Dive Brief:

• While 82% of 150 small and medium manufacturing respondents to a recent Grant Thornton and National Association of Manufacturers survey are optimistic about their business outlook, only 10% had implemented a formal strategy to optimize their supply chain.
• Most (78%) manufacturers had focused their supply chain efforts on managing direct costs including labor, overhead, inventory and materials, rather than indirect costs such as waste or on-time delivery. 
• The supply chain efforts yielding the greatest benefits had to do with building up key supplier relationships, centralizing procurement for better terms and compliance and nearshoring projects, but these companies rarely integrated their data systems or invested in automation.

Dive Insight:

The survey of small and medium manufacturers reveals a gap in the strategies being used by these companies and those employed by larger companies such as Coke, GM or Wal-Mart for supply chain management.

For small and medium companies, lean manufacturing strategies still rule the day, as direct cost reductions yield clear, attributable results. The promise of Big Data seems untenable at best, as the path to integrate systems and be able to collect more useful data is long. With Industry 3.0 problems still to be fixed, Industry 4.0 is a far off reality.

Nonetheless, the survey also reveals that manufacturers realize greater potential to optimize supply chain processes remains. Larger companies' strategies lay the path to success for these smaller ones. The industry is slow to adapt, but it is not slow to learn. In fact, 48% of companies stated that customer demand drove their supply chain strategy, the largest response category of the group.

In other words, small and medium manufacturers — often situated between the large manufacturer and raw material supplier — benefit from the ripple effect of new supply chain strategies. Motorola was the first company to implement Six Sigma, for example, followed by companies like General Electric. Now, certifications on the process abound, and the small and medium manufacturers are doing it en masse, too. 

Supply chains are difficult to change, given the large number of actors involved in the process. But it is for that reason that leaders can go a long way in driving innovation. Similarly, a push in a direction by buyers (whether it be other businesses or consumers) encourages new efficiencies. One step at a time — with pilots, analyses and sometimes failures — business continues to evolve, pushing supply chains along with it.