Several companies export raw materials to different countries. In return, those countries import finished products from those supplies at high prices.
In your opinion, what hampers these suppliers to connect with SMEs to produce within a country?
who do you think has more challenges upsream (suppliers of raw material) or downstream (SMEs) to adopt this strategy? or any other player? thoughts/suggestions are welcomed. Chers
Dear friend Mir Dost
According to a post on ResearchGate, several companies export raw materials to different countries. In return, those countries import finished products from those supplies at high prices. The post also mentions that upstream manufacturing firms (i.e., steel, aluminum, plastic) can face challenges to connect with downstream SMEs to manufacture produce locally (What challenges upstream manufacturing firms...).
In addition, a McKinsey report states that 45% of small businesses have experienced disruptions in supply chains in June 2020. In many cases, leading firms have handed risks down the supply chain to vulnerable SMEs in developing countries, causing job losses and even bankruptcies. Regarding your second question, it is difficult to say who has more challenges upstream or downstream. Both parties face different challenges. For example, upstream manufacturers may face challenges such as raw material availability and transportation costs while SMEs may face challenges such as access to finance and technology. (Helping small and medium-size enterprises thrive..).
On the other hand, the OECD states that SMEs can often be more flexible and responsive to customer needs than large integrated firms. They can pool resources and share the costs of training, research and marketing. Clustering facilitates exchange of personnel and diffusion of technology and creates new possibilities for efficiency gains. This report mentions that they can pool resources and share the costs of training, research and marketing. Clustering facilitates exchange of personnel and diffusion of technology and creates new possibilities for efficiency gains (Small and Medium-sized Enterprises: Local Strength, Global Reach......).
I hope this helps. Let me know if you have any other questions.
Source:
(1) What challenges upstream manufacturing firms (i.e ... - ResearchGate. https://www.researchgate.net/post/What_challenges_upstream_manufacturing_firms_ie_steel_aluminum_plastic_can_face_to_connect_with_downstream_SMEs_to_manufacture_produce_locally.
(2) Helping small and medium-size enterprises thrive | McKinsey. https://www.mckinsey.com/industries/public-and-social-sector/our-insights/beyond-financials-helping-small-and-medium-size-enterprises-thrive.
(3) Small and Medium-sized Enterprises: Local Strength, Global Reach - OECD. https://www.oecd.org/cfe/leed/1918307.pdf.
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