A study of the engagement of SMEs in the supply chain

Schofield, Clare (2006) A study of the engagement of SMEs in the supply chain. In: 29th Institute for Small Business Entrepreneurship Conference, 31st October - 2nd November 2006, Cardiff, UK. (Unpublished)

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Abstract

Objectives: The aim of this research is to explore the engagement of SMEs in the supply chain and to examine opportunities and barriers to their entry. Although an existing body of research exists on the supply chain, it is recognised that more research needs to be conducted to assist our understanding of how SMEs enter and compete in the supply chain. Prior work: The literature suggests that SMEs need to understand how to position their business and compete in the supply chain. However, SMEs face barriers to their entry in the supply chain in comparison to larger enterprises. This has a negative impact on SME growth and inhibits market competitiveness. Moreover, SMEs face structural and bureaucratic barriers set in place by larger enterprises that inhibit their ability to enter the supply chain. Approach: A qualitative approach was used with the methodology largely defined by the investigative nature of the research. The grounded approach reflects the unique characteristics and circumstances within small firms. The research focussed on ten SMEs in the three sectors; biolife sciences, financial and professional services, and creative and media. Results: The results of the research revealed that each of the SMEs engaged with the supply chain in different ways depending upon a number of factors. However, each SME experienced a range of different barriers that variously affected their ability to engage effectively with the supply chain. Half of the SMEs competed and won contracts to complete work for large and medium sized enterprises in the supply chain. However, the other half encountered significant problems both in terms of competing for work and gaining access to contracts for work. The research identified a number of common themes across the three sectors. Implications: For entrepreneurs the research identifies a number of important factors that inform the successful management of a small business, in particular the importance of business and professional networks. The findings also reveal a number of barriers that SMEs encounter and highlight the strategies that SME owners have developed to overcome them. In terms of policy, the findings identify the structural and bureaucratic barriers that large enterprises enforce on SMEs in the supply chain. The research includes a number of recommendations for overcoming these barriers. Value: The research informs our understanding of how SMEs engage in the supply chain and also identifies approaches to overcome the strategic and structural barriers that exist in the supply chain.