The Effective Implementation of Global Supply Chain Management in Small to Medium-Sized Companies in Malaysia: An Empirical Study

Article excerpt

This paper examines the issues and challenges in Malaysian Small and Medium Enterprises (SMEs) towards the successful implementation of Supply Chain Management (SCM). This paper has abo highlighted the importance of SMEs in improving their current business practices and quality of products, in order to ensure long term survival and competitiveness. There were three phases of data collection in this study. In the first phase, 11 SME companies were involved and followed by another 5 large-sized companies. The study consisted of semi-structured face-to-face interviews were conducted with senior managers of each company. The study was further continued with 158 SME companies through postal questionnaire. It has been found in this study that there are many problems and challenges that arise in relation to the implementation of SCM. Results have shown that lack of resources including time, manpower and financial, technological tools, and lack of knowledge, skill and expertise were considered the main problems faced by the SMEs when trying to implement SCM. In the implementation and integration of the SCM within a company, the key factor that contributes to the success of a company is a belief and trust in the system and in the workers involved. This allows smooth application of the SCM and hence meets the objectives of the company concerned. It is vital to improve the quality competence of SMEs, and the only way to achieve this is by adopting SCM through a proper approach of quality improvement practices in SMEs. For these reasons the four main components that lead to the success of a company in the SCM are: supplier, transportation, customer and inventory.

Introduction

Malaysia is a small open economy, with a population of more than 23 million and is a filli member of the Association of South-East Asian Nations (ASEAN). During the past 40 years Malaysia has industrialised rapidly, transforming itself from a commodity-based economy (e.g. agricultural products) into an economy dominated by manufacturing and services. Now it is one of the world's biggest exporters of electronic components and electrical appliances. Foreign investment has played a significant role in the transformation of Malaysia's economy, and the USA continues to be the largest investor in Malaysia, followed by Japan and Singapore. The Proton and the Produa Project are the most significant joint-venture projects, which the Japanese helped Malaysia to realise the dream of making a national car. With considerably low labour costs, Malaysia is a popular production centre for Japanese, American, Singaporean and European multinational and joint-venture companies, which export electronic goods and other products, made in Malaysia to all parts of the world.

Malaysia aims to become a fully developed industrial nation by 2020. Hence, effort is now being focused on transforming Malaysia into a truly industrialised economy, strengthening and widening the industrial base and maintaining competitiveness of manufactured products in the world market. To reduce its dependence on electrical and electronic industry, Malaysia is now moving its development priorities to another business sectors, such as the automotive sector, the agricultural sector, the services sector (e.g. tourism) and knowledge-based economy (e.g. multimedia and Information Technology (IT)).

Prior to 1997, Malaysia, enjoyed a period of strong economic growth, led largely by the growth of the manufacturing sector. The Malaysian economy was then affected for several years by the impact of the Asian economic crisis. Now that growth has returned, Malaysian business and government are again focussing on the development of a competitive and effective manufacturing sector. Malaysian wages and standards of living are rising, like those of many newly-industrialised countries. In order to compete globally and to be more secure in times of economic crisis, Malaysian manufacturing industry, especially Small Medium Entrepreneurs (SMEs) must develop effective management practices covering all aspects of the organisation, to help achieve lasting competitive advantage, based on high quality and not only on price. …