Monday, October 8, 2012

Small-scale Manufacturing

The emergence of small-scale manufacturing is a testament to the benefits of globalization and the increasing importance of understanding supply chains.

Small-scale industries can help national economic growth and benefit consumers by providing niche goods and specialized products, but effective supply chain management is necessary to control costs, ensure regular supply, and maximize value to the customer. This is true in general, but it is even more important for these enterprises because they usually begin with little capital and/or few customers. One way small-scale manufacturers can start is by utilizing "surplus labor," i.e. the unemployed, of larger industries (think of the designers behind the Rally Fighter).[1] [2]

Competition is another obvious constraint on these fledgling manufacturers. Larger competitors force them to minimize their inefficiencies and be self-aware of their strengths. Beaton Tulk, Newfoundland's former Premier, explained it this way:
"Small scale manufacturers must learn to work with other firms in business networks and learn how to manage their place in the supply chain by adopting quality certification procedures, utilizing information technology and mastering transportation logistics so they can deliver just-in-time. Firms which adopt these practices export more, grow faster and sell more than small scale manufacturers which remain generalists by producing a range of products without focusing on what they do best." [3]
Mastering the logistics side of the business can give these small-scale startups a boost or even an edge on larger competitors, especially if they are focused on specific or customizable products. Globalization can help bring components and makers together; small businesses that take advantage of that process can succeed, grow, and thrive.

Is this a golden era of mega-corporations or are small businesses going to make a comeback?

[1]Morr, Stephan, Ken Somers, Steven Swartz, and Helga Vanthoumout. "Manufacturing Resource Productivity." McKinsey Quarterly: The Online Journal of McKinsey & Company. Published June 2012.
[2] "Small Scale Industries." Economy Watch. June 30, 2010. <>
[3] Tulk, Beaton. "Manufacturing Development: A Strategy for Small-Scale Manufacturing in Newfoundland and Labrador." May 1999. <>

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