SMB Manufacturing Sector Profile
Small and Medium-Sized Manufacturers
Small and medium-sized manufacturers [ <500 employees] are
an important sector of the U.S. economy. They are the source of
more cited patents than large firms, making them on average, more
technically important than large firms in terms of contribution
Small and medium-sized manufacturers provide the primary supplier
base for large domestic manufacturers.
Key success drivers for SMBs are:
- Increased integration of their supply chain
- Easier access to technology and capital
- Modernization and process efficiency
Issues for SMB Manufacturers
Specific issues faced by small and medium-sized manufacturers
- Small client bases - highly dependent on the expected revenue
from each client
- Small management teams - struggle to meet all the demands on
- Efficiency - SMB manufactures have been forced to become leaner,
meaning reduce resources in legal, marketing, and human resource.
This makes them more exposed to potential litigation claims arising
from increasingly complex liabilities related to products and
services, workforce issues, federal regulations, and corporate
- Limited capital for improvements - capital is typically dedicated
to operations; with limited access to capital for improvements
such as equipment upgrades, facility expansions, marketing and
sales force expansions, or the incorporation of new technology.
- Survival focus - focus on day-to-day operations, rather than
planning future growth.
- Succession planning -no mechanisms in place for transferring
knowledge from retiring employees, to a smaller pool of talent
from the next generation of senior managers.
- Workforce education - Lack of education of entry-level production
personnel - without the basic reading and writing skills required
for the jobs.
- Lack of trained production workers
- The rising cost of health insurance - increasing each year,
by up to 50 percent with health services decreasing
- Globalization - difficult for small manufacturers to provide
effective service overseas.
Computer industry mostly in Asia - it now takes up to 4 days to
visit one customer, making it more difficult to compete with local
- Vendor consolidation by large vendors - forcing small manufacturers
to change from being component suppliers to being systems suppliers
- Profits from government organizations are typically tight -
the SME becomes extremely vulnerable to program changes or cancellations.
They do not have the infrastructure to support the loss.
- Cashflow - delays in receiving payments causes problem when
large wage bills must be paid
- Thin Margins - intense competition generates pressure to bid
low. Thin margins mean greater risk, and overruns.
SMB Manufacturing SubSectors
Small manufacturing issues require an understanding of the markets
for their products. This is particular true in the increasing number
of niche manufacturing sectors, including:
- Commodity Product Manufacturing - the manufacture
of products such as office ancillary equipment and houseware products.
Commodity product manufacturers sell to the end user, wholesalers,
distributors as well as to larger manufacturers that incorporate
the product or service into their own products or services. A
large proportion of this sector is moving to low-cost markets.
- Job Shop Manufacturing - the machining, molding,
and stamping of basic parts.
- High technology manufacturing - high end products
such as optics, materials, biotechnology, sensors, and medical
devices. High-technology manufacturers often supply components
or systems to larger enterprises.
and Outsourced Manufacturing
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Roadmap | Business Benefits
| BI in Manufacturing
| Concurrent Manufacturing | BI
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