In a White House Blog post this month, the role of the President’s Council on Jobs and Competitiveness in promoting supply chain innovation and helping small businesses was highlighted. The blog described how small business growth can influence regional employment and the Council’s objective to provide constructive guidance to help make that a reality. While the blog did describe some of the methods the council is using to achieve their objectives, I was left wondering how the council can help level the playing field for small businesses when competing with large rivals.
Who hasn’t heard tales about the virtual disappearance of the local hardware stores when faced with competition like Home Depot and Lowes? Small businesses face many of the same supply chain dynamics and risks but without the level of resources in systems, expertise, and business leverage. The recent recession was particularly hard on small businesses which often have very limited capital and a much lower risk tolerance. I can count more than 10 small businesses within a 3 mile radius of my home that didn’t survive the recession. Still, small can often translate to nimble with a freedom of transformation that is difficult to achieve in large company bureaucracies. So how can the council help small companies address the disadvantages while leveraging their strengths?
Large companies have been investing heavily in developing sophisticated response management capabilities to address the volatile nature of demand and supply while minimizing their investments in inventory. Coupled with Lean Enterprise practices, these companies have achieved distinct cost advantages. I’m wondering if the council shouldn’t be actively promoting methods for small companies to learn and adopt lean practices.
Going one step further, perhaps the government should be subsidizing system investments that would help small business be more responsive to the dynamics of the current business environment. The objectives of the Council are laudable and a business environment where small companies can compete and thrive will indeed serve to increase both product and supply chain innovation. Do you have other ideas on what the Council might do to help?
I think you are exactly on target with respect to where the biggest area of opportunity for small businesses lie. They won't win on price, but it areas with service is valued as highly as the goods purchased, they can shine. The challenge for them is promoting that value and the benefit to the community of their presence.
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