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SME network in the metal working industry in Birmingham
Recently, SMEs from the metal working industry in Birmingham have been suffering difficult times. A network was developed to see if by bringing those SMEs, and various SME support agencies, together they could collectively achieve a change of fortune for the industry in the area. Key lessons learned about the development, and value, of networks are studied here. These type of networks can be a very effective form of workplace learning partnership with learning occurring in a wide variety of ways and directions.
First, we briefly watch a senior employee of a SME that makes wiring harnesses for car electrics explaining to an audience the role that his firm plays in the market. He argues it is the small volume in which they can supply their product competitively that allows them to fulfil a role in their market. Too many firms can only supply huge orders because that is the only quantity on which they can make profits as a result of their large fixed costs.
Second, this same employee is interviewed, and shares with us the secret to his firm's success in manufacturing. He believes you must be excellent at a producing something for a particular niche, and be careful not to be drawn into too many areas. His firm deliberately decided to be a second-tier supplier of wiring harnesses. This means that they supply the first tier suppliers who in turn directly supply the major car companies. He argues once set up as a second-tier supplier one must take great care not to get carried away with success and become a first-tier supplier without great consideration. He urges this caution because the demands and pressure of being a first tier supplier are manifold, and quite to distinct to, that of a second-tier supplier. First tier suppliers compete for huge contracts for whole goods, not individual pressings, from the major car companies and then contract all the work out to the second tier suppliers. Thus, their role is to win contracts, then to find and co-ordinate competitive second tier suppliers, and finally to assemble the parts that they have been supplied. So in contrast to second-tier suppliers they do relatively little producing themselves, and certainly not of specialist parts, which is why second-tier suppliers are ill-equipped for the transition to first-tier. He concludes the advantage lies in realising this and concentrating on doing a very good job for a first-tier supplier and enjoying the benefits of being second-tier (buffering from the pressure and demands exerted by the major car companies).
Second, this same employee is interviewed, and shares with us the secret to his firm's success in manufacturing. He believes you must be excellent at a producing something for a particular niche, and be careful not to be drawn into too many areas. His firm deliberately decided to be a second-tier supplier of wiring harnesses. This means that they supply the first tier suppliers who in turn directly supply the major car companies. He argues once set up as a second-tier supplier one must take great care not to get carried away with success and become a first-tier supplier without great consideration. He urges this caution because the demands and pressure of being a first tier supplier are manifold, and quite to distinct to, that of a second-tier supplier. First tier suppliers compete for huge contracts for whole goods, not individual pressings, from the major car companies and then contract all the work out to the second tier suppliers. Thus, their role is to win contracts, then to find and co-ordinate competitive second tier suppliers, and finally to assemble the parts that they have been supplied. So in contrast to second-tier suppliers they do relatively little producing themselves, and certainly not of specialist parts, which is why second-tier suppliers are ill-equipped for the transition to first-tier. He concludes the advantage lies in realising this and concentrating on doing a very good job for a first-tier supplier and enjoying the benefits of being second-tier (buffering from the pressure and demands exerted by the major car companies).
Here, the value of an automative supply chain support network is described. First, an employee of the manufacturing advisory service illuminates the benefits he garners from the network. Members of the network meet regularly; this is very useful to him because its enables him to gauge an accurate idea of the problems encountered by manufacturing SMEs and therefore what sort of advice he needs to be able to provide.
Second, an employee from the car wiring-harness manufacturer explains how her firm came to realise the importance of networking and supplier development; in the late eighties and early nineties they attended symposia on the topic which were held as part of the Department of Trade and Industry's and the Industry Forum's 'learning from Japan' initiatives. Consequently, her firm has been a member of a supply chain network ever since, in fact, it has been more than just a member: her firm played a crucial role in the network's founding, and plays a similarly crucial role in ensuring the continued existence of the network. Whilst she concedes it was difficult to establish, she argues it soon became vital to not only its members but also to the industry as a whole, and is now one of the most successful and long-standing SME networks in Europe. The network has enjoyed such success because the support its members receive is superb and otherwise unobtainable; it provides an informed and experienced group of people to which a member can always lean on and with whom a member can always consult.
Second, an employee from the car wiring-harness manufacturer explains how her firm came to realise the importance of networking and supplier development; in the late eighties and early nineties they attended symposia on the topic which were held as part of the Department of Trade and Industry's and the Industry Forum's 'learning from Japan' initiatives. Consequently, her firm has been a member of a supply chain network ever since, in fact, it has been more than just a member: her firm played a crucial role in the network's founding, and plays a similarly crucial role in ensuring the continued existence of the network. Whilst she concedes it was difficult to establish, she argues it soon became vital to not only its members but also to the industry as a whole, and is now one of the most successful and long-standing SME networks in Europe. The network has enjoyed such success because the support its members receive is superb and otherwise unobtainable; it provides an informed and experienced group of people to which a member can always lean on and with whom a member can always consult.
The value of the automative supply chain network is further discussed. This time the benefits garnered by non-members are examined; observers from outside agencies often attend their meetings. For example, university course designers have attended their meetings. One such designer is interviewed and explains why he decided to go. He goes to these meetings to better understand the needs of SMEs in the region and to initiate contact. From this initial contact he will then try to broker the creation of courses that will provide local SMEs and their prospective employees with training that is relevant and useful.
Another example is a representative of an industry confederation. He argues the benefits to him attending the meetings are two-way. He is able to get his message across about what his industry is doing, both in the UK and in markets further a field such as the Far East, representatives of who often attend the meetings. In return, he has the opportunity to take a Litmus test of what is happening across the industrial spectrum. He needs to have his 'finger on the pulse' like this because he spends a lot of his time talking with the media and politicians on behalf of the member companies he represents and the industries from which they come and which they service. He concludes it is extremely important that the kind of networking that takes place, and the relationships and partnerships that form, at network meetings like these, continues not only for the benefit of all the companies, their employees and the outside agencies, but also, ultimately, for the consumer on the street who enjoys these benefits through the media of improved price and quality of service or product.
Another example is a representative of an industry confederation. He argues the benefits to him attending the meetings are two-way. He is able to get his message across about what his industry is doing, both in the UK and in markets further a field such as the Far East, representatives of who often attend the meetings. In return, he has the opportunity to take a Litmus test of what is happening across the industrial spectrum. He needs to have his 'finger on the pulse' like this because he spends a lot of his time talking with the media and politicians on behalf of the member companies he represents and the industries from which they come and which they service. He concludes it is extremely important that the kind of networking that takes place, and the relationships and partnerships that form, at network meetings like these, continues not only for the benefit of all the companies, their employees and the outside agencies, but also, ultimately, for the consumer on the street who enjoys these benefits through the media of improved price and quality of service or product.