Quality within Small to Medium size Enterprises (SMEs) Standards in Action Quality within Small to Medium size Enterprises (SMEs) Cornering the supply chain Author: Dr Rhys Rowland-Jones

Quality within Small to Medium size Enterprises (SMEs) Standards in Action DTI Figures on SMEs At present there are over 3.7 million Small to Medium Size Enterprises (SMEs) in the UK, this figure includes small firms which employ fewer than 10 people, and makes up over 90% of all firms in the UK, contributing around 40% to the to the UK’s Gross National Product

Quality within Small to Medium size Enterprises (SMEs) Standards in Action Risky Business Launching a small business can be risky and success is not always guaranteed. Businesses are most vulnerable to failure during the early years of trading, with 20% of new businesses folding within their first year and 50% within their first three years (DTI. 2005)

Quality within Small to Medium size Enterprises (SMEs) Standards in Action

Quality within Small to Medium size Enterprises (SMEs) Standards in Action What is Competitiveness?  Competitiveness is determined by the productivity with which an organisation uses its human, capital, and natural resources.  Productivity depends both on the value of products and services (e.g. uniqueness, quality) as well as the efficiency with which they are produced.  It is how firms compete in their chosen marketplace.  The productivity of “local” industries is of fundamental importance to competitiveness.

Quality within Small to Medium size Enterprises (SMEs) Standards in Action SME Sources of Competitive Advantage (based on Porter 1984)

Quality within Small to Medium size Enterprises (SMEs) Standards in Action The SME in Context

Quality within Small to Medium size Enterprises (SMEs) Standards in Action Managerial Issues Concentration of resources on the firm’s core competencies such as supply chain management. Increasing proportion of purchased goods and services as inputs into products. Increased pressure to reduce inventories. Applying advances in information technology to strategically manage supplier relationships and the supply chain itself.

Quality within Small to Medium size Enterprises (SMEs) Standards in Action A Company’s Supply Chain

Quality within Small to Medium size Enterprises (SMEs) Standards in Action Motor Vehicle Parts Distribution Chains Distribution Chain of Parts Manufacturer Distribution Chain of V.M. Manufacturing Chain Dealer network Vehicle manufacturer Installer Local distributor Area distributor Prime distributor Supplier Sub-supplier Stockist Raw materials Source: Slack N. ‘Operations Management’, Prentice Hall 2004

Quality within Small to Medium size Enterprises (SMEs) Standards in Action Price Cost Price Time FromTo From cost driving prices up to prices driving cost down

Quality within Small to Medium size Enterprises (SMEs) Standards in Action Quality Dependability Speed Flexibility Cost Quality Quality + Dependability Quality + Dependability + Speed Quality + Dependability + Speed + Flexibility Quality + Dependability + Speed + Flexibility + Cost (FERDOWS & DeMAYER) Improving Performance Improvement The Ferdows and DeMayer ‘Sandcone’ Model of Operational Improvement

Quality within Small to Medium size Enterprises (SMEs) Standards in Action Discussion Questions Discuss and map the supply chain for your organisation What are the implications to your organisation’s overall product quality of this supply chain What kind of relationships does your organisation have with its supply chain?