Small-medium engineering enterprises and e-business: executive summary

Abstract

A preferred methodology for handling increasing customer demands and the resulting complexity is to design common modules or subsystems. The design of all the modules required by a complex system, such as a car, aeroplane or computer, is increasingly a task beyond the organisational resources of the OEMs and their close suppliers. Therefore, a larger burden is transferred down the supply chain. As a consequence, lower tier suppliers are required to play a more proactive role and demonstrate an appropriate breadth of skills and resources in order to provide complete sub-systems. This research focuses on collaboration and e-business for a solution which will enable engineering SMEs to respond to such challenges and undertake higher value projects. In particular, the aim of this engineering doctorate is to develop and implement a mechanism that puts together combinations of SMEs with the required capability, within an e-business environment. Accounting for 99.3% of all manufacturing companies and 50.8% of the total employment, SME prosperity and `well-being' has significant impact on the national economy. Analyses, such as these provided by KPMG and PriceWaterhouseCoopers, indicate that the demand for common components could substantially reduce the number of small manufacturers and subcontractors. Statistics published by the Office of National Statistics (ONS) confirm the decline of the sector, a reduction of over 22% in overall sector turnover has been reported in the past two years. Although, improved communication links through collaboration and `e' enablement could permit SMEs to move towards a more enriched business model, there is evidence that ebusiness take-up and success in Europe among engineering businesses is low. For instance, focusing on on-line sales, the eEurope 2004 benchmarking report admits that only 14% of SMEs make on-line sales and in only 7% of SMEs do on-line sales constitute more than 5% of their overall sales. The vast majority of companies still continue to rely on old trusted methods of doing business even though outsourcing to lower cost regions and countries is a major threat to many engineering SMEs in Europe. Access to specific competences drives organisations to collaborate with each other. Focusing on the organisational competence, a notion which expresses the key skills and capabilities of an organisation, an ICT based methodology has been developed and tested in this research. The `Competence Profiling Methodology' facilitates collaborative business processes. The methodology enables the discovery of appropriate collaborators for the development and manufacture of complex systems by matching complimentary competences and softer factors. These ideas were developed and tested within two SME projects in the West Midlands, Autocle@r and Autolean 3, as well as with the DTI funded Manufacturing Advisory Service - West Midlands, a one-stop shop to assist manufacturing SMEs. The results from these projects were used to develop a practical portal architecture, to help e-enable engineering SMEs. The resulting West Midlands Collaborative Commerce Marketplace, has over 2000 SME members, has had over 40,000 tenders through the system and over 100 companies are using collaborative spaces to coordinate resources. A key conclusion of this research is that traditional e-business is poorly suited to engineering SMEs being very standard product orientated. Skills and capabilities are far more generic than end products and focusing on them can support more effective eenablement of engineering companies. Results from the WMCCM (www.wmccm.co.uk) project confirm this