combining low-cost labor with improving education, communications, and transportation capabilities to compete for roles in OEM supply chains. For instance, in 1997, a New York apparel manufacturer advertised a spring fashion line on his Web site. Within days he had five orders from Beijing. The manufacturer at first savored the irony that China, a growing source of garments sold in the United States, was buying from New York. Soon, however, he began to suspect that his garments had been bought to be copied. Suspiciously similar dresses with "Made in China" labels flooded the market within a month (Kanter, 1998). Thus, U.S. SMEs can lose their competitive position virtually overnight.
Although changes like these have not yet affected all industries or all levels of supply chains, competing in fast-moving environments will require new strategies. Departments and functions within the corporation and throughout the supply chain must work simultaneously, rather than sequentially, on projects. The feedback loop between the marketplace, designers, manufacturers, and the sales force must be shortened so that products can be developed and transitioned to manufacturing faster and introduced simultaneously into markets around the world. Electronic data interchange capabilities may be required to enable key supply chain functions to respond simultaneously to changes in customer demand. Flexible or agile manufacturing may be needed for rapid responses to changes in demand, timely resolution of quality problems, and fast implementation of new product features. SMEs will have to assess their future roles carefully and may have to reposition themselves rapidly to remain competitive. In some cases they will have to make fundamental decisions about whether to (1) accept the risks associated with investing and transforming the company (see the Case Study below); (2) sell the business while it still has some value; or (3) operate the business essentially as is until it fails.
Recommendation. Small and medium-sized manufacturing enterprises must reassess their competitive positions and those of their supply chains on a regular basis and position themselves to respond rapidly to changing conditions.
Astronics Corporation, an SME headquartered in Buffalo, New York, operates in two distinct business segments: specialty packaging and aerospace electronics. In the 1980s, the packaging segment served as a regional supplier of custom folding boxes. The electronics 'segment has been selling primarily to higher tier aerospace and defense suppliers and to OEMs. Astronics' revenues in 1986 totaled $17 million.