continually reassess their roles. These advanced technologies require substantial investments, and the complexity of leading-edge design tools requires more specialized training and support than many SMEs can afford. The decision can be further complicated because investments in electronic systems to meet the needs of one customer may be of little value in working with another. Furthermore, firewalls must be created so that proprietary information is not transferred between customers. Thus, SMEs should analyze competitors and discuss requirements in depth with customers before making major decisions.

Finding. Advanced electronic systems for product design, modeling, and simulation require further development before they will be practical and cost effective for most small and medium-sized manufacturing enterprises.

Recommendation. Small and medium-sized manufacturing enterprises should carefully analyze the requirements and opportunities for electronic design systems but defer investing in them, if possible, until system capabilities increase and returns justify the investments.


The technology needs of an SME extend beyond electronic communications and design capabilities. SMEs must also remain competitive in materials, processing, fabrication equipment, and all of the other technologies used in their businesses. SMEs in fast-moving, high-technology industries must continually reassess their positions and fill capability gaps. In extreme cases, SMEs in high-technology industries may have to essentially reinvent themselves, their products, and their processes as often as several times per decade. They must focus consistently on the latest technologies, whereas in slower changing or mature industries, the appropriate focus is more likely to be on reliability, cost, and delivery. In most cases this does not mean cutting-edge, or "bleeding" -edge, capabilities; others can pay the price of being the first to debug a new technology. Accepting the risk of trying to be first only makes sense in industries that greatly reward early adopters of new technology. However, implementing carefully selected advanced technical capabilities may be one of the few ways of enhancing profitability in markets with increasing price pressures. For example, a company in the precision forging business may rely on expertise in advanced precision forging techniques to differentiate itself from its competitors.

Competitive advantage can be gained through a combination of

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