Using and building an SME strategy to build your business
The USA got hit very hard by the 2008/9 credit crunch. The entire economy, as the primary catalyst of the trauma, took deep pain. In addition, the highly competitive environment within the USA led to some fast thinking and quick moves to prevent the pending corporate disaster that many businesses faced. One such strategy that we have been involved in is the restructuring of supply chains.
During the buoyant abundant years of economic growth, many corporations became bloated. They reached far and wide across their value chains seeking and eking out additional value. Post the credit crunch, positioning within the value chains became a key corporate survival strategy. Questions were asked and consultants made millions working with the corporates to figure out what their core and strategic competencies were. Once discovered, this became the non-negotiable focus of developing expert capabilities and ownership of IP. Thereafter, the non-core, non-strategic services and product categories get redefined. A procurement strategy that was made up across three propositions – price, reliability and quality – dominated the success or failure of the corporates' suppliers.
The most exciting space, however, was the redefinition that came about in understanding and identifying the middle of the supply chain: those services that are strategic but non-core. A deep dialogue developed around what non-core meant. It emerged as capabilities that are utilised on an event basis and not in the everyday delivery of the corporate's core, strategic competencies. In addition, the corporate does not possess the skills and capabilities to necessarily evaluate and hire people with the skills, nor will the corporate necessarily want to make the investments to support the delivery of the services or products associated to that capability. Examples include technology and branding.
Any business today without a technology strategy is in trouble. Yet developing, building and maintaining the technology roadmap and services is key to the corporate's strategic competence. Consultancies like Accenture amongst others then become strategic, non-core partners to that corporate in the design, delivery and support of technology strategy, their core, strategic competency in return.
The same is found in brand and advertising agencies, where the design and communications language translating the brand of the corporate through everything from business cards to TV commercials is controlled by an organisation that has that as its core, strategic competency.
Corporate SME strategy is now emerging as a similar service. We are seeing this in the USA and, although still fragmented, it is now emerging in corporates competing in aggressive market segments here in SA. A corporate SME strategy is one in which SMEs are used to improve competitiveness in the supply chain, build new markets in the demand chain and support innovation in the core of the corporate entity.
Sourcing, selecting and building SMEs to service corporate needs and support investment is Aurik’s core, strategic competence, forming a perfect partnership for corporates to capitalise on the innovation being driven out of SMEs within the corporate's sector.