THE IMPACT OF WORLD-CLASS MANUFACTURING PRACTICES ON SMALL MANUFACTURERS - by
David K. Johnson

Obstacles to Supply-chain Integration

Small manufacturers face a unique set of obstacles during supply-chain integration. Insufficient capital, technical expertise, and supplier leverage complicate the process of supply-chain integration for many small manufacturers. These disadvantages are however counterbalanced by reduced cultural inertia, which helps to facilitate change and the personal nature of small manufacturers, which helps to facilitate close relationships among supply-chain members.

Because the obstacles faced by small manufacturers are unique, the methods used by small manufacturers to integrate their supply-chains vary from the methods often used by larger manufacturers. Capital constraints and lack of technical expertise often limit technologies used to facilitate communication among small manufacturing supply-chains. The lack of technical expertise could be overcome through the use of outside consultants, but unfortunately this is not an option for many small manufacturers due to capital constraints. For this reason the use of information sharing technologies, such as electronic data interchange (EDI), is not as common among small manufacturers.

Even though reduced supplier leverage would appear to have an impact on a small manufacturer’s ability to integrate its supply-chain, research conducted by Inman and Mehra suggests that small manufactures are able to overcome this obstacle through sole sourcing. It is theorized that small manufacturers are more likely to use sole sourcing in order to gain the required supplier volume to achieve supplier leverage. This also has the effect of simplifying the supply-chain resulting in closer relationships and better communications.

Because of these options, even though small manufacturers face unique supply-chain integration obstacles, they should be able to integrate at least some segments of their supply-chains.

The Pillar of Lean Manufacturing

The pillar of lean manufacturing builds upon the foundation of supply-chain management by allowing individual supply-chain members to increase their manufacturing flexibility. This allows inventory buffers to be reduced throughout the supply-chain, minimizing the bullwhip effect and improving supply-chain performance. This pillar also works in conjunction with the quality pillar to support operational performance. Literature on the subject of world-class manufacturing suggests that the removal of the lean manufacturing pillar from the structure weakens the ability of the supply-chain management foundation and the quality pillar to support operational performance. It is for this reason that lean manufacturing is considered a key component to world-class manufacturing.

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Copyright © 2005. David K. Johnson. All Rights Reserved.