SMEs' Responsiveness: A Mixed Blessing
Valeria Belvedere, Alberto Grando and Thanos Papadimitriou (SDA Bocconi's Operations and Technology Management Unit) in The Responsiveness of Italian Small-to-Medium Sized Plants: Dimensions and Determinants (International Journal of Production Research, Volume 48, Issue 21, January 2010, pages 6481 – 6498, doi: 10.1080/00207540903234751) find that Italian SMEs are more responsive than large ones in terms of delivery but that this is a mixed blessing because shorter delivery times are due to features that hamper Italian SMEs' long-term competitiveness.
The authors focus on the speed of delivery as an indicator of responsiveness (the ability of the firm to promptly react to customer needs) and use a database of 206 plants examined for the Italian Best Factory Award, a benchmarking programme aimed at recognising and rewarding manufacturing excellence, dividing it into two samples of 147 SMEs (less than 250 employees) and 59 large companies (more than 250 employees).
Lead time turns out to be significantly shorter for SMEs than for large firms (32 days vs. 91 on average, in a range spanning from 14 to 66 days for SMEs and from 44 to 167 for large firms), confirming that size is a main driver of responsiveness. This seems due to a larger proportion of make-to-stock production (27% vs. 19%), made possible by a lower product variety and complexity.
It means that Italian SMEs are generally specialized in specific sub-assemblies and must be engaged in production networks in which they perform a narrow set of transformation activities. And here the SDA Bocconi's scholars spot the flip side of the coin: the large, focal companies that coordinate such networks select their suppliers considering a wide range of performances, including not only the speed of delivery but also quality and efficiency – dimensions in which SMEs trail behind large ones.
SMEs suffer from a structural lack of human and financial resources, which keeps them from investing in up to date managerial practices and technologies that are essential for other aspects of the logistic responsiveness and the analysis shows that all performance indicators whose level can be influenced by up to date practices and technologies (set-up time and customer returns for quality reasons, for instance) are worse for SMEs than for large companies. This can partially explain why Italian SMEs keep on loosing market share, demonstrating their inability to adapt their competitive model to the new and most challenging international realities, the three scholars conclude.