The $100 question: Supply chain priorities for small firms

Abstract

A large majority of companies in Latin America are micro or small firms, making them an important part of the region’s economy. These firms are a relevant source of jobs, but a lack of managerial skills and resources threatens their survival. In this study, we analyze a set of supply chain best practices and define the more relevant practices for micro and small enterprises in a growth context. Based on a set of interviews and immersion, by way of site visits, with 15 small and micro firms located in Mexico City, we develop a system dynamics model that illustrates the influence of these supply practices on company growth. Our results show that, after quality and service baselines are met, practices related to capacity building, collaboration, and market expansion drive faster growth and should be prioritized by companies that aim for expansion. These insights are a major step in developing more effective assessments and training for micro and small firms in Latin America and improving the overall economic performance of the region.