In recent years, startups have become an increasingly important part of the business community as new small and medium sized enterprises (SME) reshape even the most traditional of markets with their fresh ideas. In 2012 alone, the UK witnessed nearly a 10% increase in the number of new businesses.
Although SMEs now account for 95% of all UK organizations, it seems there is still a perception that larger businesses have the edge over smaller less established enterprises. While, it is understandable that some businesses may regard SME suppliers as a risky alternative source, businesses should start incorporating more of these SMEs into their supply chains. These enterprises provide unique ideas and solutions which have already begun to revolutionize a number industries.
Take for example the success of Tesla Motors: since launching their first car in 2008, the forward thinking automotive startup has grown to achieve profits exceeding $15 Million in the first quarter of 2013 alone. In its short life, Tesla Motors has completely shifted public perceptions about all-electric motoring.
Likewise in the retail sector, startup Howkapow is showing great potential with their funky range of clever home and kitchen goods. Although still relatively small, the unique online retailer has steadily grown their product diversity to establish itself in a competitive market. What’s more, it seems startup success is infectious as new businesses like Kickstarter.com offer financial support for other creative enterprises. Founded in 2009, the crowd-funding startup has provided hundreds of budding entrepreneurs with a whole new platform to access startup support.
As the importance of SME’s gains momentum, organizations should review their supply chain processes to better encompass smaller businesses as both potential suppliers and customers. This may mean aligning sourcing policies to support sustainable relationships with SME suppliers. Alternatively, in order to satisfy the different purchasing behavior associated with SME customers, businesses should adopt tools that add visibility across the entire supply network and thus support accurate demand planning.
Given the success of startups like Tesla Motors and Howkapow, it seems SMEs will become an enduring part of future supply chains. As a result, businesses should adopt a flexible approach to supply chain management in order to take full advantage of the opportunities these innovative new companies offer.
As we navigate through this exciting age of entrepreneurism, what impact will SMEs have on your supply chain?
