Supply Chain Management Practices as a Support to Innovation in SMEs

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                Presently, organizations are increasingly focusing on Supply Chain Management (SCM) as a competitive tool so that to gain more leverage over competitors. As a tool of competitive advantage, SCM emphasizes on how to enhance the maximization of the general value of the firm by improved utilization of resources across the whole of the firm (Didonet & Diaz, 2012). Usually, an enterprise connects its suppliers and customers through a set of values adding activities referred as supply chain, operating on a principle that is characterized by the business receiving input from suppliers so that to improve delivery to customers. For that reason, it is crucial to set up an active SCM so that to build and sustain the competitive advantage regarding product and services of the firms.

            Even so, the dynamism of SCM has been discussed in various studies regarding small to medium-sized enterprises (SMEs). The benefits of SCM for SMEs are underlined by the gains from the competitive advantage depicted by the relationship between suppliers and clients as well as the positive impact on the general performance. Arend and Wisner (2005) argue that the various practices of SCM contribute to the level of innovation in a business through integration and coordination of activities and tasks throughout the supply chain so that to enhance establishment and delivery of solutions. Significant changes in processes can be achieved through the adoption of innovation; as such, SCM practices are explained as aspects of collaboration complemented by the incorporation of IT systems in SMEs. The integration of IT in SCM leads to customization of products or identification of trends, resulting in improved production processes. As a result, this paper-based essay aims to discuss the variables, theories, and application of SCM complemented by IT systems as a tool of competitive advantage to business organizations.

Practices of SCM and their relation to innovation in SMEs

            SCM is very significant to SMEs as underlined by value creation and permission to develop critical competitive advantages by establishing business relations without affecting the general costs of property. According to Koh et al. (2007), SMEs benefits from SCM practices concerning improvements in overall and operational performances through utilization of the available competitive advantage. As well as, the establishment of a functional relationship between suppliers and clients complemented by innovative processes. Concerning innovation, the importance of collaboration between clients and suppliers in SMEs is well explained, for instance, collaborative practices in SCM facilitate innovation in products. Further, Koh et al. (2007) argued that practices of SCM contribute to innovation through integration and coordination of operations, creating a platform that allows an exchange of knowledge and ideas, establishment and provision of solutions and so forth.       

The Model

            According to Stock et al. (2010), SCM practices cover a broad spectrum that can be described by two dimensions in the model, namely IT integration and collaborative practices. In reality, IT integration is characterized by the implementation of both intra-and inter-organizational IT. Regarding information technology systems, it is imperative to acknowledge that the intra-organizational setting of an enterprise comprises of utilization of IT within a company to enhance the process of production, management of inventories, and design of the...