Supply chain: Challenges faced by medium scale manufacturing firms & recommendations for seamless scaling up

Abstract

Small and medium enterprises (SMEs) have played a significant role in the global supply chain management across the world and in the landscape of competitive global business arena. With the evolution of knowledge, new technologies, new products or services, development of new markets, and new management concepts vis-a-vis the sustainable competitive advantage for firms—particularly for SMEs— has changed and subsequently led to new opportunities and new challenges. So in the purview of above scope, this contemporary study concern project was aimed to understand inherent characteristics, best practices and challenges in managing entire supply chain through a chosen exemplar medium scale manufacturing firm (Fowler Westrup) which incorporates a vital part of their growth strategies. With the stated objectives, the methodology of the study could be divided in three phases i.e. literature survey to cater the market wisdom, company’s supply chain understanding and evaluation, and recommendations for seamless improvement of the supply chain. The entire supply chain of the company was analysed on the basis of performance factors and risk factors identified through literature study vis-a-vis understanding of manufacturing process flow and production cycle. Though the company is performing well, they are facing some serious challenges in the form of material costs, capacity underutilization, sub optimal inventory levels, supplier integration with significant risks of overstocking and carrying costs of inventories, price fluctuations and information risks with suppliers. The key recommendations to overcome the challenges posed and to mitigate the above risks and include commodity options contract with commodity (steel) suppliers, maintaining better relationships with the key suppliers based on the supplier rating metrics along with the implementation of green supply chain for gaining competitive advantages. Along with the key recommendations, the company has also accepted one of our implementation project proposals which include identifying 10 key components for inventory optimization with focus on improving supplier relationship and mitigating the potential risks.