Supply Chain Management: A Profile of Micro Enterprises

Article excerpt

ABSTRACT

Micro enterprises (firms with less than nine employees) represent an increasingly important component of the economy. The United States literature typically defines small businesses as having less than 500 employees, incorporating micro firms into this broader definition. Although there has been a diversity of studies focusing on small and medium sized enterprise supply chain management, there has been insufficient research on micro entities. Thus, little is known about supply chain management in micro ventures. This study develops a profile of micro enterprise supply chain management practices, the factors that encourage or discourage the implementation of supply chain management activities, and the impact of these supply chain activities on firm performance. The findings of this study indicate that micro enterprises tend to implement supply chain management methods and supply chain management appears to increase micro firm performance.

INTRODUCTION

For the last decade many large enterprises (LEs), and to a lesser extent small to medium sized enterprises (SMEs), have placed increasing emphasis on the implementation of supply chain management (Chopra & Meindle, 2001; Mentzer, 2000). Supply chain management (SCM) is a philosophy and a set of business practices that allow firms to more closely coordinate their activities with suppliers, distributors, retailers and consumers (Laudon & Laudon, 2001; Simchi-Levi, Kaminsky & Simchi-Levi, 2003). The SCM literature is somewhat inconsistent in its definition of SMEs, but tends to utilize size as the focal point, with LEs characterized as 500 or more employees and SMEs as less than 500 employees, although in some cases no definition is offered at all (Barringer, 1997; Brush, 2001; Committee on Supply Chain Integration, 2000; Larson, 2005). In addition to the number of employees, small firms are also delineated by such factors as finances, sector and ownership, effectuating a universal definition problematic (Curran & Blackburn, 2001; Storey, 1994). Micro enterprises, the focus of this study, are a subset of SMEs, with micro entities defined as those having nine or fewer employees (European Commission, 1996; Fulantelli, Allegra & Vitrano, A.Z.P., 2002). SMEs by definition include micro firms, SMEs can also be referred to as micro, small and medium sized enterprises or MSMEs. Although the literature includes studies of supply chain management in SME's, it does not to date appear to address SCM implementation by micro organizations in particular.

The growth of small business and its impact on the economy and employment has been recognized by both the public and private sectors as well as by academics (Chapman, Ettkin & Helms, 2000; Committee on Supply Chain Integration, 2000; Curran & Blackburn, 2001; Park & Krishnan, 2001; Schwenk & Shrader, 1993; Watkins, 1993). Furthermore, SMEs have become increasingly more important to the United States economy in the 1990's as more employees at LEs have been downsized and the growing attention to core competencies among many companies has evolved to increased outsourcing by LEs to smaller suppliers (Park & Krishman, 2001). SMEs not only comprise the majority of the United States manufacturing facilities and employees, but account for much of the innovation (Committee on Supply Chain Integration, 2000).

SCM has taken on critical importance within the context of small business due to its impact on long-term performance, competitive advantage, strategic competence and competitiveness (Cavinato, 1992; Park & Krishnan, 2001). Small businesses are already involved in SCM, whether the owner-managers of those small businesses recognize it or not (Chapman et al. 2000). Successful implementation of SCM can reduce costs, increase revenues, enhance productivity and quality, advance technological innovation and in general allow an organization to be more competitive (Chase, Aquilano & Jacobs, 2000; Christopher, 2000; Fisher, 1997; Gryna, 2001; Hult, Thomas, Nichols & Giunipero 2000; Mainardi, Salva & Sanderson, 1999; Spekman, Kamauff, & Salmond, 1994). …