Expert Insight: Supply Chain Insight for Medium-Sized Businesses
By Dr. Chris Norek
Date: Jan. 29, 2009

Wanted: Supply Chain Strategies for Mid-Market Companies

Introducing New Column on SCDigest; the Opportunities are There; too much Focus on the Largest Enterprises?

There is one very large corporate demographic that is too often neglected in supply chain strategy discussions - small and medium-sized (SMB), often also referred to as mid-market companies. SMBs generally have to pick through articles written for multi-billion dollar companies to see which, if any, supply chain strategies might work for their companies.

The surprising part of this demographic is that it is estimated that there are 10,000 to 20,000 companies in the US in the $50 to $500 million per year revenue range.  Since the SMBs are such a large part of the corporate economy, why are they largely ignored in supply chain literature?

The goal in my consulting practice and in this column, which we are introducing today, is to help these SMB companies with their special supply chain needs. While the theories behind supply chain management are largely the same for all companies, such as keeping inventories low and service levels high, reducing total supply chain costs, etc., how these objectives are achieved in SMBs can differ significantly versus large enterprises. 

Some SCM Strategies Apply, Others Need Agenda

Some supply chain improvement strategies and tactics can be used in both large and small companies, some that frankly don’t apply at all, and still others that need to be adapted for an SMB environment.
How often do you ever see that spelled out in any article or presentation focusing on the strategies of the Fortune 500? Almost never. 

A couple of quick examples on the unique needs of SMBs might help. On the supply chain technology front, SMBs have a hard time affording large license fees for software.  Now, the option of Software as a Service (SaaS) or “on-demand” applications have the potential to bring strong software functionality to the SMBs at an affordable cost – and one that can be more directly tied to the benefits received.

In regard to inventory control, multi-echelon inventory planning due to more direct distribution networks (e.g., fewer echelons or layers) isn’t as applicable, although inventory planning help is often needed.

On the flip side, SMBs have significant advantages over big companies in leveraging supply chain management.  In fact, SMBs can use supply chain management to actually drive corporate strategy, rather than just be a support function, which is the case in many large enterprises.

It is time that we focus on the SMB/mid-market companies and help them with their supply chains.  While it is interesting to hear the Wal-Mart and Dell supply chain success stories, there is a lot of room to work to improve the supply chain body of work for SMBs.

I’d love your reaction to this perspective, and any topics on supply chain for SMBs that you would like me to address in this column. You can ping me at the Feedback button below.

Agree or disgree with Norek's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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profile About the Author

Christopher D. Norek, Ph.D. is a founding Senior Partner with Chain Connectors, Inc. He has been in the logistics field and consulted for major firms for over 15 years.  Dr. Norek has been active in publishing for journals in the field. He is on the editorial advisory board of Logistics Quarterly (LQ) and DC Velocity and is an outside reviewer for the Journal of Business Logistics.

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Norek Says:

Some supply chain improvement strategies and tactics can be used in both large and small companies, some that frankly don’t apply at all, and still others that need to be adapted for an SMB environment.

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