cases, partnerships provide opportunities for competitive advantage at lower cost than vertical integration.

Recommendation. Small and medium-sized manufacturing enterprises should develop a basic understanding of partnership agreements and, with legal assistance, use partnerships as a means for improving their responses to changing business conditions.

Management Skills and Human Factors

Managing an SME in an integrated supply chain is a complex task, and participation in multiple chains adds to the complexity. Rapid changes in the business environment, shorter product life cycles, and increasing customer demands require a robust management team that is willing and able to respond rapidly to changes.

Recommendation. Although extensive formal planning may not be justified, it is becoming imperative that small and medium-sized manufacturing enterprises periodically pause from the rush of daily business to survey the business environment of rapidly changing technologies and customer requirements and develop brief, formal business plans.

Recommendation. Small and medium-sized manufacturing enterprises should (1) assess and strengthen their management capabilities; (2) create a corporate environment conducive to the flexibility, change, evolving skills, and learning required by integrated supply chains; (3) integrate their own supply chains; (4) learn to deal effectively with risk; (5) develop the people skills required to integrate effectively with customer supply chains; and (6) engender a shift in corporate attitudes about supply chains from ''what's in it for me" to "how can we maximize the common good." Because all of the requisite skills are rarely resident in a single entrepreneur, SMEs should, whenever possible, increase the breadth and depth of their management teams.


Technology is playing an increasingly significant role in the success or failure of SMEs. Although up-to-date manufacturing and process technologies are critical, they are no longer the only required technologies. Information technology has become a key to operating success. Internet technologies alone are changing the mechanisms of communication, marketing, selling, buying, and generating revenue.

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