HOW TO THRIVE IN TODAY’S GLOBAL VALUE CHAIN
ARTICLE BY ROSALIENE BACCHUS
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In an era of globalization, markets at home and abroad are in perpetual metamorphosis. To compete and
succeed in today’s marketplace, companies must be capable of keeping pace, taking advantage of new
opportunities and anticipating future needs. This is especially onerous for small (
see Footnote 1) and medium
(
see Footnote 2) companies that lack the financial resources and qualified, skilled workforce to adapt and
innovate. To assist small and medium manufacturers (SMMs) to compete globally, the Manufacturing
Institute, the National Association of Manufacturers (NAM) and RSM McGladrey, Inc. conducted a research
of US SMMs and published their results in their 2007 report titled,
Forging New Partnerships: How to Thrive
in Today’s Global Value Chain (
see Footnote 3).  What follows is a summary of their findings and
recommendations.

According to US statistics, there are about 295,000 SMMs, comprising 99 percent of all manufacturers. Yet
they account for only 40 percent of US production value. To gain a greater share, SMMs must position
themselves in the supply chain as producers of quality products and services with their own reliable supply
base. The report presents the four challenges faced by SMMs with their inherent opportunities.

The challenge of global competition is considered the paramount change affecting manufacturers. Since
2004, US exports and imports have increased 26.7 percent and 26 percent, respectively. However, in the
survey conducted, an average of 30 percent of SMMs did not export or import materials and components.
Sixty four percent exported less than 10 percent of their sales volumes and 61 percent imported less than
10 percent of their materials and components. SMMs can compete by developing an export strategy that
defines the products of export potential, target markets, strategic advantages, sales channels, and partners.
Success will also depend upon a proactive commitment to global expansion, building strong personal
relationships, and adapting to new ways of doing business.

Pressures to improve are another challenge for competing in today’s global value chain. Only 51 percent of
SMMs interviewed use some form of lean manufacturing and 22 percent have not attempted any form of
improvement. Emphasis on innovation in products, processes, technologies and strategies opens up new
opportunities for SMMs.

The need for a skilled workforce is another challenge encountered by SMMs. The survey revealed that 81
percent of NAM manufacturers experience moderate to severe shortage of qualified workers and 90 percent
moderate to severe shortage of skilled production employees. Moreover, in addition to technical skills,
employees must have interpersonal, problem-solving, teaming, and leadership skills. To turn around this
situation, some SMMs are forging partnerships with their community, such as high schools and community
colleges.

Identifying the right financing has also become a challenge as many more options are available today.
Sound financial advice is a prerequisite for determining the best funding sources applicable to your
business. Financing global export receivables presents its own challenges since they are not subject to the
same protection as local sales. Therefore, the assistance of a financial adviser cognizant of the risks of
operating in the foreign market is of crucial importance.   


Footnotes:
  1. Small manufacturers are comprised of 500 or fewer employees.
  2. Medium manufacturers are comprised of 500 to 2000 employees.
  3. The full report is available on the National Association of Manufacturers (NAM) Website at www.nam.org.

Article published in the Guyana Journal, Guyana Journal Publication, Inc., New York, USA, March 2008, p. 12.
Reprinted with permission.
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