SMEs not quite ready for big-time SCM

The UPS Asia Business Monitor, which polls a total of 1,201 SMEs across 12 markets in Asia, found that while 80% of SMEs across the region believe supply chain efficiency is important to their competitiveness, the majority are still unsure about how to achieve this.

The study reveals that only 32% of SMEs polled are experimenting ways to manage their supply chain, while 30% consider themselves to be effectively managing their supply chains. 22% of SME leaders are under-utilising the power of the supply chain and a further 6% are neglecting the management of their supply chain completely.

The uptake of supply chain solutions among Asian SMEs, while still fairly narrow, is expanding as companies expand globally, says Andrew Connelly, senior vice president, south district, UPS Asia Pacific.

"SMEs are becoming more mature in their view of what supply chains are and what they can do," he told ProcurementAsia. "If I look back at the survey as we did it a few years ago, the appetite of SMEs to go international was less than it is today. And I think by that fact, their willingness or enthusiasm to go to a higher level causes them to think more laterally with regards to the needs and capabilities of their supply chains."

In addition, Asia SMEs are only using a small part of a supply chain solution provider's total suite of solutions, he says. According to Connelly, SMEs in Asia historically looked upon a supply chain provider as only being able to offer logistics assistance to their business. "As they become more exposed to other markets and their needs expand, then they can appreciate more of what supply chain solutions providers' capabilities are," he said.

One of the reasons hampering SMEs' uptake of a full suite of supply chain solutions is cost, but Connelly believes SMEs should remember that corporations can take out costs with effective supply chain management. He gives an example of eliminating distribution centres, or leveraging on a 3PL's distribution centres.

"We have quite a few of our customers who have over the years been able to reduce or eliminate either their own distribution centre of perhaps have the use of others' distribution centres by leveraging our capabilities," he says.

"That, in turn reduces costs and leads to improved speed to market because they can cut down their inventory costs and get their product to the end user quicker."

Since its launch in 2005, the annual UPS ABM has been conducted to deliver the latest insights on the changing business needs of SMEs, which make up the bulk of businesses in the region. In Singapore, SMEs account for 90% of enterprises, 42% of GDP and employ more than half the workforce.