits to the participant substantially exceed the costs).
REQUIREMENTS, CAPABILITIES, AND GAPS
Competitive cost, quality, service, and delivery are the traditional fundamental capabilities required of all suppliers, but successful participation in today's integrated supply chains requires more. Although these evolving fundamental capabilities are still the cornerstones of supply chain requirements, technology and management skills are increasingly critical for success.
Today's global markets demand products of higher quality, but high-quality products cannot be assembled cost effectively from low-quality components. Therefore, to remain competitive, OEMs are demanding higher quality products from their suppliers. Suppliers with quality deficiencies weaken the entire supply chain and, unless they improve, are